Pension benefits

January 19, 2011Posted inGeneral
We talked about pensions two years ago. First, we voiced concern that the NPPF pension scheme was sustainable for only 30 years. Then, we discussed the merits of a defined-contribution plan over the existing defined-benefit plan. And then, we expressed alarm that the government was interfering in how our pension scheme was being run. Let’s keep talking about pensions. There’s good news. And there’s bad news. The good news is that, despite increased competition in the financial sector, NPPF seems to be performing well. In the last year, the membership base has increased by 5.4%, from 40,222 to 42,393…

Major pension change

February 17, 2009Posted inGovernment6 Comments
According to the finance minister’s Pay Revision Notification of 13th February, “The Government has approved a major change in the pension scheme…” The “major change” involves increasing pension benefits to 40% of the final basic salary and raising contributions to 22% of the basic salary (11% each by the member and employer).Increasing pension benefits will, as I argued in a previous entry, affect the sustainability of our pension scheme. Some of this pressure will no doubt be relieved by raising the contribution levels.So what overall impact will the government’s decision will have on the pension scheme’s sustainability? We don’t…

Defining pensions

January 20, 2009Posted inGovernment11 Comments
Yesterday, the finance minister confirmed what we already knew – that the NPPF pension scheme is sustainable only for about 30 years. What does it mean? It means the pension scheme will not be able to pay benefits to all its pensioners in about 30 years. It means that by 2040, give or take a few years, total benefits payable to pensioners are projected to exceed total contributions of the members plus any income from its investments.Why? There are a number of reasons. But, the main one is that our (and our employer's) pension contributions are not "saved" for…