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Public Sector and their pensions
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clubberFree Member
I think that’s a good point TJ but it doesn’t affect the liability issue does it? As I see it you’re talking about different things in whether it’s different to a private pension or not.
I think my concern based on how I understand it is that if there’s isn’t a consistent surplus (if there even is now – according to Z11 there’s a significant defecit once you take out tax payers’ money (proof Z11?) or just the fact that numbers paying in but not yet taking out were increased significantly) then it’s not sustainable long term unless you accept that it isn’t self funded (eg the tax payer keeps paying into it).
dangerousbeansFree MemberToys19,
I think you’ll find that selfish greed is pretty prevalent in the private sector as well. People are prepared, nay encouraged, to abandon their employer, their colleagues and their customers merely for a pay rise with all the associated costs and problems this may incur.
Also, I appreciate that many people are finding it difficult and ‘share the pain’ is the call of the day. I can, however, remember when the economy was doing well and mates of mine were getting well above inflation pay deals in the private sector, the govt saying that pay restraint in the public sector was needed to combat the effects of large private sector pay deals and ensure that inflation did not rise out of control. There didn’t seem to be as much ‘sharing the spoils’ then as there is ‘sharing the pain’ now.
toys19Free MemberPeople are prepared, nay encouraged, to abandon their employer, their colleagues and their customers merely for a pay rise with all the associated costs and problems this may incur.
Are you saying public sector workers don’t do this?
You will find the sharing of the spoils did occur, its called taxation.
Fresh Goods Friday 696: The Middling Edition
Latest Singletrack VideosFresh Goods Friday 696: The Middlin...surferFree MemberBecause in a private scheme the money has to be ringfenced and invested
Private scheme contributers (employer not employee)can take contribution holidays however when the the scheme is in surplus if they choose.
TandemJeremyFree MemberClubber – the point is that alters fundamentally the contractual terms. In the private sector a part of the deal is that the money is invested safely – this bit is not there for the NHS – but we get a government guarantee instead / in exchange for the government using the money as revenue now
There will have been huge surpluses in the early years of the scheme – this along with more recent surpluses would if invested have ensured the sustainability of the scheme
dangerousbeansFree MemberAre you saying public sector workers don’t do this?
You will find the sharing of the spoils did occur, its called taxation
Of course they do but probably not as much due to limited number employers. However I think it will rise as more private sector employers get involved and people look for the best deal.
As far as I can see most people are selfish to some extent and want to look after their own, pure altruism is very rare. The ways to achieve that are varied, some people vote with their feet and move jobs, others strike, others scheme and cheat etc.
I meant ‘sharing the spoils’ more like the 8% and £3000 bonus my mate got year on year in the good times, rather than the govt getting more revenue.
Zulu-ElevenFree MemberClubber – as posted before, the proper figures direct from the NHSBA:
http://www.nhsbsa.nhs.uk/Pensions/Documents/Pensions_FOI_Requests/Sinar_figures.pdf
From the year 2000, Employer (ie. taxpayer) contributions into the “fund” have (in stages) increased from 4% of payroll, to 14% of payroll. So, the Government (you and me) is now paying in over three times as much as we were a decade ago (proportionatly, actually over six times as much fiscally)
Prior to that increase the NHS pension scheme was in deficit to the tune of several hundered million pounds per year.
clubberFree MemberThere will have been huge surpluses in the early years of the scheme – this along with more recent surpluses would if invested have ensured the sustainability of the scheme
Yes, they would have but they weren’t. That’s not really an excuse for just blindly going along with a potentially massive liability in the future.
Basically, as I read it now, the pensions should (or maybe could) have been self-sustaining but based on where we actually are now, they’re not. The solution to that is interesting really but based on what I understand now I don’t think that you can claim that they’re self-sustaining.
Of course there’s the moral/ethical question over whether because they were previously in surplus (still waiting for figures on this) the people who paid at that time are owed by the tax payer (who took the surplus) since potentially they were being promised a benefit worth considerably more than they were paying in (so while it was sustainable at the time, it was only long term on what sounds to me like a pyramid scheme).
Or maybe I’m just totally wrong 🙂
meftyFree MemberTJ – you are conflating two questions, the first is how much am I entitled to and the second is does the payer have the financial wherewithal to pay it.
The answer to the first is no different between public and private sector. The second is.
toys19Free Memberrather than the govt getting more revenue
yes but when the govt was getting the tax revenue it allowed Messers Brown and Blair to woo the voters by overpaying the public sector with all the cash they thought they had sloshing around. So the public sector got the results of the boom, now they ahve to take some of the pain. Ok so public sector only got a few percent increase, well they need to take a few percent decrease now. Private might have got bigger increases and are suffering from consequent decreases now. I just don’t see why the puiblic sector should be protected from the recession.
