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      12-28-2012, 12:31 PM   #41
United Kingdom

Drives: M5
Join Date: Jan 2009
Location: North East

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Public vs Private Sector

Originally Posted by peterg1965 View Post
Just slightly disingenuous. 'Before they have to pay tax' actually means that they pay standard income tax up to an including 40% HRT on pension income, but if they exceed 62,500 pension income there is an additional 20% on income and 55% on the tax free pension lump sum. So the Telegraph is very misleading.

The comparison with a DC 35K pension is probably for an annuity for a 55 year old male and these can come in all sorts of varieties - so again probably misleading. I do agree though that the Final Salary schemes are the gold standard which is why they are being completely phased out as they are unaffordable in the private and public sectors.
I would agree wholeheartedly that the Private Sector is phasing out Final Salary Schemes as being completely unaffordable.

I have not seen the same trend in the Public Sector where Final Salary Schemes are considered affordable by virtue of the fact they're paid by the tax payer. The government is trying very hard to increase pensionable age and ask Public Sector workers to contribute more, as the gap between Public Sector Gold Plated, RPI linked pensions and private sector Defined Payment schemes is huge...