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For an inflation linked to RPI pension of £22600 at aged 55 one would have had to achieve a private pension pot of a million pounds. Even with tax relief this would be a helluva chunk of income. How the Scottish fireman managed around £30k aged 50 beggars belief - but then the Daily Mail is not noted for accuracy. (I am assuming public sector pensions are inflation linked - most seem to be)
www.pensionchoices.com/annuity-rates/index-linked-.../
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He was a senior officer. He would have paid in more to the pot, much more than me, and received an enhanced rate on retiring. His pension payout is much more than your bog standard fireman.
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My late father retired from the fire service in 1968 after 30 years service at age 55, his pension was not what you might call generous considering the injuries he had sustained during his service. A broken collar bone twice, one from a motorcycle crash in WW2 when he was a despatch rider for the service, and another doing hook ladder drill when the man above him fell on him.
Burns from an exploding gas cylinder.
Add to that emphysema from breathing smoke before they had breathing apparatus.
On the plus side, he drew his pension for 37 years, the last of his watch.
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It is always difficult for Mr Average to build a pension pot that will return a monthly sum equal to your former monthly salary. Even with SWMBOs pension we are still short of that figure. However what we have found is that we seem to need less in some areas now we are older and retired. We do have morning coffee out a few times a week when we go shopping and lunch probably once or twice and an evening meal out a couple of times a month. However I can still go to the pub most evenings for a few pints and we do have a car and holidays. Considering we brought up a family, bought a house, paid for university fees, usually managed a holiday annually I am surprised what we did manage to save. No final salary schemes for us, our own plus some company contributions, and over the years it did build up well. I never thought I was paid fantastic money, probably above the average, but we have always been good at managing the money and getting value for it. Also SWMBO did not go out to work until our youngest was 12, and then only part time, so I think we did alright. The secret is to keep saving regularly and just forget about it until near retirement and you may get a decent surprise.
Cheers Concrete
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My pension is £19k per year. I served 32 years. Paid in between 11 and 14% of my monthly salary towards it. I've had to find another job as it is well below my monthly salary I was getting. And it's very hard to get work in your 50s, believe me I've tried. So I paid out for a PCV and getting agency work.
After slightly longer period in the Civil Service mine is £25k but that was in a 60ths scheme with no lump sum. If I'd been like most of my colleagues in the old 80ths scheme I'd have got about same as Ben with a lump sum of two year's pension.
It's index linked to CPI but rather than being based on my salary on leaving in 2013 the start point is a three year average to 2006 indexed from that date until my actual last day. In other words my pay fell behind inflation continually from 2006 on.
Cutting out commuting, parking, lunchtime sarnies etc and I'm actually no worse off than when working.
I'm under no illusion that I've paid in enough to buy those benefits, but they were the terms offered.
Could do with extra cash so the wife can reduce her hours and I then run into same problem as Ben - getting work in your 50s after a public sector career is hard. I'm now onto something developed from a volunteer role but it's taken nearly two years.
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I'm 55 and was made redundant 2 weeks ago. Fortunately, having a final salary pension with nearly 37 years clocked up and almost 2 years redundancy payout makes me better off than many. And I am grateful. However, despite my pension being more than the national average income for working people, it is still a drop to what we are used to and I don't know yet whether I'll be looking for part time work in a few months. For now, I'm happy to enjoy the freedom, the sunshine and I've got a list of DIY jobs to tackle.
Ben10 and Brompt's comments on the over 50's job market concerns me though. I won't be able to find a job within 30 miles doing what I did before and I can't be bothered to travel up to London where it would be relatively easy. There was an 'expert' on TV a couple of days ago saying there is a shortage of trades and also of experienced office staff, which is what I guess I am. I wouldn't expect anyone to pay me anywhere near what I earned before, but equally I wouldn't expect to be paid minimum wage.
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I wouldn't expect anyone to pay me anywhere near what I earned before, but equally I wouldn't expect to be paid minimum wage.
I've investigated agency work in government departments. The start rate even for junior/mid manager rates seems to be little more than min wage with possibility of increase after 12 weeks to something closer to staff salary rates. IIRC there's legislation from EU on that point.
Suspect however that, excepting those who've made themselves indisepnsible, you'll be 'let go' after 11.5 weeks with re-employment at lower rate after the required 4 week break in continuity.
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It beats me how some people expect to have a substantial pension after voluntarily retiring in their 50s. I sympathise with those who have been 'let go' and cannot find similar work, though.
