National Grid Share Discussion Threads

[utyinv] 26/6/2019 15:00

1carus,

Well done, but not so much luck as doing the right thing.

Many young people aren’t interested in pensions etc.

When I reached 18, I was at work on my 18th birthday (as a Student Apprentice)and the Union Rep approached me and asked if it was my 18th Birthday. When I replied yes, he said stop what you are doing and come with me. I thought I had done something wrong and was in the Sh1t. He walked me over to the admin block and told the Head Personnel chap to sign me up to the pension scheme. If that Union Rep was alive today I would shake his hand and buy him a drink or two.

👍

[bountyhunter] 26/6/2019 14:20

That's one of the great benefits of final salary schemes, many of which have now been replaced by 'career average schemes' (CARE schemes) which are clearly not so good despite the fudged acronym!

[1carus] 25/6/2019 22:50

Uty... Yes I did. I would rather not say what scheme.
Here is a stat.for you. From 1984 to 1996 my average salary was something like 14k, That included apprenticeship years. My total pension contributions in that whole period was a little under 7k. I can't remember what the company put in, may be 6 %. I cashed it in close to 300k. When I got the letter from the scheme regarding the transfer value , it was genuinely a sit down moment. I was figuring maybe 180K. As I said, little did I know how life changing those early years pension payments would be. At that number, part of the decision process was " a bird in hand"... with other positions I have more than I will need in retirement, whenever I chose to retire. My best investment ever and all down to luck.

[utyinv] 22/6/2019 00:32

1carus,

What scheme were you in? Ie what Company?

From your post, unless I misread your post, did you withdraw your pension pot from your scheme?

[1carus] 21/6/2019 11:44

Ianood, I was aware of that risk also. The lump sum transfer was greater than the forecasted annual amount that I would accumulate from 65 to 91, excluding any annual interest rise, which as pointed out is generally somewhere between2 and 3 percent. However I figured that taking the cash amount 12 years before 65 and reinvesting it in a boring private pension targeting 3 to 4 percent was a better option for me. It also reduced the risk of the scheme running light on money towards the end of its life. There was stuff in the press last year that was basically complaining that the take up of the generous multiples being offered run the risk of remaining members being left high and dry in later years. I am not sure what multiples they are offering now in these schemes but for me it seemed like a reasonable choice, that gave me more flexibility in the future.

[1carus] 21/6/2019 11:16

Is that an upward trend we are seeing?

[beckers2008] 17/6/2019 17:50

NG, investing in the US again, no surprise money flows across the pond and with good reason. No investment case for the UK anymore with Ofgem bleeding NG. dry.

[utyinv] 15/6/2019 22:02

1carus,

You did well contributing to a pension scheme at 17 as most start at 18 years of age, or did. NG were plugging their deficit in the scheme as sponsoring Company by contributing 22% whilst we were contributing 6%.

But in NG’s case it won’t be long before the Scheme, which is managed by the trustees ( made up of appointed reps from company, elected existing contributing members and elected retired members) and administer by RPMI will be independent from the sponsoring Company before long, ie, NG’s liabilities are limited and soon to end.

Jonnycash1,

OK (if you insist) you are right and the pension that hits the bank accounts, each month, is a figure of imagination for many thousands in the ESI Industry👍
28514;. Also the 3 x pension lump sum that the scheme gives you, tax free (what everyone got and still gets from the scheme, many decades before the 25% rule was implemented), and, for many, is invested to add to their pension income is an illusion. Due to new 25% rules, if you take more than 3x pension lump sum your pension will be reduced. So if you say there aren’t any 40/80ths or 40/60ths then OK, you believe what you want. 🤷‍a94;️

In your rhetoric you referred to GPs, I have immediate family members who are GPs👍

If I was bothered about your understanding of the NG’s ESI final Salary Pension Scheme, I would post the scheme rules for you, or I could pass you a copy at the NG AGM on Mon 29th July at the ICC in Birmingham. 😉

[ianood] 15/6/2019 19:31

1carus - Well done! Another risk you have mitigated is having the rate of inflation adjustment being reduced from RPI to CPI which is being widely achieved with the exception of BT so far.

[1carus] 15/6/2019 18:24

My particular scheme was 40/60. Not public sector. In 2000 it was about 82pc funded for its liabilities snd had a substantial plan to get it back on track. When I exited ot was back to 100pc. However, in tje annual.news letter it warned that a change in governace could affect the plan. I am not suggezting that this was my major concern but trustees felt it wise ro point this oit every year. The scheme was something like 80% deferred members... ie most were mot claiming from it and only a handful still paying in as the scheme had been closed to new members for some time. The near 30 x multiple made sense to me and my personal sitiation. Eitherway, little did i know that my pensiom contributions i made at 17 could posdibly worth the sum of money they are today... mind boggling numbers tbh.

