Unsustainable public sector pensions
Discussion
mph1977 said:
the issue is with the way it is portrayed , when you have individuals implying that the pension schemes are requiring extensive tax payer support ( on top of the employers contribution) ,
It's almost as if you don't understand where the "employer's" contribution comes from.mph1977 said:
when in fact they are and have done ( and will continue to in at least the short to medium term - hence the diminuation of benefits all ready coming in - contrary to the assertion of some recent posters) return surpluses to the exchequer - this being the trade off for their PAYG nature ...
It's almost as if you don't understand how to account for the value of accrued benefits and hence what is (or is not) a true 'surplus' in a pension fund.CarlosFandango11 said:
Do you have any evidence to back up your extraordinary claim that public sector DB schemes return surpluses to the exchequer?
A quick google suggests that your claim is rubbish.
http://www.telegraph.co.uk/news/health/news/934653...
The link says this at the bottom:A quick google suggests that your claim is rubbish.
http://www.telegraph.co.uk/news/health/news/934653...
The BMA argues the NHS pension scheme is currently in surplus to £2bn a year, which is returned to the Treasury.
It says: "Given that the amount being paid into the scheme currently exceeds the amount being paid out, there is no justification for further immediate increases. They equate to an additional tax on NHS staff to help pay for a economic deficit which they did not create. "
Which shows that the BMA is entirely ignorant about pension funding too!
dave123456 said:
the overwhelming majority of government departments would not function as businesses in the private sector,
It's just not feasible for most work - can you imagine what would happen if, for instance, HMRC's functions were put into the private sector?Someone commented about dealing with public sector jobs-worths - the DVLA's privatised clampers haven't proved to be very customer friendly.
And look at the disaster of the Forensic Science Service privatisation.
mph1977 said:
the issue is with the way it is portrayed , when you have individuals implying that the pension schemes are requiring extensive tax payer support ( on top of the employers contribution) , when in fact they are and have done ( and will continue to in at least the short to medium term - hence the diminuation of benefits all ready coming in - contrary to the assertion of some recent posters) return surpluses to the exchequer - this being the trade off for their PAYG nature ...
Every penny of what is spent on the NHS, whether it's for a bandage, germolene, salary or pensions comes from the tax payer.Yes, employees of the NHS are tax payers too. But the tax they pay comes from a salary from the taxpayer (it would be better in many ways to pay govt employees a lower amount but tax free).
As for the surpluses...they're an apparition. The govt (the NHS employer) expects to be able to guarantee sufficient income (whether from the tax payer at large or from your "surpluses" etc) to be able to keep paying these pensions regardless of how long people live for, or how much they get paid in that pension. With the demographics of age changing, this is highly unlikely to be the case. Most private sector operations realised this a while ago. It's nothing to do with envy etc. It's simple mathematics.
If the govt does not get a grip of it, a couple of scenarios will come to pass:
1) NHS employees won't get what they think they were promised as the money pot will be empty. Your surpluses will then seem even more of an apparition
2) Other services the NHS employer pays for will need to be cut to keep providing what was promised. This might mean services within the NHS or elsewhere.
This is what people have been trying to get across. The increased personal contributions still do not make the defined benefits affordable. Other factors, unfortunately, prevent this. Private sector providers have scrapped defined benefits as no matter what the employee contributes, you cannot guarantee the affordability of the provision....the govt will need to do the same. Either now in a controlled fashion, or later when reality bites.
My view is that if they start to get a controlled grip on it now, the overall impact on a long term basis is likely to be minimised. If they keep kicking the can down the road and govt employee expectations remain reality free, it will be a lot worse. Look at Greece for an example of the latter...
JagLover said:
A couple of points regarding share of state pensions as a percentage of GDP.
First of all I agree this is a valid method of measuring total costs. Though others may concentrate on the fairness aspect.
First of all I agree this is a valid method of measuring total costs. Though others may concentrate on the fairness aspect.
Sidicks, you originally questioned this as below - do you now agree this is reasonable?
sidicks said:
Does 'GDP' provide cash to pay pensions?
What % of GDP is available to fund public spending in total?
What % of GDP is available to fund public spending in total?
JagLover said:
Firstly, and most importantly, graphs showing stable or falling share of GDP assumed that the "cap and share" agreement would be followed and that future increases in longevity would be met by a later retirement age, higher employee contributions, lower pensions or a mixture of all three. Such graphs are not an argument against reform they are based on reform having taken place.
