[Closed] Pensions......is that it then?

So the strike worked then, power to the unions!

Doesnt look like it really.

Any unpopular decision that can be put off...

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

"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.

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

Yup those that earn more will be now worse off.

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.

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."

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.

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

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"?

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

Oh! Then why the need to change? Because

with many billions from employees contributions being used as revenue by successive governments

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)

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.

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

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.

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...

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'.

....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.

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.

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 - [b]might lose short term[/b] 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...

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.

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.

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).

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

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.

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?

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.

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

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

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%

@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.

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

The NHS budget. Its in there and defined.

i know, lets have an argument about pensions.

go.

The NHS budget. Its in there and [s]defined[/s] paid for by the tax payers.

Fixed that for you 😉

Yep, that was where I was coming from...

@TJ 'Revenue'? Do you mean NHS income or income from the Inland Revenue? If you mean NHS income (i.e. NHS defined budget) that equals Tax.

BTW 'revenue' is normally income generated by commercial activity, 'funding' is received. Unless the NHS is going into business selling its services to 'clients' (AKA patients), its income from Govt is probably more akin to funding. Though I'm sure all the plastic middle managers recently appointed prefer to delude themselves they are running commercial enterprises but that's another topic...

As for future liabilities vs current. that's what this pullava is all about. The Actuaries took a look at total liability and observed the majority of pension schemes (public and private) were in deficit. Then came the rush to defined contribution and the end of the world.

The public sector issue is the same thing, slightly different flavour as the Govt largely (apparently with the exception of the NHS) funds their pension liabilities from tax 'revenues' but total liability is greater than the projected ability to pay.

@Kryton57 - Get a new financial advisor (or at least a second opinion). You may want to look at a SIPP. You won't be able to access your money until you retire, but you will benefit from tax relief on your contributions, so should be much better for you in the long run than an ISA.

You can use the same investments in a SIPP as an ISA, the ISA/SIPP wrapper is just there to allow for the various tax breaks.

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...

I should point out I have 3 pensions already, 1 of which is work based (contribution matched by employer)

My next investment is diversification perhaps, I don't wnat all my eggs in one basket. GearFreak - no ixdea what SIPPS is I'll look it up cheers - I havent opened an investment ISA yet.

@Gear Freak.

Aha! Well thats interesting - I have one already. The reason I got some advice is that I have an amount stuck in a stakeholder pension from an old company which depreciated this year - becuase of the stock market fall. It was THERE (Legal & General) advisor which said I might be better with the S&S ISA instead of restarting payments into the Stakeholder (which is effectively a SIPP).

You think not then?

boblo

I suggest you go and look into the NHS pension scheme - I gave you some links are there is plenty more on the net.

the NHS pension scheme is what is known as "revenue funded" ie benefits come from the revenue ie the employer and employee contributions

Nhs scheme is 'unfunded'

Is the scheme funded or unfunded?

Unfunded. It is paid for out of general taxation, not an underlying investment fund.

See: http://www.bbc.co.uk/news/business-11446832

Wrong Gusmac - go read up on it. It is revenue funded.

Tandem Jeremy
there is plenty more on the net.

LIke this you mean (same linky as previous poster)

[b] Is the scheme funded or unfunded? [/b]
Unfunded. It is paid for out of general taxation, not an underlying investment fund.

[b]What is the value of the scheme's assets (if any) and its liabilities? [/b]
There are no assets.

The scheme liability, which is estimated by the Government Actuary's Department (GAD), is £287.6bn as of 31 March 2010.

Source: NHS Pensions

http://www.bbc.co.uk/news/business-11446832

http://www.sppa.gov.uk/index.php?option=com_content&view=article&id=189&Itemid=758

The NHS Superannuation Scheme (Scotland) does not have a real pension fund but, as a statutory scheme, benefits are fully guaranteed by the Government. Contributions from both members and employers are paid to the Exchequer which meets the cost of scheme benefits.

Whether it comes from a fund or not is irrelevant. The employer is funded via taxation... it's the same outcome (favourite NHS word) in the end just semantics.

So it's not really a "pension scheme" as most of us understand the phrase,
more like a giant piggy bank which the taxpayer fills up and the government looks after.
😆

Ok - think of it like that if you want - actually I pay 8% of my salary towards it and my employer 14%.

So actually then I pay a greater % of tax than you do - is this what yo are claiming?

boblo - there's a massive difference

a fund limits liability (*except in the public sector where the shortcomings of the fund are made up direct out of tax - ie unlimited liability), in the real world people only get the money in the fund (*or not if you were with Equitable Life - which is worth searching on)

What about the Police; lets have a go at them whilst we are at it.
They have NO pension fund whatsoever so perhaps none of them deserve a pension at all???

The truth is this goverment and many subsequent goverments spent all the money coming in to them in the form of member contributions, some of the money went to pay those actually collecting their pensions. However as the Police forces of this country have only just started to shrink in size there must have been millions or billions coming in to the government and yet virtually no money was paid out as most members were working their 30 years in order to collect their pension.

