Wednesday 11 January 2012

10 People who really should know better. One organisation that clearly does not.



There was a really interesting (?) NEST Pensions Release  on 10/11/12

new research by NEST shows that very few people think pensions are 'straightforward' (6 per cent), 'easy to understand' (4 per cent), 'simple' (3 per cent), 'interesting' (5 per cent) or 'engaging' (2 per cent).
Well, so are car maintenance manuals and Tax guides.  What to do...

Yes, publish a phrasebook

'The latest version of NEST’s phrasebook includes new jargon-busting terms we've tested with our likely members and their employers to help make pensions easier to understand.
Or what other people call a 'dictionary'.
Better yet take the old one and make it better.

Get some people to review it
Nick Timmins, Policy Commentator and Analyst, Financial Times: 'If you only read one book about pensions, read this!'
It cannot be said that any book on Pensions has reached the bestseller list, but they do generally tell you something about Pensions.

These people think that you can simplify a subject by providing a dictionary that re-states terms that refer to (sometimes) complex terminology that need extended explanation in their own right.

I would like to put this down as evidence of a particularly perverse collective sense of humour, but this subject is too important.
 
Having said that, this is the industry that had Pensions Simplification and ended up with a rulebook over 3 times as long.

If you want to make something more simple, the best method of doing this is to make it more simple.  Not use shorter words to describe it.


Civil Service Pension Schemes and unintended consequences



My Partner is a Doctor.  One of the things she is currently v. unhappy about (ignoring the general state of the NHS) is her pension.
She belongs to the old scheme (N/80ths NRA 60) and quite soon she will be moved across into the new scheme.  The BMA gave her some details on the proposals last week.
I did warn her at the time that they fluffed the review on '08 and that the arrangement is just not sustainable, but stopped myself short of the 'I told you so' moment, the reason being that having read the details, I cannot be sure that she is worse off.

Before :
N/80ths pension + 3N/80ths cash, NRA 60
After :
N/54ths, NRA 67.
The early retirement factor is due to be about 5% (not confirmed).
So this becomes 54 * 1.05^7 = 80ths

So, on the face of it, the you get about 25% less pension (the cash) and pay 3% more for the privilege.

Hold on though, the salary used to calculate the benefit is not Final Salary anymore, it is the salary in year, revalued by CPI + 1.5%.
If (for the sake of argument), there are 15 years between retirement and age 60

So, if the govt keeps NHS pay-rises below CPI+1.5% - just 0.5% per annum, the difference is slowly eroded.
Indeed CPI+1% would be a better pay rise that she has had for the last 3 years.