I made the point a few pages back that the share of GDP for public pension is NOT stable of falling, but that the share has been FORECAST to rise from 1.5% to around 2% in 2030, then decline. JagLover said:
Secondly long term GDP forecasts are inherently unreliable, in the past few years the cost has grown as a percentage of GDP and is still forecast to grow for the next few years. Longer term forecasts may assume a return to long term average rates of GDP growth, but growth in GDP per head has been very poor since the early 2000s.
True, but the government has to make some estimates to predict tax revenue and plan accordingly. The share has grown, see above. There is still a need to plan for the long term even if it is subject to risk and uncertainty. Also we cannot afford for the government to be too conservative in these estimates otherwise they just would stop funding everything - just in case. This would cripple services etc. There has to be a balance. Is a prediction at 2% sensible? It doesn't seem outrageous or unsustainable. If it were ballooning to 10% then that would be another matter - but it seems it is not.
JagLover said:
Finally even if the cost does indeed remain stable longer term (not a given as above) there are other areas of government spending which are going to grow as a percentage of the total. This includes Health care spending, the basic state pension and possibly in-work benefits in an increasingly low wage economy (if the Tories are unable to adequately reform this).
True, this also has to be factored in, and perhaps more changes made to retirement age etc. accordingly. These changes are happening, not sure some think the unions can just stop it - they can't and already haven't.I'm not sure there is any confusion over how public services are funded - it is of course all taxpayer funded. Ultimately the cost of all pensions for civil servants comes from the taxpayer. But as above their pensions have to be factored into the cost of deciding to have those civil servants, and understand their long term cost liability. The govt do do this, contrary to some implied statements to the contrary. The fact that it is an unfunded scheme doesn't mean the long terms costs are not being forecast and steps taken to manage them - they are and it is false to claim otherwise.
Finally, some raise the point about wasters in public service. This is true, they do exist. Equally excellence is also evident. This is not actually related to pensions however, and the implication (even if perhaps it is not meant) is "well there are some wasters, so lets screw the pensions for everyone". This is a clear logic fail - the answer is to address the poor performance & get rid or restore performance. There is a certain irony in those bashing "poor management in the public service" and then coming up with an entirely fallacious solution - thereby demonstrating similarly inadequate skills of analysis! Doh!
Edited by ///ajd on Sunday 29th November 15:07
sidicks said:
markcoznottz said:
What was the mythical job? Member of parliament? Il eat my hat if any private sector pension can get anywhere near the police one, you know we know, drop the nonsense.
To be fair some private schemes might have been in broadly the same ballpark (although still less generous to those that understand the details) 20-30 years ago.However a lot has changed in that intervening period and the private sector has recognised that the numbers no longer stack up (and haven't done for some time).
///ajd said:
Sidicks, you originally questioned this as below - do you now agree this is reasonable?
GDP is not the same as having cash / tax income available to spend.///ajd said:
Is a prediction at 2% sensible? It doesn't seem outrageous or unsustainable. If it were ballooning to 10% then that would be another matter - but it seems it is not.
Given that you have no idea on what assumptions have been used to determine the 2% GDP figure, neither have you understand what the other future demands for public spending are in the future (and how that compares to funds available).So quite how you think you can make a judgement as to what is reasonable or unsustainable, I've no idea!
///ajd said:
True, this also has to be factored in, and perhaps more changes made to retirement age etc. accordingly. These changes are happening, not sure some think the unions can just stop it - they can't and already haven't.
Yes, the Unions won;t threaten to strike at all if pension terms need to change. Of course not.///ajd said:
I'm not sure there is any confusion over how public services are funded - it is of course all taxpayer funded
Tell that to mph1977 who keeps denying that the taxpayer has to subsidies public sector pensions!!///ajd said:
"well there are some wasters, so lets screw the pensions for everyone". This is a clear logic fail -
The only logical fail is yours - revising public sector pensions to make them sustainable and fairer for the taxpayers having to fund them is not 'screwing pensions for everyone'.///ajd said:
the answer is to address the poor performance & get rid or restore performance. There is a certain irony in those bashing "poor management in the public service" and then coming up with an entirely fallacious solution - thereby demonstrating similarly inadequate skills of analysis! Doh!
