Re: N Plan Plus C Plan better combination????

Posted by N.E.One on 17 January 2001 at 23:57:52:

In Reply to: Re: N Plan Plus C Plan better combination???? posted by N.E.One on 17 January 2001 at 18:25:15:

I'm sorry, thimking about it afterwards I realised I did the wrong calculation, re:
".... In this case if one had delayed by 4 years one would have 14 years at N Plan , giving approx 20-21% as opposed to 10 years at 2.2% = 22%. So,as far as I can tell, one effectively probably gained by 1 or 2% final salary over the cost of 5% before tax salary over 4 years. I've no idea whether this is good or bad."

As far as I can see if in 1982 one was 35 and one elected to transfer then one would immediately get C Plan service backdated to 25 - making 10 years @2.2% = 22% instead of N Plan of 14 years = approx. 20-21%. Therefore there WAS an immediate benefit as far as I can see without paying anything.

If one had delayed by 4 years, one would then be 39 and would have accumulated 18 years service on N Plan @ about 1.5% = 27. If at 35 one had gone to the C Plan, by age 39 would have accumulated 14 years on the C Plan (10 years backdated plus 4 additional) = 14 times 2.2% = 30.8%. So by not delaying it would seem to me that one would get 3 to 4% better final salary by contributing 5% (not sure when it changed to 4%) before tax salary for 4 years.

Sorry for the error in the first posting - I hope the latest one is roughly correct.
Anyway, the gist is these are very difficult things to calculate and even then one has to be an expert to understand the real benefit of the various alternatives. As a form of investment it is also very difficult to evaluate personally since unfortunately it is based on a major gamble on how long one is likely to live, what future inflation rates might be and even what future tax rates on one's pension might be.