Reply to post: Final salary pensions

NEVER MIND the B*LLOCKS Osbo peddles, deficits don't really matter

Chris Miller

Final salary pensions

Happy though I am to blame Brown for anything and everything (since most of it, as you point out, was actually his fault) and the changes to taxation of pension funds certainly didn't help, speaking as a (lapsed) actuary, the demise of final salary schemes was already assured.

Basically, defined benefits schemes (their proper name) only really work if you can (expect to) remain a member for at least 20, preferably 30 years. And the number of jobs where that's a realistic expectation is vanishingly small (maybe teachers or the NHS, but very few in private enterprise). If (as the great majority of people now do) you change employers every few years, you don't have time to build up significant benefits with any of them, and while (in theory) you could transfer accrued benefits from one scheme to another, the two sets of actuaries tend to take contrary views of the values* involved, so you end up with far less in benefits than you might expect.

* That's their job - they're paid to protect the benefits of the people already in the schemes, not to facilitate transfers between them.

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