Once again, the inadequate skills of analysis come from those who barely have a basic understanding of pensions, not those who work in this area.Edited by sidicks on Sunday 29th November 15:19
Murph7355 said:
Every penny of what is spent on the NHS, whether it's for a bandage, germolene, salary or pensions comes from the tax payer.
Yes, employees of the NHS are tax payers too. But the tax they pay comes from a salary from the taxpayer (it would be better in many ways to pay govt employees a lower amount but tax free).
As for the surpluses...they're an apparition. The govt (the NHS employer) expects to be able to guarantee sufficient income (whether from the tax payer at large or from your "surpluses" etc) to be able to keep paying these pensions regardless of how long people live for, or how much they get paid in that pension. With the demographics of age changing, this is highly unlikely to be the case. Most private sector operations realised this a while ago. It's nothing to do with envy etc. It's simple mathematics.
If the govt does not get a grip of it, a couple of scenarios will come to pass:
1) NHS employees won't get what they think they were promised as the money pot will be empty. Your surpluses will then seem even more of an apparition
2) Other services the NHS employer pays for will need to be cut to keep providing what was promised. This might mean services within the NHS or elsewhere.
This is what people have been trying to get across. The increased personal contributions still do not make the defined benefits affordable. Other factors, unfortunately, prevent this. Private sector providers have scrapped defined benefits as no matter what the employee contributes, you cannot guarantee the affordability of the provision....the govt will need to do the same. Either now in a controlled fashion, or later when reality bites.
My view is that if they start to get a controlled grip on it now, the overall impact on a long term basis is likely to be minimised. If they keep kicking the can down the road and govt employee expectations remain reality free, it will be a lot worse. Look at Greece for an example of the latter...
Well yeah that's true because technically everyone using an NHS service is a tax payer whether they come from abroad for treatment or pay privately.Yes, employees of the NHS are tax payers too. But the tax they pay comes from a salary from the taxpayer (it would be better in many ways to pay govt employees a lower amount but tax free).
As for the surpluses...they're an apparition. The govt (the NHS employer) expects to be able to guarantee sufficient income (whether from the tax payer at large or from your "surpluses" etc) to be able to keep paying these pensions regardless of how long people live for, or how much they get paid in that pension. With the demographics of age changing, this is highly unlikely to be the case. Most private sector operations realised this a while ago. It's nothing to do with envy etc. It's simple mathematics.
If the govt does not get a grip of it, a couple of scenarios will come to pass:
1) NHS employees won't get what they think they were promised as the money pot will be empty. Your surpluses will then seem even more of an apparition
2) Other services the NHS employer pays for will need to be cut to keep providing what was promised. This might mean services within the NHS or elsewhere.
This is what people have been trying to get across. The increased personal contributions still do not make the defined benefits affordable. Other factors, unfortunately, prevent this. Private sector providers have scrapped defined benefits as no matter what the employee contributes, you cannot guarantee the affordability of the provision....the govt will need to do the same. Either now in a controlled fashion, or later when reality bites.
My view is that if they start to get a controlled grip on it now, the overall impact on a long term basis is likely to be minimised. If they keep kicking the can down the road and govt employee expectations remain reality free, it will be a lot worse. Look at Greece for an example of the latter...
For example the Fertility treatments are not all provided by the NHS and people can pay for the service so indeed however you look at these people they are taxpayers or if on benefits.... Well you know.
egor110 said:
crankedup said:
For all the discussions regarding these pensions it seems the Government is not overly concerned and allows the various schemes to continue. If Government is not unduly concerned that must indicate the issue is relatively minor?
They won't give a f
k what the electorate think until nearer election time.Downward said:
Murph7355 said:
Every penny of what is spent on the NHS, whether it's for a bandage, germolene, salary or pensions comes from the tax payer.
Yes, employees of the NHS are tax payers too. But the tax they pay comes from a salary from the taxpayer (it would be better in many ways to pay govt employees a lower amount but tax free).
As for the surpluses...they're an apparition. The govt (the NHS employer) expects to be able to guarantee sufficient income (whether from the tax payer at large or from your "surpluses" etc) to be able to keep paying these pensions regardless of how long people live for, or how much they get paid in that pension. With the demographics of age changing, this is highly unlikely to be the case. Most private sector operations realised this a while ago. It's nothing to do with envy etc. It's simple mathematics.
