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How are Pensions Indexed?

09 Oct 2017, 09:43

Related to the other thread I have posted in - sorry if I am being a bit thick here. :cuppa

Reading at length the section C booklet, it appears that our CSDB blocks are revalued using the RPI number from the previous September, so our blocks earned up to and including 2017 shown in the latest illustration, should be revalued by 3.9% come 31st March 2018 if I have read the correct info on page 5 of the section C booklet.

Next thing are the figures for the final salary pension (In the purple box). I see, going back through my last 3 nutshells that this figure has risen slightly as well. Q) where it states 'linked to your current pensionable salary' does that mean my salary as at 31st March 2017? Or is this linked to my salary as at 31st March 2008 (when the scheme closed). If linked to 2008, this final salary pension figure must be indexed linked in some way? If so, is it linked to CPI or RPI?
Last edited by BeamishStout on 09 Oct 2017, 14:23, edited 3 times in total.


How are Pensions Indexed?

09 Oct 2017, 13:42

Your final salary part is still linked to your current pay. It only gets delinked and moved to RPI increases after the end of March next year. They have not yet announced the RPI for September yet. So might still be 3.9% or higher or lower! It's announced around the 17th October. And the CSBB blocks will indeed be revalued by it next year.

How are Pensions Indexed?

09 Oct 2017, 14:02

FAB wrote:Your final salary part is still linked to your current pay. It only gets delinked and moved to RPI increases after the end of March next year. They have not yet announced the RPI for September yet. So might still be 3.9% or higher or lower! It's announced around the 17th October. And the CSBB blocks will indeed be revalued by it next year.


Yes of course the figure announced in September 2017 related to year to August 2017 :oops:

Re the final salary part, yes that now confirms what I had originally thought. :thumbup

How are Pensions Indexed?

09 Oct 2017, 14:40

As an addition, Section C members’ pensions will also increase in line with RPI in payment, but Section A/B pensions only go up by CPI.

How are Pensions Indexed?

09 Oct 2017, 14:45

RobertT wrote:As an addition, Section C members’ pensions will also increase in line with RPI in payment, but Section A/B pensions only go up by CPI.

Bet that will changed sometime soon in the future! BT are already trying to change their section C pension from RPI to CPI at the moment!

How are Pensions Indexed?

09 Oct 2017, 14:50

FAB wrote:
RobertT wrote:As an addition, Section C members’ pensions will also increase in line with RPI in payment, but Section A/B pensions only go up by CPI.

Bet that will changed sometime soon in the future! BT are already trying to change their section C pension from RPI to CPI at the moment!

It wouldn't surprise me. But BT do have a rather large pension deficit, which RM don't.

How are Pensions Indexed?

09 Oct 2017, 15:37

Robert, can you explain how the money paid to individuals is paid until death. on a pound for pound basis you receive thousands upon thousands more than you pay in. an example, a mate of mine who took his in 1999. he receives about 800 quid a month. that's 18 years. over that time he has received well over 150 grand but paid in nowhere near that amount. how can this be done?

How are Pensions Indexed?

09 Oct 2017, 16:29

daveyeff wrote:Robert, can you explain how the money paid to individuals is paid until death. on a pound for pound basis you receive thousands upon thousands more than you pay in. an example, a mate of mine who took his in 1999. he receives about 800 quid a month. that's 18 years. over that time he has received well over 150 grand but paid in nowhere near that amount. how can this be done?

Good question!

It’s partly down to the other contributions made by the employer and the government(tax relief) which often amount to a lot more than the worker pays in. Plus the compounded investment returns over a long period of time will grow the money massively. So we’re talking about pension pots worth huge amounts of money which can increase in value by £ Billions in a good investment year.

But the answer really is why DB pension schemes(I assume that’s what your mate has got?) are a noose around the neck of many employers and have been closing left right and centre for the last 20 years.

They make promises to thousands of their workers to pay out an income for life and hope that the contributions and investments will provide a big enough pot to pay out for everyone. In practice it’s the older workers or those who take their pensions relatively early in a schemes’ existence who get the best deal. Because the terms are often better for those people and they get worse for later entrants – the RM pension scheme is a good example, with Sections A, B & C all getting progressively worse.

Then the scheme starts to struggle to keep up with its liabilities due to an ever bigger membership, plus increased life expectancy and lower than expected investment performance. It then gets closed for new entrants and in turn for existing employees too – again RM is a good example. But because the pensions of those who’ve already taken their pensions can’t be touched(except under certain circumstances), they continue to get their nice big pensions, while the current workers get less.

Basically the workers of today are paying for the pension promises made to the workers of yesterday because the schemes can’t cope with paying out generous incomes for everyone. So your mate gets a nice income for life, while someone 20-30 years younger and doing the same job as he did will be getting less to pay for it.

How are Pensions Indexed?

09 Oct 2017, 17:25

cheers, appreciated.....wait till I see the old bugger!!! :Very Happy

How are Pensions Indexed?

17 Oct 2017, 09:53

FAB wrote:Your final salary part is still linked to your current pay. It only gets delinked and moved to RPI increases after the end of March next year. They have not yet announced the RPI for September yet. So might still be 3.9% or higher or lower! It's announced around the 17th October. And the CSBB blocks will indeed be revalued by it next year.


Yes figures just released, the RPI has remained unchanged @ 3.9% so our CSDB blocks will be revalued by 3.9% at the end of March 2018

How are Pensions Indexed?

26 Oct 2017, 23:46

BeamishStout wrote:
FAB wrote:Your final salary part is still linked to your current pay. It only gets delinked and moved to RPI increases after the end of March next year. They have not yet announced the RPI for September yet. So might still be 3.9% or higher or lower! It's announced around the 17th October. And the CSBB blocks will indeed be revalued by it next year.


Yes figures just released, the RPI has remained unchanged @ 3.9% so our CSDB blocks will be revalued by 3.9% at the end of March 2018
small question . As pension ends in 2018, I am guessing we have one more block to come (Csdb ) in March 2018.

How are Pensions Indexed?

27 Oct 2017, 03:16

stephen500 wrote: small question . As pension ends in 2018, I am guessing we have one more block to come (Csdb ) in March 2018.

Yes.

How are Pensions Indexed?

27 Oct 2017, 09:39

If you start taking the pension late in the financial year do you receive all of any increases when they are added in April or just a part of them? And if just a part do you eventually get the rest the following year plus that years increase if there is any? The wording on the RM website is a bit vague!

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