Unsustainable public sector pensions
Discussion
sidicks said:
brickwall said:
I agree changing the rates doesn't change the total cost. However it does have two effects:
- Forces departments/budgets to recognise the actual cost of employing that person, and cut their cloth accordingly. The charge to department budgets should reflect the fully-loaded cost of employing that person, just like any business
- Essentially departments pay a greater amount of money per head back to the Treasury, to pay for future pensions, nominally reducing the burden on future taxpayers (I know it all just goes into the pot, but all other things being equal, the effect is the same)
- Forces departments/budgets to recognise the actual cost of employing that person, and cut their cloth accordingly. The charge to department budgets should reflect the fully-loaded cost of employing that person, just like any business
- Essentially departments pay a greater amount of money per head back to the Treasury, to pay for future pensions, nominally reducing the burden on future taxpayers (I know it all just goes into the pot, but all other things being equal, the effect is the same)
http://www.bbc.co.uk/news/uk-politics-35838493
Essentially adjusting employer's contribution rates to further reflect the true cost of the pension entitlements they're giving their employees.
Looks like it reduces the taxpayer subsidy to the tune of £2bn a year.
(The other great long-term effect here is I can see departments starting to realise just how expensive these pensions are, now they have to actually pay for them themselves, and think about reforming their pay structures).
Edited by brickwall on Saturday 19th March 14:27
brickwall said:
Hidden in the melee of the budget was this gem:
http://www.bbc.co.uk/news/uk-politics-35838493
Essentially adjusting employer's contribution rates to further reflect the true cost of the pension entitlements they're giving their employees.
Even with this change, if you look at the assumptions, they are still wildly optimistic compared to what would be allowed in the private sector, so still dramatically understate the true cost.http://www.bbc.co.uk/news/uk-politics-35838493
Essentially adjusting employer's contribution rates to further reflect the true cost of the pension entitlements they're giving their employees.
brickwall said:
Looks like it reduces the taxpayer subsidy to the tune of £2bn a year.
What effectively is happening is that money that would previously have been implicitly funded by the tax payer (but hidden) is now explicitly charged to public sector budgets.In practice, this means that, of the published spending numbers, there will be more spent on pubic sector employees and less on the actual services that we want...
brickwall said:
(The other great long-term effect here is I can see departments starting to realise just how expensive these pensions are, now they have to actually pay for them themselves, and think about reforming their pay structures).
We can but dream!!sidicks said:
In practice, this means that, of the published spending numbers, there will be more spent on pubic sector employees and less on the actual services that we want...
In reality, 'money spent delivering the services we actually want' is in reality the same as 'public sector employees':- Hard to have good education without teachers
- Hard to have a good health services without doctors and nurses
- Hard to have a good army without soldiers
- Hard to have good police force without police officers
etc. etc.
Labour cost is the vast majority of the cost of delivering public services.
This change doesn't alter the amount of money available, but it forces departments to more accurately recognise the cost of people in their budgets.
brickwall said:
In reality, 'money spent delivering the services we actually want' is in reality the same as 'public sector employees':
- Hard to have good education without teachers
- Hard to have a good health services without doctors and nurses
- Hard to have a good army without soldiers
- Hard to have good police force without police officers
etc. etc.
Labour cost is the vast majority of the cost of delivering public services.
It's highly arguable that you need to fund excessive pensions to obtain good staff - it doesn't work like that in the private sector so why should it be the case in the public sector. Particularly when the available evidence suggests that public sector employees don't understand or accurately value the pension benefits they receive.- Hard to have good education without teachers
- Hard to have a good health services without doctors and nurses
- Hard to have a good army without soldiers
- Hard to have good police force without police officers
etc. etc.
Labour cost is the vast majority of the cost of delivering public services.
sidicks said:
brickwall said:
In reality, 'money spent delivering the services we actually want' is in reality the same as 'public sector employees':
- Hard to have good education without teachers
- Hard to have a good health services without doctors and nurses
- Hard to have a good army without soldiers
- Hard to have good police force without police officers
etc. etc.
Labour cost is the vast majority of the cost of delivering public services.
It's highly arguable that you need to fund excessive pensions to obtain good staff - it doesn't work like that in the private sector so why should it be the case in the public sector. Particularly when the available evidence suggests that public sector employees don't understand or accurately value the pension benefits they receive.- Hard to have good education without teachers
- Hard to have a good health services without doctors and nurses
- Hard to have a good army without soldiers
- Hard to have good police force without police officers
etc. etc.
Labour cost is the vast majority of the cost of delivering public services.
Or alternatively, they realise just how bloody expensive the pensions are, and set out to reduce that cost.
sidicks said:
It's highly arguable that you need to fund excessive pensions to obtain good staff - it doesn't work like that in the private sector so why should it be the case in the public sector. Particularly when the available evidence suggests that public sector employees don't understand or accurately value the pension benefits they receive.
If they don't "understand it or accurately value it" surely it would be fairly straightforward to make them give it up?Countdown said:
sidicks said:
It's highly arguable that you need to fund excessive pensions to obtain good staff - it doesn't work like that in the private sector so why should it be the case in the public sector. Particularly when the available evidence suggests that public sector employees don't understand or accurately value the pension benefits they receive.
If they don't "understand it or accurately value it" surely it would be fairly straightforward to make them give it up?sidicks said:
Countdown said:
If they don't "understand it or accurately value it" surely it would be fairly straightforward to make them give it up?
As an example, do you really think that new employees would choose the final salary pension over a 10-15% pay rise?!
mph1977 said:
and the costs ?
the only people it would suit are those who like to bandy around chicken little figures about the liabilities ...
Or maybe those that understand the cost of the liabilities.the only people it would suit are those who like to bandy around chicken little figures about the liabilities ...
If you can't see that the taxpayer would benefit significantly by exchanging pension liabilities worth 30%+ for wages with 10-15% then that's your problem.
fblm said:
Isn't this the norm for the public sector anyway?Killer2005 said:
Isn't this the norm for the public sector anyway?
i think you'll find most pension schemes have limitations of working for the same employer or class of employer and recieving pension ... where people are re-hired they don;t recieve pension unless they are rehired at much fewer hours or a lower grade (i've known a few do that in the NHS mainly clinicians though retire as a Consultant or Nurse /AHP senior manager and then come back at reduced hours at a 'lower' grade ... )
mph1977 said:
i think you'll find most pension schemes have limitations of working for the same employer or class of employer and recieving pension ...
where people are re-hired they don;t recieve pension unless they are rehired at much fewer hours or a lower grade (i've known a few do that in the NHS mainly clinicians though retire as a Consultant or Nurse /AHP senior manager and then come back at reduced hours at a 'lower' grade ... )
Are you sure - can you point me to the relevant section in any of the public sector pensions scheme documentation?where people are re-hired they don;t recieve pension unless they are rehired at much fewer hours or a lower grade (i've known a few do that in the NHS mainly clinicians though retire as a Consultant or Nurse /AHP senior manager and then come back at reduced hours at a 'lower' grade ... )
The article states:
Spokesmen for Cambridgeshire, Bedfordshire, Leicestershire and London fire services all said that in line with national regulations, they had capped the salary and pension payments of rehired staff, so the combined income did not exceed their gross salary before stepping down.
So these people clearly accrue further pensions, once rehired.
Edited by sidicks on Tuesday 29th March 12:42
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