Pensions......is that it then? « Singletrack Forum

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Pensions......is that it then?

63 posts & 24 voices | Started 5 months ago by mcboo | Latest reply from ph0010421

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mcboo - Member

Looks like we won't be having another round of strikes.

The government is seeking four major changes to the schemes: a 3.2 percentage point increase in contributions by 2014-15; pegging the pension age for public sector employees to the state pension age; switching the uprating of benefits from the RPI rate of inflation to the less robust CPI measure; and switching people in final salary schemes to career average schemes.

In a joint statement, local government unions stressed that they were signing off on a negotiation framework and not a final deal, which would have to be voted on by members. "We believe that – if agreed – the principles under discussion will provide a very positive framework for negotiations and potentially could lead to no change until 2014," they said.Barber said: "We have been talking for many months but since the day of action that involved millions, and with the intensive discussions over recent days, we now see change. Accrual rates are more favourable than were originally proposed, there is enhanced protection for those nearing retirement, Fair Deal protection for those whose jobs transfer out of the public sector, and there will be no adverse changes to pensions for 25 years."

http://www.guardian.co.uk/society/2011/dec/19/union-nhs-pension-reform-pact

Posted 5 months ago #
MSP - Member

So the strike worked then, power to the unions!

Posted 5 months ago #
anagallis_arvensis - Member

Doesnt look like it really.

Posted 5 months ago #
b r - Member

Any unpopular decision that can be put off...

Posted 5 months ago #
stumpyjon - Member

So the strike worked then, power to the unions!

Oh to live in the rose tinted world of the unions / North Korea.

Doesnt look like it really.

This

Posted 5 months ago #
Drac - Moderator

"It's important to stress that no agreements have been reached, but unions now have proposals to put to their executives and members," he said.

So no not yet. Members haven't been consulted, my ballot paper for next phase is in the mantlepiece.

Posted 5 months ago #
bol - Member

It looks like I was actually better off before the unions started negotiating.

Posted 5 months ago #
Drac - Moderator

Yup those that earn more will be now worse off.

Posted 5 months ago #
mcboo - Member

Have their been concessions from the government since the strike? I know they gave some before, for those within 10yrs of retirement I think. Anything else?

See that reliable old Trot Mark Serwotka still wants a fight.

Posted 5 months ago #
MSP - Member

Have their been concessions from the government since the strike? I know they gave some before, for those within 10yrs of retirement I think. Anything else?

.....since the day of action that involved millions, and with the intensive discussions over recent days, we now see change. Accrual rates are more favourable than were originally proposed, there is enhanced protection for those nearing retirement, Fair Deal protection for those whose jobs transfer out of the public sector, and there will be no adverse changes to pensions for 25 years."

Posted 5 months ago #
TandemJeremy - Member

The government moved a long way - not far enough tho and I suspect it will be rejected. We shall see - and again there is not one monolithic pension - there are a multitude of schemes.

Posted 5 months ago #
Kona TC - Member

Let the private sector race to poverty in retirement continue to drag everyone down with them…

Posted 5 months ago #
Markie - Member

Will these proposals mean that a public sector worker's pension is paid for soley by the contributions made by that worker and his employer through the course of his career, or will some future pension costs remain "unfunded"?

Posted 5 months ago #
TandemJeremy - Member

Markie - that was always true - that it was funded buy the employee and employer contributions. For example The NHS fund has been in massive surplus fro decades with many billions from employees contributions being used as revenue by successive governments

Posted 5 months ago #
Markie - Member

Oh! Then why the need to change? Because
with many billions from employees contributions being used as revenue by successive governments
? Damn!

Posted 5 months ago #
IanMunro - Member

I still haven't spotted the differences from the offer before the strike.
The improved accrual rates were offered then (unless they've been changed again)

Posted 5 months ago #
TandemJeremy - Member

Markie - there is no need to change for most of the public sector pensions. teachers and NHS have already been revised. The pensions are affordable and cheap to the country.

