Local government pensions and the Tories

barny_100

A_Nice_Englishman wrote: »

The OP was talking about the Local Government Pension Scheme (LGPS). This is NOT unfunded. Local government employers and employees (yes, they pay towards their pensions) are putting enough money aside to meet future liabilities.

Barny will be pleased to know that benefits in the LGPS have already been worsened. In my case it means I will have to work another 5 years.

Hmmm - an index-linked final salary pension scheme for costs of only 5.5-7.5% of your salary? Something doesn't add up!

http://business.timesonline.co.uk/tol/business/industry_sectors/public_sector/article5956101.ece

The deficit run by local government pension schemes in Britain is estimated to have ballooned to £100 billion, more than twice the latest officially stated figure.
.......
He said that the real pension benefit for local government employees was 24 per cent of salary, against the officially stated rate of 14 per cent. That means an average council employee is 16 per cent better off than a private sector worker on the same salary.

:rolleyes:

Former_Spice

barny_100 wrote: »

In my book this would be a vote winner, a massive one for me personally actually. Unaffordable and unfunded pensions for public sector workers are a massive issue. In my opinion they have to be stopped ASAP, it's happened in the private sector and within T&C's should happen in the public sector.

As to what they will do? You'll have to ask George O!

They ARE funded. The 6-7.5% taken out of employees salaries goes into a fund to pay for it along with (sometimes) an employer contribution. Should local government employees lose the five figure sums that have already earnt and paid into a fund?

Former_Spice

Cook_County wrote: »

I would not think anything is guaranteed. Retirement ages we had all been planning towards previously have been deferred historically & we may see such changes in the future. Equally the trustees of underfunded schemes (most - including many government employers) may need to cut inflation increases or take other measures if they don't have enough dough.

Yes this would be a vote winner. Why are public sector pensions largely still gold plated?

Local government pensions average at £3800. Do you really think that is 'gold plated'?

barny_100

Former_Spice wrote: »

They ARE funded. The 6-7.5% taken out of employees salaries goes into a fund to pay for it along with (sometimes) an employer contribution. Should local government employees lose the five figure sums that have already earnt and paid into a fund?

Stop saying they are funded. That indicates the taxpayer is not liable for the entire deficit. Contributions are made but in return you get a guaranteed index-linked final salary pension. That is absolutely gold plated in the pension world and would cost a hell of a lot more than 5.5-7.5% to get if you were in the private sector.

In conclusion you have had it good so please have the grace to accept a more affordable arrangement going forward. I absolutely agree that whatever has been accrued so far must be paid. I'm not into retrospective action as it is not on but the next (Conservative) Government needs to make big changes for the good of the nation rather than the good of the public sector worker.

I don't wish to come across as knocking individuals working in the public sector, my opinions are all about the system. However the facts are things need to change.

barny_100

Former_Spice wrote: »

Local government pensions average at £3800. Do you really think that is 'gold plated'?

The amount is irrelevant, the issue is how much do people pay in and what do they get out. Index-linked, final salary pension schemes are basically dead in the private sector so in comparison the LGPS and many of the other public sector schemes are "gold-plate.

Former_Spice

barny_100 wrote: »

The problem is that is a myth thanks to the 12 years of Labour.

From: http://burningourmoney.blogspot.com/2009/04/grasping-public-sector-pay-nettle.html using official Gov.Stats

There is a lot of nonsense on this thread.

Several problems come to mind.

1. The jobs that get privitased, contracted out are the low paid ones. Of course doing that will change the average public, private sector pay.

2. That is not a like for like comparison of the same job.

3. Private sector pay packages from near the bottom to the top include other benefits. Sales commision (e.g in call centres), bonuses, company cars etc which are not taken into account in this.

Former_Spice

barny_100 wrote: »

Stop saying they are funded. That indicates the taxpayer is not liable for the entire deficit. Contributions are made but in return you get a guaranteed index-linked final salary pension. That is absolutely gold plated in the pension world and would cost a hell of a lot more than 5.5-7.5% to get if you were in the private sector.

In conclusion you have had it good so please have the grace to accept a more affordable arrangement going forward. I absolutely agree that whatever has been accrued so far must be paid. I'm not into retrospective action as it is not on but the next (Conservative) Government needs to make big changes for the good of the nation rather than the good of the public sector worker.

I don't wish to come across as knocking individuals working in the public sector, my opinions are all about the system. However the facts are things need to change.

To suggest that it's guaranteed is ridiculous. Already been reduced by a quarter for those that ask for their money back at 60. This effects money already earnt and paid into the fund.

barny_100

Former_Spice wrote: »

3. Private sector pay packages from near the bottom to the top include other benefits. Sales commision (e.g in call centres), bonuses, company cars etc which are not taken into account in this.

They are: "figures relate to full-time gross pay, including bonuses".

This may or may not be of interest for people trying to understand the basic differences in pensions and why the term "gold-plated" is used: http://burningourmoney.blogspot.com/2008/02/public-sector-pensions.html

A_Nice_Englishman

barny_100 wrote: »

Hmmm - an index-linked final salary pension scheme for costs of only 5.5-7.5% of your salary? Something doesn't add up!

http://business.timesonline.co.uk/tol/business/industry_sectors/public_sector/article5956101.ece



:rolleyes:

If you take a snapshot of a funded scheme at any particular time it will be either over- or under-funded. Falling equity values and very low interest rates like we have had recently will tend to produce a deficit on paper. It's the long term funding position which is important.

If the LGPS was overfunded, would you argue that money put aside to meet future liabilities had been wasted?

And if taxes did have to rise, who do you think the burden would fall on? Yep, those with 'gold plated pensions' who in any case will have to pay for those who have been unable or haven't bothered saving for their old age and will rely on free social housing and benefits.

barny_100

A_Nice_Englishman wrote: »

If you take a snapshot of a funded scheme at any particular time it will be either over- or under-funded. Falling equity values and very low interest rates like we have had recently will tend to produce a deficit on paper. It's the long term funding position which is important.

If the LGPS was overfunded, would you argue that money put aside to meet future liabilities had been wasted?

The deficit existed before those events - they have compounded it:

The_Times wrote:

....was valued two years ago, when its deficit — the scheme's liabilities minus its assets — was reported to be £23 billion. However, that deficit rises to £45 billion when restated under the recently adopted FRS 17 pensions accounting standard, and to about £80 billion when the subsequent 20 per cent fall in the FTSE 100 and increase in liabilities from new pension promises are taken into account.

And yes the long term funding position is important, unfortunately it's not too hot:

The_Times wrote:

Although the Government makes an annual £5 billion cash contribution to the LGPS, that is sufficient only to cover the regular cost of new pension commitments and leaves nothing to reduce the deficit, Mr Ralfe said.

If it was overfunded I would say great, as long as that funding didn't just come from Government coffers of course. However seeing as the scheme is guaranteed to pay out and is backed by the Government the taxpayer had better hope the stock market does very well for many years to make up the deficit. Unfortunately with the levels of government debt and the likelihood of higher taxes to pay for it economic growth is unlikely to storm ahead. With that in mind a booming stock market seems less likely doesn't it?

A_Nice_Englishman wrote: »

And if taxes did have to rise, who do you think the burden would fall on? Yep, those with 'gold plated pensions' who in any case will have to pay for those who have been unable or haven't bothered saving for their old age and will rely on free social housing and benefits.

I don't understand this - those of working age in the private sector are likely to be hardest hit, obviously public sector workers will be hit by any tax rises etc but due to the pension issue it's a double whammy for the private sector worker.