Final salary pension schemes must end

[Durruti]

An interesting article from the Telegraph, pointing out the £35 billion pound black hole in councils pension funds.


http://www.telegraph.co.uk/finance/personalfinance...

Final salary schemes have to stop. It is another looming time bomb for our economy as the liabilities are handed generation to generation getting progressively larger until....?. We need to accept that the downside of medical advance and higher average lifespans means that our retirement is likely to be longer and more expensive than ever in history and we must find a better way of planning and funding for the future.

God knows what the total liability is for the entire public sector - remember this is "just" local authority. So when your council tax increase this year but your council makes spending cuts, you'll know why.

Here's a breakdown of the liabilities by authority.

http://www.telegraph.co.uk/finance/financetopics/r...

[OllieC]

time for logans run

[thehawk]

Durruti said:

We need to accept that the downside of medical advance and higher average lifespans means that our retirement is likely to be longer and more expensive than ever in history and we must find a better way of planning and funding for the future.

We could also change the ageism in society and work longer too.

[Iain328]

Durruti said:

An interesting article from the Telegraph, pointing out the £35 billion pound black hole in councils pension funds.


http://www.telegraph.co.uk/finance/personalfinance...

Final salary schemes have to stop. It is another looming time bomb for our economy as the liabilities are handed generation to generation getting progressively larger until....?. We need to accept that the downside of medical advance and higher average lifespans means that our retirement is likely to be longer and more expensive than ever in history and we must find a better way of planning and funding for the future.

God knows what the total liability is for the entire public sector - remember this is "just" local authority. So when your council tax increase this year but your council makes spending cuts, you'll know why.

Here's a breakdown of the liabilities by authority.

http://www.telegraph.co.uk/finance/financetopics/r...

Public sector FSP schemes will be the last things to get scrapped - no matter what the justification. We'll have gone cap in hand to the IMF and been declared nationally bankrupt before they'll do that. Can you really see any of our "nose in the trough" politicians voting for that? About as likely as turkeys voting for xmas IMO.

And as for the rest of us, of course we have a hole in our pension funds - Brown the Clown's had £5-6 Bn and more a year out of them for the last 10 years+. If that money had stayed in the funds and been re-invested, you'd reasonably expect it to have been worth close to £100Bn (before the crash!). It might not solve the entire problem, but a hundred thousand million pounds is not exactly small change....

A classic example of Labour's "spend it today and sod tomorrow" attitude.

[Durruti]

thehawk said:

Durruti said:

We need to accept that the downside of medical advance and higher average lifespans means that our retirement is likely to be longer and more expensive than ever in history and we must find a better way of planning and funding for the future.

We could also change the ageism in society and work longer too.

I think this is already occurring to a certain extent. It does seem senseless to have an arbitrary age where one becomes unemployable. Provided you're physically fit enough and still have all your marbles, why shouldn't you carry on working if you choose to.

The point however, is more about this particular type of scheme. The cost on future generations is untenable and it must be addressed sooner rather than later.

[Pupp]

So, how are you proposing to compensate those whose pension right you're proposing to diminish then?

[Parrot of Doom]

Pupp said:

So, how are you proposing to compensate those whose pension right you're proposing to diminish then?

For a start, they can work 10 years longer. The 60-65 retirement age is about 20 years out of date.

[rich1231]

Pupp said:

So, how are you proposing to compensate those whose pension right you're proposing to diminish then?

How were those that had contributed inot private pensions when GB started taxing them?

[Durruti]

Pupp said:

So, how are you proposing to compensate those whose pension right you're proposing to diminish then?

Sorry to say Pupp, that the first thing would be to close all final salary schemes from new entrants with immediate effect. The second would be to negotiate with current stakeholders a reduction of entitlement on a sliding scale basis, ie if you are due to retire in the next financial year there will be a 10% reduction in payment, the following year a further 10% less for new retirees etc etc until the problem is gone.

I can't see a fair and equitable way of dealing with the problem, but the above would be more palatable than just drawing the curtain on the whole thing tomorrow. It would at least let people make some adjustment for the future.

There is no fair solution, but the problem will not go away.

What would you suggest?

[Pupp]

Durruti said:

What would you suggest?

Fund it. It's one of the few things that keeps people in public service.
We're worth it

[dilbert]

thehawk said:

Durruti said:

We need to accept that the downside of medical advance and higher average lifespans means that our retirement is likely to be longer and more expensive than ever in history and we must find a better way of planning and funding for the future.

We could also change the ageism in society and work longer too.

Marvellous idea.

All those young graduates on the dole, and an ageing poor working to the grave, whilst the old rich people dump their liabilities on everybody else's kids.

