Final salary pension schemes should end
Discussion
Ozzie Osmond said:
In reality there's more than one problem going on at the same time,
1. Public sector pensions are not "funded" but all part of UK gov't crazy "pay as you go" approach. With the public sector grown and life expectancy rising the fact is public sector pensions have been a ticking time-bomb for more than a decade. It's not the current recession which has made them unaffordable.
2. Working patterns have changed and relative salaries have changed. Final salary is fine where everyone has a long career and the bosses doesn't earn too much more then the workers. But it's a nonsense when bosses earn far more than workers yet are only bosses for a short while. Their years of service at low level get multiplied up by their high level salary just before they leave.
3. Gordon Brown's tax raids have virtually destroyed private sector pensions. You simply can't have a situation where the engine of the economy (private sector) is funding a benefit for public sector employees which is massively more generous than anything in the private sector.
4. All things being equal Money Purchase (Defined Contribution) pensions are nothing to fear. Whether a pension arrangement is Final Salary (Defined Benefit) or Money Purchase you can never magically create money in it. Money out = money in plus investment return (less expenses).
Re 3, isn't it the case that the gap between boss' and staff's pay has widened in recent years? Think I heard it in a R4 prog, not sure which, prob the one about statistics.1. Public sector pensions are not "funded" but all part of UK gov't crazy "pay as you go" approach. With the public sector grown and life expectancy rising the fact is public sector pensions have been a ticking time-bomb for more than a decade. It's not the current recession which has made them unaffordable.
2. Working patterns have changed and relative salaries have changed. Final salary is fine where everyone has a long career and the bosses doesn't earn too much more then the workers. But it's a nonsense when bosses earn far more than workers yet are only bosses for a short while. Their years of service at low level get multiplied up by their high level salary just before they leave.
3. Gordon Brown's tax raids have virtually destroyed private sector pensions. You simply can't have a situation where the engine of the economy (private sector) is funding a benefit for public sector employees which is massively more generous than anything in the private sector.
4. All things being equal Money Purchase (Defined Contribution) pensions are nothing to fear. Whether a pension arrangement is Final Salary (Defined Benefit) or Money Purchase you can never magically create money in it. Money out = money in plus investment return (less expenses).
It's uderstandable to look at the potential future cost of pub sec pensions, agreed, belatedly. However, aren't there potentially huge future costs to the taxpayer in benefits because 70% of pri sec has no provision at all?
Sticks. said:
Ozzie Osmond said:
In reality there's more than one problem going on at the same time,
1. Public sector pensions are not "funded" but all part of UK gov't crazy "pay as you go" approach. With the public sector grown and life expectancy rising the fact is public sector pensions have been a ticking time-bomb for more than a decade. It's not the current recession which has made them unaffordable.
2. Working patterns have changed and relative salaries have changed. Final salary is fine where everyone has a long career and the bosses doesn't earn too much more then the workers. But it's a nonsense when bosses earn far more than workers yet are only bosses for a short while. Their years of service at low level get multiplied up by their high level salary just before they leave.
3. Gordon Brown's tax raids have virtually destroyed private sector pensions. You simply can't have a situation where the engine of the economy (private sector) is funding a benefit for public sector employees which is massively more generous than anything in the private sector.
4. All things being equal Money Purchase (Defined Contribution) pensions are nothing to fear. Whether a pension arrangement is Final Salary (Defined Benefit) or Money Purchase you can never magically create money in it. Money out = money in plus investment return (less expenses).
Re 3, isn't it the case that the gap between boss' and staff's pay has widened in recent years? Think I heard it in a R4 prog, not sure which, prob the one about statistics.1. Public sector pensions are not "funded" but all part of UK gov't crazy "pay as you go" approach. With the public sector grown and life expectancy rising the fact is public sector pensions have been a ticking time-bomb for more than a decade. It's not the current recession which has made them unaffordable.
2. Working patterns have changed and relative salaries have changed. Final salary is fine where everyone has a long career and the bosses doesn't earn too much more then the workers. But it's a nonsense when bosses earn far more than workers yet are only bosses for a short while. Their years of service at low level get multiplied up by their high level salary just before they leave.
