Black hole within black hole

macaque_2

Inflated public sector pensions were bad enough at the best of times. It now appears that mismanagement by bungling council chiefs (on their £240k salaries) has wiped out the pension funds.

Local authorities are facing a £50bn shortfall in their pension pots after investing taxpayers' money in shares and hedge funds, including Bernard Madoff's failed scheme.

The scale of the potential bail-out lays bare the extent to which council chiefs have taken risks with taxpayers' money to shore up retirement funds.

http://www.thisismoney.co.uk/news/article.html?in_article_id=480272&in_page_id=2&ito=1565

Generali

macaque wrote: »

Inflated public sector pensions were bad enough at the best of times. It now appears that mismanagement by bungling council chiefs (on their £240k salaries) has wiped out the pension funds.





http://www.thisismoney.co.uk/news/article.html?in_article_id=480272&in_page_id=2&ito=1565

No worries macaque. The Government can either borrow the money without screwing the next generation or they can quantatively ease their way out of the problem without screwing the current one. So they tell us at least.

£50,000,000,000 really is nothing at all compared with the deficit at Central Government level. That's £1,000,000,000,000, 20x more!

Former_Spice

Local council pensions aren't 'inflated', they average at £3800. Care home staff, dinner ladies, binmen are not well paid and their aren't many council officials.

You also appear to be making the ridiculous assumption that's it's taxpayers money only that has been lost. A large chunk of it is the contributions (up to 7.5% of pay) paid by staff out of the their own salaries as well as money than has been transferred into it from staff that had a pension set up before starting there.

Where do you get the idea that taxpayers will make up the shortfall? It's just as likely that staff will pay more out of their salaries to make it up (already happened once), will be told to work longer so that there is more money going into the funds and less out (already happened once) or somebody will make up a silly excuse to knock a further quarter off (already happened once).

However, it is invested there will always be a way to criticise and the people who adminster the funds are almost certainly seperate from those who pay into them.

Former_Spice

'Councils known to have invested retirements funds in Madoff's scheme include Dorset, which put in £2m, Hampshire (£7.1m), Merseyside (£2m) and Clwyd (£1.9m).' between 3.5 million people.

That's all of £3.71 per council employee or 22p per head of population.

Generali

Former_Spice wrote: »

You also appear to be making the ridiculous assumption that's it's taxpayers money only that has been lost. A large chunk of it is the contributions (up to 7.5% of pay) paid by staff out of the their own salaries as well as money than has been transferred into it from staff that had a pension set up before starting there.

Where do you get the idea that taxpayers will make up the shortfall? It's just as likely that staff will pay more out of their salaries to make it up (already happened once), will be told to work longer so that there is more money going into the funds and less out (already happened once) or somebody will make up a silly excuse to knock a further quarter off (already happened once).

Local council employees have a chunk taken off their pay check which then becomes a part of their (index linked, defined benefit) pension fund. If the stock market falls or rises AIUI (as the son of a teacher) there is no difference in the pension the council employee receives.

Is that not the case (although there was a one off change in terms that partially reflected the fact that people are living longer into retirement and so perhaps the retiree should bear some of that cost as well as the taxpayer)?

At present, IMO, local Government employees have by far the best pension scheme. Central Government will raid it. That'd be something worth striking to prevent IMO as they'll be trying to take £100,000 off each 'normal' full time employee (ie exclude the juniors/pt and the top bosses) I guesstimate.

Generali

Former_Spice wrote: »

'Councils known to have invested retirements funds in Madoff's scheme include Dorset, which put in £2m, Hampshire (£7.1m), Merseyside (£2m) and Clwyd (£1.9m).' between 3.5 million people.

That's all of £3.71 per council employee or 22p per head of population.

Add on to that the fall in the FTSE of 45%++.

Old_Slaphead

The article suggests a potential further loss of £50bn - that's £15.000 per public sector employee.

Still, no problemo, scheme is indemnified by good ol' taxpayer so won't cost public sector peeps a penny (apart from a bit of extra tax)

StevieJ

Generali wrote: »

Add on to that the fall in the FTSE of 45%++.

Hey Gen I saw that local (to you) Mardi Gras on Bloomberg last night, very tasteful

Generali

StevieJ wrote: »

Hey Gen I saw that local (to you) Mardi Gras on Bloomberg last night, very tasteful

They're not that in to Mardis Gras out where I live. I'm really in red neck territory (or at least the start of it).

Westies? Love 'em.

Shouldn't Mardis Gras be on a Tuesday anyway?

Jennifer_Jane

Why, oh why, are councils putting money into Icelandic Banks and Madoff schemes! Who has advised them to do this, and why aren't those people named and shamed. If I can look after my own money better than that, why can't the Councils use the public's money properly?

After years of Libdem financial mismanagement (and I am a Libdem supporter in general), the Conservatives took over our Council, and brought some financial discipline, and into profit. Now with a lack of 'prudence' the Councils have wasted huge amounts of money.

Jen
x

macaque_2

Former_Spice wrote: »

Local council pensions aren't 'inflated', they average at £3800. Care home staff, dinner ladies, binmen are not well paid and their aren't many council officials.

You also appear to be making the ridiculous assumption that's it's taxpayers money only that has been lost. A large chunk of it is the contributions (up to 7.5% of pay) paid by staff out of the their own salaries as well as money than has been transferred into it from staff that had a pension set up before starting there.

Where do you get the idea that taxpayers will make up the shortfall? It's just as likely that staff will pay more out of their salaries to make it up (already happened once), will be told to work longer so that there is more money going into the funds and less out (already happened once) or somebody will make up a silly excuse to knock a further quarter off (already happened once).

However, it is invested there will always be a way to criticise and the people who adminster the funds are almost certainly seperate from those who pay into them.

As I suspected, this is a load of tripe. Private sector pension schemes have average equity holdings at around 53%. Public sector schemes by contrast have average equity holdings of 62%. In a few cases, they are over 90%. It turns out that the public sector take these risks because the liabilities are underwritten by the tax payer. According to a chap on the TV tonight, there will have to be huge hikes in council taxes in some areas to make good the damage done by these bafoons.