TandemJeremyFree MemberOf course its morally and ethically wrong – I have paid for my pension, the money has been spent instead of being invested for my pension, the reason the future projection looks to be in deficit is because the predictions are based on less staff being paid less so lower contributions. So because the tories intend to privatise the NHS I get my pension cut?
And the government want me to pay more and get less benefit so a wages but the extra I pay will go towards the deficit not to paying for my pension?
Its theft on a scale that make maxwell look OK
TandemJeremyFree MemberNo mefty – you are failing to understand the basic and fundamental difference between and investment funded private scheme and a revenue funded public scheme backed by the government.
surferFree MemberI meant ‘sharing the spoils’ more like the 8% and £3000 bonus my mate got year on year in the good times, rather than the govt getting more revenue.
Where did Osborne get the claim that public sector pay increased by twice the rate of private sector pay over the last four years?
Maybe he’s been selective with his sample as you have?surferFree MemberOf course its morally and ethically wrong – I have paid for my pension,
Thats a tricky one TJ. How much have you actually paid and is this what you will get back? I think what you mean is that you have made a contribution as do many people. How that contribution is turned into a larger or smaller guranteed future income is a different matter.
I hope to get more than I have put in thats why I didnt put it under the bed.
The argument appears to be that your contribution turns into a significantly larger pension later than many in the private sector who are not on final salary schemes.clubberFree MemberTandemJeremy – Member
Of course its morally and ethically wrongI tend to agree actually though only regarding what you’ve already paid towards, not ongoing accrual of pension benefits. I’d be inclined for what you get out to reflect the benefits you were offered at the time but that the benefits are reviewed now to reflect what’s being discussed – eg a deficit in the future (or now). That sounds fair to me.
And the government want me to pay more and get less benefit so a wages but the extra I pay will go towards the deficit not to paying for my pension?
Well that’s really about the part of your pension you’re paying towards now even if there is no ‘pot’ there’s still a defined future liability. If as is claimed, there’s actually a deficit at present or more importantly there’s a significant difference between what you’re paying in and getting out and that’s due to continue then I don’t see it as unreasonable for any surplus you pay now to go back to the government to balance out what is being paid in.
Out of interest, the claimed 14% being paid in by the government – what value is that in relation to the extra costs being proposed to the pension members?
meftyFree MemberI have spelled out the differences throughout this thread and explained the rationale for them, but then I am capable of analysing financial risks and know how to manage them. You can continue to live in your own little world where the Tories are out to get you and where no doubt, another fundamental principle of economics and finance can be ignored, the existence of the economic cycle, so that boom and bust can be abolished.
dangerousbeansFree MemberWhere did Osborne get the claim that public sector pay increased by twice the rate of private sector pay over the last four years?
Maybe he’s been selective with his sample as you have?Was talking more than 4 years ago, I mean the real boom times when NuLab was doing well and GB had ended boom/bust for all times.
The real issue is this:
I am a nurse and under the current scheme will get a pension of around £8K pa at 60. With the proposed one I might get a bit more but will have to put £200ish a month in.
Lets say I am going to get £10k which is about £200 per week but will have paid in the £200 per month for the next 21 years.
State pension is at the moment £132 per week so in comparison what I pay only gives the difference.
Reckon I might be better off just enjoying my cash and hoping that theres some welfare state left (or my kids get really rich and look after their old dad).
TandemJeremyFree MemberNo mefty – you keep attempting to say it the same as a private sector one when it clearly isn’t there being a number of fundamental differences.
a private sector pension is paid from an invested fund
The NHS scheme is paid from revenue
teh NHS scheme is guaranteed by government.
these are fundamental differences that you simply want to ignore.
clubberFree MemberTJ, to be fair, I think you’re misunderstanding him. I don’t think he disputes those points or is saying that the NHS pension is identical to a private one, what he’s disputing is that there’s somehow no consideration for liability just because there’s no pot. For me, liability is the key issue and in that sense, no different from a private pension even if there isn’t an actual pot of money to cover it – it’s still something to consider.
binnersFull MemberGlad to see this threads still going well. I’ll call by tomorrow and check if you’ve got it all sorted by then. No fighting, now!
clubberFree MemberHey, binners, I’m finding it particularly funny as this was the second post of the thread
clubber – Member
oh god, no!just look up TandemJeremy and half the threads he’s been on to save having yet another unproductive discussion on this.
🙂 Mind, I am actually learning something here.
TandemJeremyFree MemberI am not misunderstanding him at all- I see the point he is making but its irrelevant.
this “liability” has only arisen because of the unique nature of the scheme. If it had been like a private scheme with the contributions being invested then there would be no liability that was unfunded.
So he cannot treat the future liabilities the same as a private scheme because the past contributions were no used in the same way as a private scheme.