3. Gordon Brown's tax raids have virtually destroyed private sector pensions. You simply can't have a situation where the engine of the economy (private sector) is funding a benefit for public sector employees which is massively more generous than anything in the private sector.
4. All things being equal Money Purchase (Defined Contribution) pensions are nothing to fear. Whether a pension arrangement is Final Salary (Defined Benefit) or Money Purchase you can never magically create money in it. Money out = money in plus investment return (less expenses).
It's understandable to look at the potential future cost of pub sec pensions, agreed, belatedly. However, aren't there potentially huge future costs to the taxpayer in benefits because 70% of pri sec has no provision at all?
Sticks said:
isn't it the case that the gap between boss' and staff's pay has widened in recent years? Think I heard it in a R4 prog, not sure which, prob the one about statistics.
Yes, that's part of the problem.Sticks said:
It's uderstandable to look at the potential future cost of pub sec pensions, agreed, belatedly. However, aren't there potentially huge future costs to the taxpayer in benefits because 70% of pri sec has no provision at all?
Yes, that's why contributing to a pension scheme will become "compulsory" very soon. But still about 15 years too late....Ozzie Osmond said:
Yes, that's why contributing to a pension scheme will become "compulsory" very soon. But still about 15 years too late....
"Compulsory"? Didn't know that. Hope that doesn't mean having to buy into a pension, (rather then make some provision) as they seem only to be worthwhile if you're in the financial services industry.Pupp said:
Ozzie Osmond said:
In reality there's more than one problem going on at the same time,
1. Public sector pensions are not "funded"
Actually; some are. The Logal Govt scheme for example; but carry on, don't let facts obscure things...1. Public sector pensions are not "funded"
I can only comment about the doctors in the nhs, but basically even with the lump sum, you need to exceed the average life expectancy to even get out what you and your employer put in, or be very lucky with your length of service etc. This is before the normal gain from investments etc
I wonder if the FSA should be informed..
Pupp said:
Actually; some are. The Logal Govt scheme for example; but carry on, don't let facts obscure things...
The majority aren't funded, which is why UK PLC effectively has a circa £1 trillion off-balance sheet liability for public sector pensions.
Sidicks
Edited by sidicks on Sunday 10th October 22:33
Sticks. said:
"Compulsory"? Didn't know that. Hope that doesn't mean having to buy into a pension, (rather then make some provision) as they seem only to be worthwhile if you're in the financial services industry.
Yes, it's highly likely everyone will be forced to contribute to a pension scheme. But that's not all bad news. It's like an increase of National Insurance - but without the risk of the government spending it two days later on other people's benefits.Mr_annie_vxr said:
It just shows how some people on here really are not very nice individuals. Who want it all but don't like it when others appear to be gaining.
As you have noticed we are all individuals who put self-interest first. Therefore we should be treated as individuals and everyone who make their own arrangements.Until that is put at the heart of our thinking, somebody will be bleating that it is all unfair.
anonymous said:
[redacted]
To my mind those organisations simply need to develop a career structure which enables those who can't handle the physical side to move into the office. They don't NEED the early pension and can do work which must otherwise be done by a specifically recruited employee at additional cost.Farmers and builders do not stroll off with an early pension just because they have/had a physical job!
robsti said:
Why dont the goverment just raise the age of retirement for the PS by 5 years like they did for private pensoins and take the link to salarys and make it linked to contributions which would be much fairer for everybody!
They are proposing to / have done the former and the Hutton report is basically proposing the latter.
Sidicks
Not read the whole thread but why doesn't the government offer a state backed and guaranteed index linked private style pension scheme?
It would generate massive cashflow in the short term, in the long run generate huge revenues for the country, and solve the whole pension defecit in one go.
Should the worst happen and we have another major financial crash, your pension fund is underwritten by the government which is a lot more than can be said of current private funds.
It would generate massive cashflow in the short term, in the long run generate huge revenues for the country, and solve the whole pension defecit in one go.
Should the worst happen and we have another major financial crash, your pension fund is underwritten by the government which is a lot more than can be said of current private funds.
dvs_dave said:
Not read the whole thread but why doesn't the government offer a state backed and guaranteed index linked private style pension scheme?