If the govt does not get a grip of it, a couple of scenarios will come to pass:
1) NHS employees won't get what they think they were promised as the money pot will be empty. Your surpluses will then seem even more of an apparition
2) Other services the NHS employer pays for will need to be cut to keep providing what was promised. This might mean services within the NHS or elsewhere.
This is what people have been trying to get across. The increased personal contributions still do not make the defined benefits affordable. Other factors, unfortunately, prevent this. Private sector providers have scrapped defined benefits as no matter what the employee contributes, you cannot guarantee the affordability of the provision....the govt will need to do the same. Either now in a controlled fashion, or later when reality bites.
My view is that if they start to get a controlled grip on it now, the overall impact on a long term basis is likely to be minimised. If they keep kicking the can down the road and govt employee expectations remain reality free, it will be a lot worse. Look at Greece for an example of the latter...
Well yeah that's true because technically everyone using an NHS service is a tax payer whether they come from abroad for treatment or pay privately.Yes, employees of the NHS are tax payers too. But the tax they pay comes from a salary from the taxpayer (it would be better in many ways to pay govt employees a lower amount but tax free).
As for the surpluses...they're an apparition. The govt (the NHS employer) expects to be able to guarantee sufficient income (whether from the tax payer at large or from your "surpluses" etc) to be able to keep paying these pensions regardless of how long people live for, or how much they get paid in that pension. With the demographics of age changing, this is highly unlikely to be the case. Most private sector operations realised this a while ago. It's nothing to do with envy etc. It's simple mathematics.
If the govt does not get a grip of it, a couple of scenarios will come to pass:
1) NHS employees won't get what they think they were promised as the money pot will be empty. Your surpluses will then seem even more of an apparition
2) Other services the NHS employer pays for will need to be cut to keep providing what was promised. This might mean services within the NHS or elsewhere.
This is what people have been trying to get across. The increased personal contributions still do not make the defined benefits affordable. Other factors, unfortunately, prevent this. Private sector providers have scrapped defined benefits as no matter what the employee contributes, you cannot guarantee the affordability of the provision....the govt will need to do the same. Either now in a controlled fashion, or later when reality bites.
My view is that if they start to get a controlled grip on it now, the overall impact on a long term basis is likely to be minimised. If they keep kicking the can down the road and govt employee expectations remain reality free, it will be a lot worse. Look at Greece for an example of the latter...
For example the Fertility treatments are not all provided by the NHS and people can pay for the service so indeed however you look at these people they are taxpayers or if on benefits.... Well you know.
Qualified staff will just work for agencies as the moneys better and they can pick there shifts rather than being in a shift pattern as they are being nhs emplyed staff.
The police, fire, prison wardens once the pension perk is removed and the nat min wage ( £9 something a hour) comes in i wonder how many decide the risk of injury , unsocial shifts is no longer worth it.
sidicks said:
Sheepshanks said:
It doesn't matter - people who choose to devote themselves to a life of public service deserve to be looked after.
The vast majority of public sector workers haven't 'devoted themselves' to anything, they are just doing a job.No-one is saying that they shouldn't be 'looked after', just that the private sector shouldn't be giving them massive subsidies.
HTH
sidicks said:
///ajd said:
Sidicks, you originally questioned this as below - do you now agree this is reasonable?
GDP is not the same as having cash / tax income available to spend.///ajd said:
Is a prediction at 2% sensible? It doesn't seem outrageous or unsustainable. If it were ballooning to 10% then that would be another matter - but it seems it is not.
Given that you have no idea on what assumptions have been used to determine the 2% GDP figure, neither have you understand what the other future demands for public spending are in the future (and how that compares to funds available).So quite how you think you can make a judgement as to what is reasonable or unsustainable, I've no idea!
///ajd said:
True, this also has to be factored in, and perhaps more changes made to retirement age etc. accordingly. These changes are happening, not sure some think the unions can just stop it - they can't and already haven't.
Yes, the Unions won;t threaten to strike at all if pension terms need to change. Of course not.///ajd said:
I'm not sure there is any confusion over how public services are funded - it is of course all taxpayer funded
Tell that to mph1977 who keeps denying that the taxpayer has to subsidies public sector pensions!!///ajd said:
"well there are some wasters, so lets screw the pensions for everyone". This is a clear logic fail -
The only logical fail is yours - revising public sector pensions to make them sustainable and fairer for the taxpayers having to fund them is not 'screwing pensions for everyone'.///ajd said:
the answer is to address the poor performance & get rid or restore performance. There is a certain irony in those bashing "poor management in the public service" and then coming up with an entirely fallacious solution - thereby demonstrating similarly inadequate skills of analysis! Doh!