[jonnycash1] 15/6/2019 17:02

I'll leave you to it. There are thousands of final salary schemes but no such thing as a 40/80 or 1/2 scheme. You are confused. You're the sort of people who feel unwell, google their symptoms and then argue with their doctor at the surgery.
Incidentally, final salary public sector pensions are guaranteed by the taxpayer, the others are covered by the PPP, or pension protection fund, albeit to a lesser extent.

[utyinv] 15/6/2019 14:20

1carus,


In your post 7101, you identify the risks associated with closed Final Salary schemes especially to cover future liabilities as the last remaining Beneficiaries draw pensions. In a way you are right, and that’s why the ESI scheme has carried out Longevity studies, anticipating the liabilities to honour pensions of those who will be last to draw pensions from the scheme.

These studies have prompted the Trustees to take out Insurance policies underwriting such liabilities if markets fall short of expectation, ie, all angles anticipated and mitigated for👍

[bountyhunter] 15/6/2019 14:04

>>However, it is idiotic for people on a bulletin
>>board to make assumptions about whether
>>or not you have made the right decision.

I presume that underhand comment was aimed at me. What is idiotic johnycash is some of the nonsense (e.g. there is no 40/80 or 40/60 final salary scheme?!) in your arrogant posts. I am certainly entitled to give my opinion of 1carus's choice already done and dusted. 27x was an excellent multiple imo as others have also said.

[utyinv] 15/6/2019 13:19

Jonnycash1,

Your post 7099: there is no 40/80 or 40/60 final salary scheme.?????

———;——̵2;——R12;


So please explain why NG ESI final salary pension scheme (together with many electricity utilities), are all 40/80ths? Have I been imagining the years working in the Company and how thousands of us are drawing such a pension today?

There are too many people who assume they are right but sadly wrong. I say that with the utmost respect👍

The way the scheme works as I have previously stated on the 40/80ths Scheme ( which is closed to new entrants btw), is for every year you work and contribute into the scheme you are credited with 1/80th. So after 40 years of work you get 40/80ths of your final PENSIONABLE salary ( which does not include bonuses, allowances overtime etc,),
Except, for some who joined the scheme early and continue working to 63 years of age, where after 40 years of contributions you stop paying employee contributions. Eg, if you are 59 and have contributed into the scheme for 40 years, you stop paying and the company stops paying, however, on your 60th birthday the Company resumes it’s contribution on your behalf ( but you don’t contribute) until you get to 63 giving a potential max of 43/80ths but such circumstances are rare. In simple terms it’s a 40/80ths based scheme.

If you are made redundant, normally you draw what you have earned ( in simple terms) ie if you have contributed 25 years you get 25/80ths of your final PENSIONABLE salary ( you do not get abated for drawing your occupational pension early). If you leave voluntarily, you can start drawing your occupational pension from 55 years of age. However, you will be abated to the tune of 4% for every year between your agreed Normal Retirement Age (NRA) and when you started drawing your occupational pension.

There are many differences between 40/80 ths and 40/60ths ( the latter NG gas protected employees - again scheme closed to new entrants)

In the 40/80ths scheme on drawing your pension you get a Lump sum of 3x pension.

On the Gas Scheme, if you are below state pension age and about to draw your occupational pension, the scheme applies a normalising factor ie rather than draw a 2/3rds pension based on your final PENSIONABLE salary, they look at how old you are and when you are due to draw your state pension and alter the figures so that you get a ‘normalising or smoothing’ factor applied, but when you get to state pension age you don’t get any increase in income.

Whilst in the ESI( Electricity Supply Industry ) scheme, when you get to state pension age you draw a state pension in addition to your occupational pension, which increases your annual income ( albeit the state pension is reduced for being ‘contracted out’).

There is no doubt about the whole subject in general, final salaries are regarded as being the most secure and reliable. What started this debate, was Newbank identifying that not all senior citizens who draw a pension are economically well off and they would find the cost of a tv license stretching. I agree as I know some ‘old timers’ who are nearly above the means tested level and would lose their free license.

As for security of final salary schemes, once you are drawing your pension you are guaranteed, underpinned by Gov legislation, to the tune of 90% of your pension. So in the event of another financial crash or the Sponsoring Company going bankrupt those drawing their occupational pensions are guaranteed to continue to receive 90% of their pension.

The underlining factor in all schemes which may differ slightly to others is the detail that is contained within the ‘Scheme Rules’ which will be upheld in any deliberation involving Pension Ombudsman or Court proceedings,

Hope this helps?