Because the contribution rate would need to be 30-40% of salary which no-one could afford!dvs_dave said:
It would generate massive cashflow in the short term, in the long run generate huge revenues for the country, and solve the whole pension defecit in one go.
No it wouldn't - see above!Sidicks
Mr_annie_vxr said:
I've read some of the posts and accept there is a big hole. A hole in my case not of my doing. For many years the police fund was in credit due to the reduced life expectancy and the higher percentage payment.
I was willing to accept change. Then I read the bile filled posts from some of those who chose not to join the PS but go into other far more lucrative fields. I've never begrudged any in the private sector for the enormous benefits they get. I paid my money I took my choice having now seen so many of them dancing with glee I now think my view is that nobody should earn more than 50k a year. That we should to reduce deficit tax at 100% for any figure above that car should also retrospectively tax those high earners for the past five years.
I'm of course kidding.
It just shows how some people on here really are not very nice individuals. Who want it all but don't like it when others appear to be gaining.
How many of the anti brigade earn more than 30k a year?
Problem is that its been qujite definitely shown that the Private sector earns on average less than those in the Public Sector- the latter STILL want guilt edged pensions, AND to be paid more, where those of us in the Private sectors are being squeezed as tight as lemons.I was willing to accept change. Then I read the bile filled posts from some of those who chose not to join the PS but go into other far more lucrative fields. I've never begrudged any in the private sector for the enormous benefits they get. I paid my money I took my choice having now seen so many of them dancing with glee I now think my view is that nobody should earn more than 50k a year. That we should to reduce deficit tax at 100% for any figure above that car should also retrospectively tax those high earners for the past five years.
I'm of course kidding.
It just shows how some people on here really are not very nice individuals. Who want it all but don't like it when others appear to be gaining.
How many of the anti brigade earn more than 30k a year?
pugwash4x4 said:
Problem is that its been qujite definitely shown that the Private sector earns on average less than those in the Public Sector- the latter STILL want guilt edged pensions, AND to be paid more, where those of us in the Private sectors are being squeezed as tight as lemons.
Not the whole truth that oft quoted stat though. Pub sec pay improved under the last govt and has only become comparable since then and the pri sec cutting back on bonuses. Low paid pub sec jobs, like cleaners, were privatised, affecting the 'average' (the link is in the long public sector thread somewhere). For many years prior to that, govt offered improved pension and terms in lieu of extra pay and the pub sec lagged behind for a long time. Govt was, in effect, putting off paying until some day in the future, while balancing the books now. It compares well now because it's less affected, up or down, by market forces than the pri sec.And the whole comparison is as meaningless as the sectors both sectors cover such wide areas in jobs, skills and pay.
Gilt edged? Hutton found average pub sec pension was £5k, so if that's an average, a lot are much lower than that.
Bottom line is imho, in recession, everyone looks at pub sec jobs with envy, but in boom times, they don't apply because they can do better elsewhere.
Sticks. said:
Gilt edged? Hutton found average pub sec pension was £5k, so if that's an average, a lot are much lower than that.
The average pension is meaningless without comparing it to the average salary and average contributions paid in.The fact remains that compared with the employee contributions paid-in, public sector final salary schemes are 'gilt-edged' compared to the money purchase schemes available to the majority of the private sector.
Sidicks
sidicks said:
Sticks. said:
Gilt edged? Hutton found average pub sec pension was £5k, so if that's an average, a lot are much lower than that.
The average pension is meaningless without comparing it to the average salary and average contributions paid in.The fact remains that compared with the employee contributions paid-in, public sector final salary schemes are 'gilt-edged' compared to the money purchase schemes available to the majority of the private sector.
Sidicks
Sticks. said:
Hmm, I struggle to call £5k gilt edged though I see your point. As I say though, pre 2001 govt offered pensions etc rather than competitive pay.
The competitive pay aspect is old news and many reports confirm that gap no longer exists.You also need to remember that a £5k index-linked annuity at age 60 is broadly equivalent to a £10k non-escalating annuity at age 65....
Sidicks
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