Fears council tax could rise because local government pensions 'are too generous'

CLAPTON

Generali wrote: »

Local Government pensions are pretty much fully funded. that's why they're expensive. Pensions cost a lot of money when the life expectancy for someone on retirement is 17 or 19 years (m/f).

Civil service pensions are completely unfunded and so are incredibly cheap until you come to pay them.

as any economist will tell you, pension payments to pensioners of unfunded schemes come from the current workers through taxes and their own contributions to pensions
payments to pensioners of funded schemes come from the current workers though company profit and their own contributions to pensions

whether or not they are cheap depends upon lots of factors like the level of benefits, the ratios of workers to pensioners etc and not really upon whether they are funded or otherwise.

Generali

CLAPTON wrote: »

as any economist will tell you, pension payments to pensioners of unfunded schemes come from the current workers through taxes and their own contributions to pensions
payments to pensioners of funded schemes come from the current workers though company profit and their own contributions to pensions

whether or not they are cheap depends upon lots of factors like the level of benefits, the ratios of workers to pensioners etc and not really upon whether they are funded or otherwise.

The argument seems to be about cashflow rather than total cost - in the short run funding a liability is more expensive than not funding it.

In the long run the costs are the same, you just find the money at different times.

chopperharris

I was just thinking about this , and the whole civil service pension thing.

Most of these workers are on less than half of what an mp is on , and work longer to get a pension.

They dont do several jobs ,or have paid for homes as a second income which they can flip as a profit.

Then when joe q retires he isnt young enough to get another job with a company , write a column for a paper or get fees for appearances , actually most of them will be dead by the time they reach whatever the new retirement age will be by then.

.....yet the mp are the people that make the decisions on pensions and benefits for the electorate , and are the same people that voted against preventing themselves from defradung the same electorate and want to vote to prevent those that pay their wages from ever finding out just how much defraduding they actually do..

Corrupt from the top down , you bet , and they have a cheek to say how despicable these things are when the managers at companies do the same.

bristol_pilot

This policy will initially result in savage downsizing of the public sector, followed by a realisation that the work still needs doing and the employment of large numbers of 'contractors' whose pensions are perhaps less generous than the public sector workers they replace but whose wages are 2-3 times as much resulting in an overall increase to the public purse. Most likely these people will be the same individuals. Maggie Thatcher came to that conclusion years ago which is why the Tories didn't implement such a policy when they were last in power.

andykn

bristol_pilot wrote: »

This policy will initially result in savage downsizing of the public sector, followed by a realisation that the work still needs doing and the employment of large numbers of 'contractors' whose pensions are perhaps less generous than the public sector workers they replace but whose wages are 2-3 times as much resulting in an overall increase to the public purse. Most likely these people will be the same individuals. Maggie Thatcher came to that conclusion years ago which is why the Tories didn't implement such a policy when they were last in power.

...and whose greater earnings will push up house prices.

LizzieS_2

CLAPTON wrote: »

as any economist will tell you, pension payments to pensioners of unfunded schemes come from the current workers through taxes and their own contributions to pensions
payments to pensioners of funded schemes come from the current workers though company profit and their own contributions to pensions

Unfunded pensions do indeed come from current contributions - in the case of public sector, current employee contributions are usually fixed and the taxpayer makes up the shortfall of payments due.

You are incorrect witht he funded schemes - employees do not pay towards current pensions (they are paying toward their own future pension), employers may pay extra if past assumptions have proved incorrect, but otherwise the fund is already there to meet the costs of paying current pensions.

Generali wrote: »

The argument seems to be about cashflow rather than total cost - in the short run funding a liability is more expensive than not funding it.

In the long run the costs are the same, you just find the money at different times.

Well the costs are the same if you invest the capital for future payments. Realistically that does not happen, therefore they lose the potential interest. This idea sounds as good as spending on credit cards and expecting to pay the same over 10 years if you only make minimum payments.

CLAPTON

LizzieS wrote: »

Unfunded pensions do indeed come from current contributions - in the case of public sector, current employee contributions are usually fixed and the taxpayer makes up the shortfall of payments due.

You are incorrect witht he funded schemes - employees do not pay towards current pensions (they are paying toward their own future pension), employers may pay extra if past assumptions have proved incorrect, but otherwise the fund is already there to meet the costs of paying current pensions.



Well the costs are the same if you invest the capital for future payments. Realistically that does not happen, therefore they lose the potential interest. This idea sounds as good as spending on credit cards and expecting to pay the same over 10 years if you only make minimum payments.

You miss my point about funded and unfunded schemes.

From the point of view of costs to the current generation of working people there is little to choose between funded and unfunded scehmes. One needs to consider the macroeconomic consequences of both schems to try to compare them.

Generali

CLAPTON wrote: »

You miss my point about funded and unfunded schemes.

From the point of view of costs to the current generation of working people there is little to choose between funded and unfunded scehmes. One needs to consider the macroeconomic consequences of both schems to try to compare them.

The problem for me isn't that so many state/civil service pension schemes are unfunded so much as the liability just isn't accounted for.

CLAPTON

Generali wrote: »

The problem for me isn't that so many state/civil service pension schemes are unfunded so much as the liability just isn't accounted for.

I'm not sure what you mean by its not accounted for ... obviously the revenue cost of actually paying the pensions is fully acounted for each year and in the forecasts

RabbitMad

bristol_pilot wrote: »

This policy will initially result in savage downsizing of the public sector, followed by a realisation that the work still needs doing ...

Actually I think the work doesn't need doing; or rather I think we can live with out it given the cost.

Do we need diversity officers at each local council. Obviously they do a job but is what they are prodcing worth it. Lets have a referendum on every single public sector employee's job and let the public decide if they are willing to pay for it.

Better still have a referendum on all public sector spending as its our taxes that pay for it.