Further changes will not save significant money as all it will mean is future pensioners on benefits instead.

Posted 5 months ago #
Kona TC - Member

Markie - there is no need to change for most of the public sector pensions. teachers and NHS have already been revised. The pensions are affordable and cheap to the country.

Further changes will not save significant money as all it will mean is future pensioners on benefits instead.

TRUE

Posted 5 months ago #
Kryton57 - Member

Private sector here - sought financial advice last week re pensions and it was thus:

a) Best investment today (based on monthly payments assuming you can't afford more than 10k per year) would be a Stock and Shares ISA - might lose short term but would undoubtably gain in the 20 years before I retire, and the money is instantly accessable.

b) 2nd, Premium bonds and crossed fingers

c) 3rd - a Pension. Yep, more likely to make more gains on PB's than anything lower than a High Risk investment into a private pension.

Posted 5 months ago #
boblo - Member

Markie - Member
Will these proposals mean that a public sector worker's pension is paid for soley by the contributions made by that worker and his employer

You do realise the employer is the Govt right? and its ability to pay the employee and his/its pension contributions comes from tax yes? i.e. our money (collectively)

Surely the only way a Govt sponsored pension scheme can be in surplus if it's over funded by...the Govt...

Posted 5 months ago #
boblo - Member

My mate just put £10k into solar panels... 10% annual return. I bet that beats any current investment option. And, they've just halved the 'benefit'.

Posted 5 months ago #
MSP - Member

....might lose short term but would undoubtably gain in the 20 years before I retire, and the money is instantly accessable.

IMO stocks and shares as a way as investing for pensions is unsustainable, even allowing for the falls over the past couple of years, dividends as a percentage of investment are still far far lower than they would have been 20, 30 or 40 years ago. The point of shares was once that you owned a share of a company, and therefore took a share of the profits. Now that seem to have changed and gains are expected from rising markets rather than company profits.

Posted 5 months ago #
MSP - Member

You do realise the employer is the Govt right? and its ability to pay the employee and his/its pension contributions comes from tax yes? i.e. our money

And where do you think tesco get money to pay pensions, it comes from money paid over at checkouts, our money, and the banks pay their pensions from profits made from mortgages and loans, our money.
Its far too simplistic to just classify Government spending in that way as our money.

Posted 5 months ago #
Kona TC - Member

Kryton57 - Member
Private sector here - sought financial advice last week re pensions and it was thus:

a) Best investment today would be a Stock and Shares ISA - might lose short term but would undoubtedly gain in the 20 years before I retire, and the money is instantly accessible.

Not a personal dig in anyway, more point of principle, pension are a long term investment; start work at 16 retire at 65, contribute to a pension and/or accept lower salary to ensure a poverty free retirement.

The race for jam today by the private sector will result in pensioners living in poverty during their retirement solely reliant on benefits. I am sure my children will look back and think why ho why...

Posted 5 months ago #
Markie - Member

You do realise the employer is the Govt right? and its ability to pay the employee and his/its pension contributions comes from tax yes? i.e. our money (collectively)

Surely the only way a Govt sponsored pension scheme can be in surplus if it's over funded by...the Govt...

Yes, I do realise the employer is the government. What I'm trying to get at (and may well fail here too, I'm very unsure how to express it!) is that with a private sector pension, employee pays something each month and employer pays something each month (generally expressed as a % of salary) and then when employee retires no extra money is forthcoming from either employee or employer - the pension money comes from the invested accrued funds.

I had been under the impression that with public sector pensions, the pension being paid to a retired employee came from a mix of accrued invested employer and employee contributions (as in the private sector) PLUS extra money from the government to top the aforementioned up. It's this 'extra' money that I would take issue with.

Posted 5 months ago #
TandemJeremy - Member

Markie - well its far more complex than that as many public sector pension funds are revenue funded

Teacher - the government / employer contribution is capped - It cannot grow more than it is now. If there is not enough money in future to pay pensions then the benefits decrease of the contributions increase

NHS

At the moment it is in massive surplus and has been for decades. ie the amount paid out in pensions is far less than the contributions from the employees and employers. this money has been used as revenue and spent not invested.

