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pension changes and the real impact
Whilst I am aware that my Union and others are campaigning in a legal sense to prevent any change to the pension scheme, and whilst I understand their arguments I am of the opinion that some form of change is inevitable. After all if the government is going to do something then there will be a way. My disappointment is the level of change to pensions and the far reaching impact it will have. The default change is a move to a CARE scheme as that is a cheaper scheme and the benefits would be lower, but not massively so. I could accept a CARE scheme if no further changes occurred. The problem is the NDA/Gov proposal also states that even with the CARE scheme, contributions will be raised by an average of 3.2%, so it could be more than that for myself. So now we are paying more for lower benefits! Further and even more serious is the pension age for normal retirement will be state pension age. For me that is currently 67yrs. I have read that there is a worst case scenario where my pension age could be 71yrs. That impact is massive and unjustified, as with a bit of mathematics I can see that if I did retire at 60yrs which is the current CNPP retirement date, whatever the CARE scheme value I have built up will be reduced by over 40% as I am taking the pension effectively 11yrs early. Even at 67yrs I would suffer over 30% reduction. It also means that the Government can effectively hold great power to save money and slash Nuclear pensions at any moment in the future by increasing the state pension age, whereby all the actuarial adjustments favour the government and in an instant many percent is further knocked off a diminished pension. It is monumentally unfair to have an “undefined normal pension age”. And it absolute stupidity and completely ridiculous to ask people to agree to it. I fear many workers do not understand the impact of this moving target age change. The booklet provide by the NDA “Pension Consultation Am Employee’s guide” is misleading. There is no way to work out the impacts to oneself which is unhelpful. Example 4 somehow shows that working to 68yrs old, the member gets significantly greater benefits on the CARE scheme than current final salary. I thought we are trying to save money so this is an odd example. What it also fails to illustrate is the member wanted to retire at 60yrs old as per current scheme then with a bit a mathematics I have calculated that he would have been retired for over 24 yrs before the higher paying CARE scheme caught up. And many studies show that working later increases the likelihood of early death. So the example completely favours the NDA/Gov, as the worker continues to 68yrs old, paying additional contributions all the time and gets to claim pension for a limited time as death is likely to be earlier. Again I feel workers without actuarial knowledge will see example 4 as a good thing, but in reality it is very bad. The other option for change is to a Pensionable Pay Cap, which in my opinion is more reasonable as original terms such as contribution rates and retirement age remain the same. To be fair, it should however begin in 2018, not 2017 and have the 2.5% cap from the beginning, not from 2020. Only I fear this option will not be taken up because all or most schemes have already been reformed to a CARE scheme, and with a Pay Cap scheme members will probably retire at 60yrs, which NDA/Gov seem to want to prevent at any opportunity.