Once again, the inadequate skills of analysis come from those who barely have a basic understanding of pensions, not those who work in this area.Edited by sidicks on Sunday 29th November 15:19
1. You questioned whether GDP was a good indicator of future tax revenue. I provided evidence it was. You are now changing your question and saying "its not the same as having the cash to spend" as if that somehow covers your mistake in failing to see the correlation. Of course it is not a cast iron gtee, but it is one of the best predictors. What is your better alternative? Or are you suggesting the government should just not bother making forecasts as they might be wrong? If you are suggesting the government should not make any long term commitments as "GDP might fluctuate", you clearly have no understanding of why that would be nonsense and prevent any government investment in ANYTHING! Daft.
2. Of course you can make a judgement - you can say 1.5% and 2% are in the same order of magnitude, so can be afforded. If your car insurance went up from £150 a year to £200 a year - would that be affordable? Probably yes, noting you may have to make assumptions about other levels of spend. Is it reasonable to slash current pensions of those who have worked for 40 years on the basis of a 0.5% increase. No. Particularly when you factor in the difference in contributions and payments is on 0.3%. Yes the contributions are from taxpayers, but it all adds up to reduce the ACTUAL bill to taxpayers. You should be able to see this.
3. The unions will strike, but will they win and prevent all changes to pensions? I think not. Do you think they will succeed in stopping all change? They may slow the rate of change to protect their members, but stop it? Impossible.
4. Why mention that many in public service are wasters? What relevance has that to pensions? You brought it up - why? What is the correlation? Please DO explain!
sidicks said:
Countdown said:
"Worse" for you, but "better" for the Shareholders and Senior managers, surely?
Better for the business to help avoid going bust, which means in some way better for the employee too!///ajd said:
1. You questioned whether GDP was a good indicator of future tax revenue. I provided evidence it was. You are now changing your question and saying "its not the same as having the cash to spend" as if that somehow covers your mistake in failing to see the correlation.
What I actually said was:///ajd said:
Does 'GDP' provide cash to pay pensions?
So I'm not changing anything. You can increase GDP by increasing public spending - how does thus that suddenly make public sector pensions more affordable?///ajd said:
Of course it is not a cast iron gtee, but it is one of the best predictors. What is your better alternative? Or are you suggesting the government should just not bother making forecasts as they might be wrong? If you are suggesting the government should not make any long term commitments as "GDP might fluctuate", you clearly have no understanding of why that would be nonsense and prevent any government investment in ANYTHING! Daft.
I'm saying no such thing, so please don't pretend that I am.///ajd said:
2. Of course you can make a judgement - you can say 1.5% and 2% are in the same order of magnitude, so can be afforded.
You've no idea if 1.5% can be afforded if you have no basic understanding of how that 1.5% was calculated or what the plans are for the other 98.5%By the same reckoning, tax breaks to fishmongers in Grimsby amounting to 1.5% are also somehow 'affordable'.
///ajd said:
If your car insurance went up from £150 a year to £200 a year - would that be affordable? Probably yes, noting you may have to make assumptions about other levels of spend. Is it reasonable to slash current pensions of those who have worked for 40 years on the basis of a 0.5% increase. No. Particularly when you factor in the difference in contributions and payments is on 0.3%. Yes the contributions are from taxpayers, but it all adds up to reduce the ACTUAL bill to taxpayers. You should be able to see this.
As keeps being explained to you, the 0.3% number is meaningless, and public sector pensions are a net cost to taxpayers regardless of short-term timing of cashflows.///ajd said:
3. The unions will strike, but will they win and prevent all changes to pensions? I think not. Do you think they will succeed in stopping all change? They may slow the rate of change to protect their members, but stop it? Impossible.
So you admit that, despite having agreed to the changes (and which are factored in to the 1.5% of GDP figure that you are suddenly fixated upon, that won;t actually happen in practice as the Unions will delay the changes.And that's in the absence of future demographic improvements etc.
///ajd said:
4. Why mention that many in public service are wasters? What relevance has that to pensions? You brought it up - why? What is the correlation? Please DO explain!
I have made no such comment. Please take this back.
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