In future it may go into deficit. the argument is that as the government has spent the surpluses that would have covered this deficit then they should make up the future deficits. Effectively my pension contributions have been spent on reducing taxes not on my pension.

Councils - have an investment fund that may or may not cover future liabilities.

Posted 5 months ago #
boblo - Member

The only way a Govt funded pension scheme can be in surplus is if more money has been invested than is needed to meet its liabilities (I'm discounting better fiscal management than the rest of the public and private sector combined as an option for obvious reasons...).

This surplus investment comes from tax. IIRC it's only recently that public sector pensions became contributory (when was it for the NHS?) which tends to suggest, the decades old surplus is actually 'missappropriated' tax.

@Marky I understood the general public sector pension position to be revenue funded rather than from reserves which is what has got all the Actuaries in a lather (as they have in the private sector).

Posted 5 months ago #
TandemJeremy - Member

boblo - no = as the NHS scheme is revenue funded at the moment and more is paid in in contributions both employer and employee than is paid out in pensions - this surplus is then used by the government as revenue.

NHS pensions have been contibutory since I joined nearly 30 years ago

Posted 5 months ago #
anagallis_arvensis - Member

c) 3rd - a Pension. Yep, more likely to make more gains on PB's than anything lower than a High Risk investment into a private pension.

This is a massive scandal which is currently being swept under the carpet by successive governments and the current one is hiding by going after public sector pensions.

Posted 5 months ago #
boblo - Member

OK ta. I was an uncivil servant for a couple of years and it was non contrib.

I find it difficult to fathom how the NHS scheme specifically can be in surplus if it is funded soley from contribution unless some of that contribution is excessive. I.e. I can't see how the NHS could manage their investments better than the rest of the financial industry combined... This leads to the conclusion that either fewer NHS people take long term pensions as they are worked to an early death or too mcuh provision has been made (probably from tax).

If that's not it, how did it end up with such a surplus?

Posted 5 months ago #
Pembo - Member

The NHS scheme cannot be in surplus because it is not run like a private company scheme where the money is ring fenced and goes up and down with contributions, investment performance, pension payments etc.

With the NHS scheme employee contributions go into the central Treasury pot with income tax, VAT etc and pension payments to retired public sector workers come out of the same pot.

In theory the government would have to pay around 20% in employer pension contributions in addition to the employee contributions and this is the nub of the current argument. The government are saying they (we) cannot continue to provide this level of contribution.

Posted 5 months ago #
boblo - Member

@Pembo. That's how I though it worked.

So TJ is really saying on current liability cobtribution is greater than expenditure...?

Posted 5 months ago #
TandemJeremy - Member

Pembo - that is simply wrong. the various NHS employers do pay in money a defined contribution. the two lots of contributions - emplyere and employee are far greatrthanthe payments to NHS pensioners. employer contriution is effectively capped at 14%

http://www.nhsemployers.org/SiteCollectionDocuments/NHS_Pension_Scheme-employer_summary_210709_aw.pdf

http://www.nhsemployers.org/SiteCollectionDocuments/NHS%20Employers%20pensions%20factsheet.pdf

Posted 5 months ago #
TandemJeremy - Member

@Pembo. That's how I though it worked.

So TJ is really saying on current liability cobtribution is greater than expenditure...?

Nope

It revenue funded. this years employee and employer contributions are far greater than this years pension payments. Same as last year and for many decades.

Future liability is a different issues - in future it may be that contributions are less than outgoings. Then the government will have to make up the shortfall in the same way as the government has spent the surplus

However the NHS scheme has been reviewed to limit and minimise this risk.

Posted 5 months ago #
Pembo - Member

Run that past me again TJ, the employer contributions come from where?

Posted 5 months ago #