Pensioned Off

by Quinn

If you’ve read my previous post, where I mention that I work in the public sector, then you are no doubt jealous of the fact that my pension allows me to “swan off” at 60 when everyone else will have to work until they are 68 before they retire; at least you will if you have been reading what the media has been saying for the past month or so.

Unlike many bloggers I have a fairly benign opinion of the mainstream media; but it has been frustrating recently to see many commentators I respect blithely trot out this “two tier pension” rubbish recently. I will briefly explain what I mean.

Firstly, I would have thought it is pretty obvious that if the state retirement age is raised then that affects everyone equally, wherever they work. This seems to have escaped the critical faculties of most newspapers; I may be able to retire at 60, but I will still have to wait until I am 67/68 before I get my state pension.

Secondly, the current average retirement age is 58 (according to a copy of the Daily Express I saw lying around, so I am happy for that figure to be proved wrong); that is short of 65 and even a couple of years shy of 60. So, regardless of the age you can draw your pension, most people I suspect will retire as soon as they can afford to, whenever that may be.

The main difference with my position compared to many in the private sector is that I cannot be prevented from retiring at 60 and drawing my pension; but that is not to say that I will be able to. I hope to retire earlier; I may well have to retire later, and work until my occupational pension is supplemented by my state pension. We will have to see how the sums work out.

The fact is that every pension scheme, everywhere, is having to look at how affordable its benefits are. As long as the benefits can be funded, then I don’t see it matters when people retire, or what pension they receive. If the only way my pension fund can remain solvent is for my retirement age to be put back five years then I personally am not bothered by that fact. All things should be considered, but whatever they do it won’t change the age at which I actually want to retire.

The point is that this is another silly and simplistic difference between the public and private sectors. There isn’t a two tier retirement age, rather there is a multi tier retirement age in theory (as many retirement ages as there are different pensions schemes) and an almost infinite number of retirement ages in practice (the age at which people actually finish work). My wife’s private sector occupational pension states she should work until 65, but as the benefits she will receive are higher than in mine she may be able to retire earlier than I can if her employers can let her go. If you have your own personal private pension then you can retire whenever you want, just as long as your pension pot has built up enough money for you to be paid a reasonable annuity.

I do feel fortunate to be a member of my pension scheme, don’t get me wrong, I know it is better than most; but if you think I will have a 7 year head start on you, sat on a beach while you serve out your time, then think again. As ever, real life is a bit more complicated than that.