So having spent all of these contributions the government are now struggling and want to go back on deals put into place decades ago.

Also bear in mind that currently Police are entitled to claim their pension after 30 years service; this is for the priviledge of paying the government 11% of their salary (for those on the old scheme). The government are to increase this to 15% and appear to be offering no guarantees as to what each contributing member will receive.

Compare teachers, nurses and police with MPs who are still NOT contributing to their pension and judges who only have to work for 15 years (I think) to receive their non contributory final salary pension. Fair!!

<Elfinsafety>
WHATTT??? You don't even need pensions, they're just for the disgusting lazy nation that is the UK. Why should you be allowed the right to stop working at a certain age? My mum didn't stop working, ever - in fact she's still working now and has been dead ten years. She never needed a pension and neither do you. you useless intolerant lazy scum... Hazzunt/wuzzent/cuzzent to be inserted as appropriate </Elfinsafety>

as a private sector worker, can I invest in a public sector pension scheme?
if not, then isn't that discrimination? I bet brother Crow would fight for my cause.

Ok - think of it like that if you want - actually I pay 8% of my salary towards it and my employer 14%.

So actually then I pay a greater % of tax than you do - is this what yo are claiming?

Yo, yo yo not claiming anything bro' 😆

In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover. Some companies receive revenue from interest, dividends or royalties paid to them by other companies

Can't see how the NHS generates revenue, using the standard description of the term, so both the employers contribution and the employees contribution are tax funded aren't they ?

@Kryton

Disclaimer - I'm not an IFA, I'm not qualified! (I've had bad experiences of qualified IFA's before, they cost my in laws a LOT of money, so I would always speak to 2 or 3 and then make your own mind up)

With a SIPP, you can choose how to invest your money, normally through unit trusts. You can buy units in any number of investments, with different levels of risk and potential return. You could just invest in a FTSE tracker, which would roughly follow the london FTSE market, or you could invest in say a renewable energy fund, which would then be invested in a range of renewable energy companies. Or you could invest in the shares of a single company, if you think M+S is good, you can buy shares in M+S.

With a stakeholder pension, you have no control over the investment, so you are at the whims of a 'professional' who is investing the money for you.

The difference between having the money in an ISA rather than a pension is that with a pension you get tax relief, so if you pay in £80 from your salary, you would get £100 in your pension pot, but only £80 in your ISA. (If you pay tax at 40 or 50%, the savings are greater.)

You should be able to transfer your current stakeholder pension into either another stakeholder pension, or into a SIPP.

Over the life of the pension you will expect the value to rise and fall on the markets, unless your crystal ball is very good and you predict the fall first and get your money out. It's best not to look at it too much, all that matters is what it is worth when you retire. Typically the younger you are the more risky the investments you would look at (more change of growth), but as you get closer to retirement you would look to invest in less risky investments with a lower chance of growth (typically bonds such as government bonds, which is why greece defauilting is causing so much of a hoo haa as govt bonds are meant to be pretty much no-risk investments).

Both have advantages and disadvantages depending on how involved you want to be.

thats a bs argument imagine the NHS magically turns private right - say view your tax as going ot a private company for an inusrance policy then they claim when I use the NHS
Even though nothing has actually changed in terms of income or expenditure it would magically make money - it is a disengenous argument of right wing
Ps healthy people make money

as a private sector worker, can I invest in a public sector pension scheme?

Possibly, depends on what company you work for.

@gusamc I know the difference between a 'pension fund' and funding pension liability... that's the whole point of my dull posts. I'm obviously not very good at that Engrish 🙂

@TJ I wasn't actually having a go at the Public sector or your own position. I was just trying to illustrate the flawed concept of 'revenue' in public healthcare and how it funds pension liability. I.e. there is no such thing as revenue when a body is wholly funded by the taxpayer.

I was also pretty certain ther Govt pays public sector pensions directly rather than through a fund. It looks like that is the case as you have gone a bit quiet on it... (uncharacteristically).

Didn't really want to get involved in this, but I can argue semantics for hours: For the NHS, there is no pot of money/pension fund, so you could say it is paid directly out of taxation.

However, it is also true that pension contributions paid by employees and employers are greater than what is paid out, and those contributions also go directly to the tax man, hence the statement that it isn't funded by taxation.

You could argue, correctly, that the employer contributions are the same thing as taxation paying pensions, but in that case it's not really an argument about pensions, it's an argument about public sector pay being too high (employer pension contributions being just another part of the remuneration package, for both private and public workers). Maybe it is, maybe it isn't, but that seems like a more honest way of framing the discussion (or argument, seeing as this is STW)

Well that didn't last long..
[url] http://union-news.co.uk/2011/12/breaking-news-unison-unite-and-gmb-withdraw-from-pensions-deal/ [/url]

[i]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.[/i]

+1 Probably the best wording I've seen so far - my money, badly spent - what a surprise...

Let's face it; no-one took a job because it had or did not have a good pension, they just took a job. Those with wopping pensions declare they knew it and signed up for it, and those without are now bitter because we wish we had.