The pensions calculator…

… is out of date, it doesn’t reflect the BBC’s improved CAB2011 offer. Apparently the updated version will go online on Friday.

I’ve been doing some playing around with the different parameters, and it is surprisingly difficult to get anything like a realistic scenario out of the calculator. However, it is possible to construct some broad scenarios which are at least internally consistent, and once the calculator is updated tomorrow I’ll blog on what these scenarios reveal.

However, there is one headline that seems clear. Most people are going to drastically underestimate their average salary increase. If you expect to be promoted between now and your retirement, then (regardless of the annual pay round) your average pay rise will run well ahead of inflation. That’s also commonsense: most of us expect that through our working lives we will gradually earn more in real terms (ie after inflation).

So most people should put a bigger figure in for salary rises than for inflation. A 3% gap would be a good starting point, so if you think inflation will average 4.5% then try putting in average salary increases of 7.5%.

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3 Responses to “The pensions calculator…”

  1. BEN Says:

    HELLO One question, what if you do not see your salary rising at all in the next 15 years ie: you’re on top of your ladder and there is no room for upward mobility in your particular department. (too many indians not enought chiefs) just the annual increment.

    • renouj21 Says:

      Well, you’d have to be VERY pessimistic. There is no such thing as an annual increment anymore, there’s just the annual pay rise as negotiated by the unions. In general over the long term salaries rise roughly in line with inflation (although not in the last couple of years). Given the BBC’s straightened circumstances that may no longer be a valid assumption, going forward. So if you thought you were going to get no promotions between now and retirement, and you thought that pay rises would lag behind inflation, then you might want to change my assumptions so that whatever figure you put in for inflation, you then subtract 1% for your annual pay figure. (Bear in mind as you do this that you are factoring in 15 years of pay cuts in real terms.)

  2. BEN Says:

    Thank you for your quick reply and yes the BBC has not given us any pay rises in the past 2 years. I can see this becoming a way of the future.

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