[1carus] 15/6/2019 09:48

One other point... many of the final salary schemes have no or very few people paying in to them and have many people still not taking their pensions, the funds have to be managed well to keep thr funds at 100% of their forward liabilities. It is still effectively a managed fund and might still be affected by market movements, so they are not without risk and indeed carry more risk as a part8cular scheme nears its end of life as it runs out of time to correct investment errors. There are many factors to consider.

[1carus] 15/6/2019 09:30

Jc1, you are correct. Many personal factors involved. It's not for everyone. Its not my only pension and i have other income streams. Part of my objective was to establish a tax free income of 50 to 60 k per year once i can and choose to retire. In terms of market risk, you need to provision an amoumt of cash to weather a 2 to 3 year issue I would think. Cost for moving the fund was about 7k per 250k and took nearly 6 months to organise... the requirements for doing this thankfully seem quite rigorous as it couod have negative outcomes for many people.

[jonnycash1] 15/6/2019 07:59

Whilst 3/80 schemes capped at 25 years service did exist, there is no 40/80 or 40/60 final salary scheme. Earning £40000 a year for 13 years does not equate to 40/60 X 13. Do the maths. It would seem you have given up £8666 a year,likely with a guaranteed increase of at least 2.5%pa, for £233982 in a drawdown scheme. After charges you will be lucky to clear 3.5% a year as income, meaning you start with a pension of £8189, lower than you had before. No guarantees. Not inflation proofed. If the global markets collapse in five years, a few years after retirement, your pension pot will lose maybe 1/3 of its value, leaving you drawing £5404 a year or further eating into your depleted capital to maintain your income level. Taking into account at 2.5%pa you would have a 12.5% increase in your final salary pension over the period to £9803, you are now £4399 worse off each year with a depleted capital value you cannot replace and your retirement has just begun. That is also excluding charges to transfer and set up your FAD scheme, which would have been a great deal of money. Obviously if you die the full amount will go to spouse or can be left in a drawdown pension, tax-free under age 75 and I trust it is not your only source of income in retirement and that for you, the benefits outweighed the potential negatives. However, it is idiotic for people on a bulletin board to make assumptions about whether or not you have made the right decision.

[utyinv] 14/6/2019 21:35

27 is very good

Bear in mind pensions or actuaries assume you will live to 85 for a man. If you are in a scheme or bought an annuity for your retirement income the age of 85 is very important! If you die before 85 unexpectedly the pension provider is quids in if you live longer than 85 you are quids in.

That is why it’s important if buying an annuity to disclose any ailment which may promote death sooner than 85 , that way you can get a higher rate from an annuity.

It’s all swings and roundabouts. Many people take their money out of managed schemes and manage it themselves through SIPPs. The benefit of SIPPs is that when you die your remaining capital in the scheme is transferred to your wife. Whilst in many final salary scheme your pension is reduced to between 50% and 66% ie your wife gets between 1/2 and 2/3 of your pension for life. After she dies your pension dies with her. Whilst in SIPPs if they perform well any remaining capital can be passed to your offspring through your estate.

All swings and roundabouts, but many use final salary schemes and on top manage investments and the income from those investments themselves to top up their pension income.

[bountyhunter] 14/6/2019 20:50

27 * forecast sounds very good, i.e. they expected you to live until 65(?) + 27 + a few more years covered by investment interest on the pot equivalent so say to around 90ish. Not a bad decision with a younger spouse I would say although usually there is a 50% ongoing pension for the spouse going forwards so if much younger it would still be a tricky decision. But can't argue with taking back control with the 27x factor.

[1carus] 14/6/2019 17:40

I cashed in a 40/60 scheme last year.. had about 13 years in it in total. I left that company in 1996. You dont seem to have a pot of money but thr trustees offer a figure tp come oit of tjr scheme. Mine was close to 27 times the annual fotcasted for my retirement age. This multiplyer was historicsllu high... not sure what it would be now. Now sits in a drawdown fund. Better death benefits for yhe wife and gives me better lump sum and flexibolitu when i retire. Not for everyone.. very cir umstance dependant.

[utyinv] 14/6/2019 16:20

Buywell,

Depends if Corbyn raises his head again. Gone all quiet on the Marxist front. Have they all gone to regroup before another onslaught of rhetoric about Nationalisation?

Once the Conservative Party have made their decision as who replaces TM that’s when Thornbury, MacDonnell and Corbyn will raise the anti IMO.

As for now it appears to be climbing nicely.

[buywell3] 14/6/2019 14:51

Right

Going to do something hard now

I reckon this stock is now going to reverse back to 750p


dyor

[jonnycash1] 14/6/2019 14:45

Herein lies the lesson. Never take unregulated financial advice.

[ccraig69] 14/6/2019 13:53

it. 1/80 not 3/80 th