I have a good pension - because from qualifiying in my profession aged 22 I worked full time till I was 65 - and I would expect most others to do so if they want a good pension. A mere thirty years service is really a bare minimum, but good luck to those who choose to perhaps spend the next 40yrs in reduced circumstances. Just don't expect the same lifestyle as the grafters.
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I suspect most people in the private sector look with envy at these public sector pensions. My neighbour is on £14k per year, i expect to get about that adjusted for inflation. The only consolation is that I have no mortgage, and inexpensive tastes. In the private sector we don't have job security, companies close often, then you start on a new job on a lower salary.
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It seems we all have our own individual experiences. I started as an apprentice in 1964 and retired in 2014 as a Regional Manager for a national construction company. 50 years of NI but only really 25 years of serious consideration to pensions. No company scheme, because the directors didn't have a company one, they didn't have to provide one for everyone else. So everything was privately funded but they did pay above the average. But I can honestly say I did it all myself. If only someone had a word with me earlier, but hey ho! Income is not the same as when working but neither are outgoings, so with a bit of thought it is not too difficult to adjust and still retain a decent lifestyle. I did get a pleasant surprise when it came to realising the invested cash into a drawdown. Once I started saving saving I simply forgot about it, a bit like the mortgage, and after some years it does snowball. I still wish I had been the MP's pension scheme though!! Doesn't it make you bleed???
Cheers Concrete
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"If only someone had a word with me earlier".
When I started work at 18, straight from school, I automatically entered the company non-contributory final salary scheme. I knew at the time that it was a good thing!
Trouble is (and I think this can only get worse with student debt) 20 somethings are thinking about nights out, holidays and cars, 30 somethings are thinking about houses, children and marriage, 40 somethings are going to start thinking about a pension soon and 50 somethings find out they have left it a bit late (assuming they aren't supporting the children they were thinking about in their 30's).
Pensions are boring and there is little trust in the pension providers. I've heard so many take a "live fast, die young" approach, trouble is, they do the living bit, but fail when it comes to dying quick enough.
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I am sure it is harder for today's youngsters. Huge debts from university, expensive housing, modest pensions. We had it easy.
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No we didn't have it easy. Expectations now are far higher. New cars within a couple of years of passing the test, forty pounds a month phone contracts, owning property before building a savings record ( as I was told at 25).
However, nothing is gained by sectors of society complaining that others are better off than them. Over one million pensioners with basic personal care needs are receiving no help from anybody. I was a 'grafter' but I retired early because there were things I didn't agree with. I have had many more years to choose how I spend my time. My income is reasonable and I do not expect the same money as people who have worked more years.
In my view society is fundamentally unfair. Those who have can laugh at the have nots who spend their time focussed on other groups. George Osbourne is not affected by austerity measures. Cameron is claiming Conservative is the party of the working party !
As a civilisation ( I use the word loosely) many people have been seduced into pursuing material things. The false believe that your value is defined by what you own. Live with less and live happily.
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I am sure it is harder for today's youngsters. Huge debts from university, expensive housing, modest pensions. We had it easy.
IMHO they shouldn't worry too much about the university debt. The repayments are a graduate tax in all but name and should be only worry. AIUI only way in which full sum becomes due and payable forthwith is where student bails out of Uni in year one.
The move to putting all living expenses for poorer students on the loan instead of present grant though is unfair and will do nothing for the attendance numbers. But then Tory governements were always about net transfer of income from less well off to better off.
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John F writes.."It beats me how some people expect to have a substantial pension after voluntarily retiring in their 50s. "
Did you give any thought to that comment before shooting from the hip?
Where did you get "voluntarily retiring in their fifties" from Had it not crossed your mind that, the firefiighters in question (and presumably Police Officers although I won't speak on their behalf) had a mandatory retirement age of 55. They HAD to retire...like it or not. The thinking had something to do with ...do you want a 65 year old running (or not running, as the case may be) up a ladder and going into a house, flat, factory whatever, with smoke and flames coming out the windows - to rescue you, or your family? You would? Oh well that's OK then.
And Collos or Bairsto or llos or whatever it's morphed into continues in the same manner as ever. Where in that comment was the average Joe supposed to gather it was "light hearted"? No, It doesn't read remotely "light hearted" does it?
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Indeed, KB. And there are also a lot of people made redundant in middle age during the recession who haven't found work since and may live for another 30-40 years.
I can see an increasing number of people going for equity release: a tempting way out of trouble although the providers (the usual insurance suspects) charge huge rates of compound interest so bang goes much of the kids' inheritance.
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