Gordon Brown, I despise you. You tell everyone it's all right, but you'll de dead by the time the st hits the fan. (Having had a butler, and transport on expense, for most of your fat-fecker life)

What really hate about you though Gordon, is that people suck up the rancid stool that comes out of your gob. Why on earth would they like you for spending other peoples money on schools and hospitals. It wouldn't be so bad, if the people that paid for them, actually got a bit of help now your crap is starting to unravel.

One day perhaps, you'll realise that your fking billions, are actually peoples sweat, toil and lives. The stuff that comes out of the stock exchange is just monopoly money. So if you dupe yourself, Gordon, our lives disappear. You wouldn't know about that though would you. You've never had it hard, and you do bugger all to get it.

Edited by dilbert on Sunday 25th January 00:19

[Sheriff JWPepper]

Durruti said:

What would you suggest?

How about you pay 10% more tax this year and then 10% more next year.

[voyds9]

thehawk said:

Durruti said:

We need to accept that the downside of medical advance and higher average lifespans means that our retirement is likely to be longer and more expensive than ever in history and we must find a better way of planning and funding for the future.

We could also change the ageism in society and work longer too.

The rest of us could work for longer to pay the pensions of those that think 25 years is a working life time.

[Durruti]

Pupp said:

Durruti said:

What would you suggest?

Fund it. It's one of the few things that keeps people in public service.
We're worth it

No, it's no longer tenable and I'll try to explain why I think that.

Once upon a time, it was true that public sector pay lagged private sector. However, over the last couple of decades this has slowly changed to the point that, in my town for example, the jobs to have would either be with the following.

County council. Borough council. Defra. Charities Commision. HMRC. NHS.

All of these employers offer very competitive salary packages and much greater job security in this neck of the woods than the private sector currently does. On top of this, you have to factor in such things as flexi-time, annual leave allowances, and much more lenient employer/employee relations (I know of two long term alcoholics who have held jobs with Defra for over a decade for example, and despite numerous run-ins and employer sponsored courses still retain their jobs today, despite the vodka bottles scattered around the building).

Whilst the final salary scheme was once the golden inducement to put up with the public sector ethos, and God knows I couldn't, realistically it is no longer the case. If all final salary schemes were stopped for new entrants tomorrow, are you seriously suggesting that the public sector would be unable to recruit?.

So that's the situation as I see it on a daily level, let alone trying to tackle the stupidity of the maths of the scheme that dictates, with demographic trends, that the liability will grow year on year forever regardless of whether we can pay it or not.

It doesn't add up. Literally.

Oh, and by the way, my wife is a nurse and a member of a final salary scheme. I still want them stopped. Madness cannot be acceptable because it's personally advantageous.

[Skipppy]

Pupp said:

Durruti said:

What would you suggest?

Fund it. It's one of the few things that keeps people in public service.
We're worth it

The public sector is bloated as it is. It has been suggested that the public sector could run on as little as 33% of the workforce it has at the moment. Meanwhile the private sector (which funds the public sector) is getting smaller and smaller.

Labour WILL NEVER cut back on the public sector workforce, so you're safe!

[dwilkie]

That's the thing - public sector work is generally underpaid compared to private sector job for job (I was earning £16k a year as a third level helpdesk engineer supporting 7,500 years) but the pension makes it more palatable. You scrap that, and you lose a lot of the people to the private sector.

The Police and the Armed Forces are never able to recruit enough people as it is. And so I'm not sure it's a good idea to take away one of their biggest incentives to be honest.

Edited by dwilkie on Sunday 25th January 00:21

[Plotloss]

dwilkie said:

You scrap that, and you lose a lot of the people to the private sector.

Seems fair.

The civil service is already MASSIVELY over staffed.

[supersingle]

Pupp said:

Durruti said:

What would you suggest?

Fund it. It's one of the few things that keeps people in public service.
We're worth it

Final salary pensions are a pyramid scheme. Like any pyramid scheme they will eventually collapse.

How will you feel if that happens just before you are due to retire?

[Durruti]

Plotloss said:

dwilkie said:

You scrap that, and you lose a lot of the people to the private sector.

Seems fair.

The civil service is already MASSIVELY over staffed.

If the public sector would like to make a mass exodus into the private sector at present then they are dafter than many would give them credit for. Welcome to job insecurity, mounting commercial pressure and general stress and worry. Oh, and of course, there are loads of companies hiring right now - Honda, Nissan, Catepillar, Woolworths, Zaavi, Land of Leather, Wincanton Logistics - just a few of many all crying out for more staff.

[fido]

dwilkie said:

That's the thing - public sector work is generally underpaid compared to private sector job for job (I was earning £16k a year as a third level helpdesk engineer supporting 7,500 years) but the pension makes it more palatable. You scrap that, and you lose a lot of the people to the private sector.

You're right it is very poorly paid. My sister earns about a third of what a contractor doing similar work can earn, and she works very hard. But even she admits that there is an incredible amount of waste in her department - they are currently making redundancies while bringing back retirees on contractor rates!