Join the police son, they’ve got a gold-plated pension scheme.
That was my father’s premise for me in becoming a police officer.
Not the idea that I could do something decent in society (we forget that sometimes). No, his rationale was plain and simple. Do your time and then bag a cracking pension. Luckily only 11 years into a 30-year stretch, I decided to get out of the police service and try my hand at entrepreneurship. I’ve done okay. So, while I do not have that gold-plated pension waiting for me if
I was to retire at 55, I do have a frozen pot still sitting somewhere in the Scottish Police Pension Scheme.
Apparently, it is worth a couple of hundred grand – on paper. But, I won’t see any of it until I am 60. That was then and this is now. The Scottish police pension scheme has changed for new recruits and so must all final salary schemes. In short, they are not fit for purpose and companies cannot afford them. But, is it fair to those locked into them to change the rules of the game halfway through?
There is nothing worse than getting the rug pulled from you. Working for years expecting a defined pot based on the length of your tenure and your final salary quantum. It is a comforting thought for many. But when the rules of the game change and one finds that the pot is being tampered with, then it creates great uncertainty and stress.
This is happening all around us. Nurses, police officers, firefighters, teachers and lecturers all rely on having a ‘decent’ pension when they retire. Was the pension why nurses decided to look after patients, work shifts and change dressings? Was the pension why lecturers and teachers decided to deal with those creatures we call kids and teenagers for us? I’m not so sure to be honest.
I think these people – the vast majority of them – genuinely believed that they were entering great vocational roles. Roles that would not pay what entrepreneurs can get in dividends and exits, but steady, safer, less risky and guaranteed wages and superannuation. But, alas, the world has changed. And with that has come a feeling of being let down and yes – feeling like a pawn in the big financial world.
I keep asking the question – where has all the money gone? Think about it. We get less and less, but we are asked to pay more. Energy prices are up. Fuel is creeping up. Interest rates are starting to rise, albeit that will be welcomed for many retired savers. Only this month, NS&I issued its income saver rate for those willing to commit large sums for up to three years.
Wow, one can get a measly 2.15 per cent gross if one is willing to give the government one’s cash for three years. This is paltry and hardly worth the while. Food prices are up. The cost of cars is becoming ridiculous and if it was not for PCP schemes, many of us would be down the local car auction looking for a bargain.
So, where has all the money gone? If you do find it, please let me know as I believe we are living in the biggest Ponzi scheme ever. Many, somewhere, are getting filthy rich in tens of millions of pounds, while the populace is only just getting by.
As retirement ages creep up, monthly contributions to schemes are increased and defined benefits decreased, someone needs to be held accountable and government needs to stop funding foreign aid and headline grabbing PR stunts.
Our public sector workers, the ones we rely on when the proverbial hits the fan, need to be respected for what they do and looked after in their old age.
Yes, final salary schemes are not fit for purpose as they are expensive. But, we knew that decades ago and did nothing, so it’s a bit rich now to penalise those who have paid into them religiously for years.
I’m afraid I’m backing the lecturers with this one. They deserve better.
Jim Duffy is co-founder of Moonshot Academy and author of Create Special.