You cannot compare chalk and cheese
dangerousbeansFree MemberYou cannot compare chalk and cheese
You can. But you’re best to only eat one.
clubberFree MemberYou can review the ongoing accrual of benefits which is what I said above – people should get the benefits they were promised up to this point, the same as if they left the NHS now. The debate should be about what pension they should accrue going on from here. That’s a perfectly reasonable debate to have IMO.
TandemJeremyFree MemberClubber – that debate has been had – all new entrants are going on the new scheme which is sustainable
clubberFree Memberbut does that mean that people who were already on the pension – eg you – continue to accrue a pension benefit as before? If so, I still see that as an issue based on what’s been discussed here.
TandemJeremyFree MemberWhy? the government took my contributions and spent them. If they hadn’t done this and were not basing future projections of income on reduced contributions from a decreasing workforce and a decreasing payroll then this “deficit” would not be there.
clubberFree MemberOK, so your position is that the future projections are wrong and therefore the future deficit won’t actually happen so that the liability is zero? I’d be interested to see how different the projections have to be for that to be the case.
Otherwise, I don’t see it as unfair (annoying but not unfair) if the current pension scheme is stopped, you get exactly the benefits you were promised up to this point (same as if you left the NHS now) and then there’s a different pension scheme that follows a sensible line on benefits payable against liability.
Zulu-ElevenFree MemberThere will have been huge surpluses in the early years of the scheme – this along with more recent surpluses would if invested have ensured the sustainability of the scheme
Do you have proof of this, any figures which support your assertion?
which years was it in surplus, which years was in in deficit?
repeated assertions that there “will have been” amount to nothing – facts and figures please TJ.
What was the employers and employees contribution rate throughout the history of the scheme, that led to these huge surpluses that should have been invested? as far as I can see, the only reason for the current surplus is the tripling of the employers contribution since the millenium.
TandemJeremyFree MemberNo clubber – I am saying the future projections are pessimistic.
clubberFree MemberPessimism is considered accounting good practice – take the negative, don’t assume the positive. If those rules had been followed by the banks…
clubberFree Memberregardless, how different do the assumptions have to be to forecast a surplus?
Zulu-ElevenFree MemberAnd I’m saying that your historical claims are wildy optimistic TJ, but you don’t appear to be very keen on backing them up for some reason 🙄
jota180Free MemberWhy? the government took my contributions and spent them.
I think you’ll find they’re doing that with all of us that pay NI without future guarantee of contribution rates or payouts
meftyFree MemberClubber – if only I could have put it so succinctly, restores my faith in my ability to write intelligibly.
ransosFree MemberThe overiding point remains that the fundamentalstarting point of pension liability management is that you evaluate your long term liabilities (ignoring new joiners) that you have incurred, incomings and outgoings in any one year are only inputs into this process.
Quite so. It’s a pity that Thatcher didn’t see this when she decided to tax pension scheme surpluses and allow companies to take contributions holidays. Cue downturn in the stock market and the concomitant closure of schemes, something that should’ve been unnecessary.
brFree MemberGuys, TJ will just not agree with you, he doesn’t want to. You’ve explained to very well, but he’s not prepared to understand that.
He just wants whatever it was he was promised 25 years ago.
Shame he’s not got experience of the outside world, as he’d realise that only history is fixed, the future can change.
I still beleive that the Govt should close down all public pension schemes, honour the agreed benefits (to date), and start from a fresh with a more ‘sustained’ approach – for all.
Quite interesting to see TJ happy that his new collegues are getting a worse deal, from now, than he will get – comradeship in action? Oink, Oink…
TandemJeremyFree MemberNice to see the insults coming in – shows the paucity of your arguenets again
Its really rather unpleasant the delight you have in this governments spiteful destruction of public sector pensions. Still – business as usual from the usual right wingers
clubberFree MemberDoes that include me because it seems I don’t agree with you TJ? I have to say that having read up on it now, I think that your argument about long term self-sustainability doesn’t stack up. Can you provide the figures that Z11 has been asking for to back up your claims?
Agreed though, no need for the insults – TJ had thus far held off, so unnecessary.
brFree MemberTJ – Its not an insult, just a reading of the posts you’ve made
And I’m not a right-winger, far from it – I’m labour, but please notice the small ‘l’. Old fashioned and believe in pragmatism and realism.
Like you I am mad about what has happened with my (various) pensions over the years, but it doesn’t get me anywhere been mad…
I’ve Equitable ones (less said about that the better), deferred final-salary and cash ones – and we haven’t even got onto what annuity my cash will buy. This is another area where a final salary schemes win-win – have you seen the reductions in this area recently?
And even if the Govt had invested your money, it still doesn’t mean there wouldn’t be this discussion – and returns vary, and as the phrase goes ‘you can’t buy history’.
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