90% Public Sector Final Salary Pension Meltdown Scandal

izzybusy23

Harry_Powell wrote: »

Perhaps the "real human beings" are the ones who would prefer their tax monies to be shared equally and fairly between all pensioners, rather than just those who have worked in the public sector?

People have a choice whether to work in the private or public sector, but most choose private as it hasn't got a stigma attached to it. So why on earth should public sector employee's feel that their tax monies should be shared equally and fairly to all pensioners, when everybody had a choice who to work for? If you think the LGPS is gold plated and that folk are so hard done by working for the private sector then join the public sector, instead of harbouring a grudge. Simple really.

izzybusy23

Harry_Powell wrote: »

Do all public sector employees contribute to their pension plans? If yes, then does anyone know how much?

(I thought I'd try a different tack and rather than just have a backwards and forward argument between entrenched positions, I'd like to gain a bit of knowledge here)

I contribute 5.9% towards my pension... I think the top end of the scale contribute 7.5%

Pennywise

ruggedtoast wrote: »

A pension is a benefit. The same as a company car, health care, gym membership or anything else. Traditionally public sector jobs have paid poorly but had decent holiday and pension benefits which has offset this to some extent.

I don't disagree as regards the past, but for the past decade or so, public sector wages have increased ahead of private sector. Unfortunately, the Government forgot that this would impact on the level of pension due to them, i.e. a lot of those retiring now have pension based on final salary and not average career earnings, so a 10% increase in wages over the last few years equates almost directly to a 10% increase in pension.

I've seen a similar effect in action - in one case, a fireman spent almost all his working life "on the pumps", at sub-officer level (i.e. in charge of the fire engine) as he loved the action end of the job and hated the thought of desk work. He'd done the courses though and had "qualified" for more senior managerial roles- he just never applied for the jobs. As retirement approached, he applied and got a station officer's job, and then after a year or so, applied and got a Asst Div Officer's job, at substantially higher pay than before. He only stayed in the higher job for 2 years then retired on a pension based on the final earnings, which were something like 40-50% more than his previous lifetime average earnings. He admitted he'd only done it to get a far better pension and hated his managerial role but he was just playing the game. That's completely wrong and should have been stopped years ago. I think it's now either been stopped or is being phased out thank goodness.

I don't blame the workers for taking advantage of their public sector pensions. I put the blame firmly at the door of the government who woefully failed to appreciate the problem and hadn't the balls to stand up to the powerful public sector unions. The whole problem could have been avoided had steps been taken to mitigate the problems years ago - it would have been relatively easy to phase in slight reductions in pension entitlements over time that wouldn't hit people quite so badly. As it is, as always, it's been left too late and now there is no other way but to have some fairly severe pruning back which will hurt people. Ignoring the rights and wrongs, the pensions aren't affordable - the public sector pensioners will have to share the pain - either by reduced pensions or by higher taxes on their pensions - they are living in a dream world if they think they'll be sitting pretty and not be affected.

bigheadxx

Sir_Humphrey wrote: »

A "thanks" for a reasoned argument. Unfortunately, it is entirely erroneous as to do what you suggest would involve tearing up contract law.

The Tories have already stated that existing entitlements are safe. They are telling the truth on that as unilaterally rewriting a contract (with retrospective effect) is a breach of the rule of law. The same precedent would apply to private sector workers, or indeed any form of Capitalist transaction. Not gonna happen.

Happy to see Trident and ID cards go.

Reducing benefits simply externalises costs as the resultant increase in poverty related crime would increase insurance premiums. Cuts in actual services just means people pay for the services out of their paycheck rather than thorugh taxes. Whether that is better is an ideological argument on how society spends, not on whether society spends.

Of course, we could just stabilise debt at 80% of GDP, like more successful economies such as Germany, or Britain during the 19th Century.

If debt is the number one priority, then taxes will go up. If taxes are number one priority, the debt will not be reduced. Simple as.

Contract law is pretty irrelevant when we are talking about the long term viability and stability of the country. Borrowing to sustain spending makes no sense whatsoever as the interest (and capital at some point) repayments have to be met from tax revenues in the future. This means sustained lower levels of spending for a prolonged period rather than a short sharp shock.

This government is the bloke down the pub, appears to be doing very well, big house, new car, exotic holidays etc. Unfortunately all paid for by credit card/house remortgage and there is inevitably a short sharp shock for the individual as creditors demand payment and property prices fall, he will have to make immediate changes to survive and so too will the state.

andygb

kabayiri wrote: »

2 people on the 'Tonight' program a while back (during the good years!).

Person A is a 28 yr old bloke; Person B is 44.

Both wanted to know what to save Pension-wise to achieve a modest 15K pa income.

Person A was told : 250 a month; Person B was told 440.

Both laughed and said it aint gonna happen. They were normal working blokes, and didnt have that level of disposable cash.

Herein lies a big issue.....a lost generation who feel disenfranchised from the whole pension process. Somehow, they need to be enticed back into some sort of savings arrangement. I doubt the answer is glossy government advertising on TV either....

Excellent illustration of why people are as you say "disenfranchised". I could have been person "B" at aged 40, where I was advised to up my contributions from £300 to £450 per month in order to achieve a similar sum. I just shook my head and walked away. That particular plan, which I paid into for six years is worth virtually nothing, despite it being mixed fund investment, and not high risk.

Sir_Humphrey

bigheadxx wrote: »

Contract law is pretty irrelevant when we are talking about the long term viability and stability of the country. Borrowing to sustain spending makes no sense whatsoever as the interest (and capital at some point) repayments have to be met from tax revenues in the future. This means sustained lower levels of spending for a prolonged period rather than a short sharp shock..

LOL. How stable do you think the country would be without the rule of law? Do you think the government would stop at accrued pension rights if it just decided it could ignore the rule of law just when it became inconvenient?

bigheadxx wrote: »

This government is the bloke down the pub, appears to be doing very well, big house, new car, exotic holidays etc. Unfortunately all paid for by credit card/house remortgage and there is inevitably a short sharp shock for the individual as creditors demand payment and property prices fall, he will have to make immediate changes to survive and so too will the state.

With respect, the govt is in effect borrowing 80% of gross income at 1-2%, whereas even a sensible mortgage is 350% of gross income at 6%. And the government has an indefinite amount of time to make the repayments. All this makes that a completely false analogy.

I think you need to get a basic understanding of how these things actually work.

Generali

Old_Slaphead wrote: »

Personally, I don't have too many issues with the lower paid getting some help with pensions - it's the legions of mini public sector 'fat cats' (ie doctors, police chiefs, MPs, judges, LG director, quango chiefs etc etc) with their million pound plus pension pots largely built up from the taxpayer that I object to.

I have no problem with any of these people building up pensions at the taxpayers' expense. I have a problem with them being promised a pension and then assuming that another generation and Government will make good on that promise.

The current generation benefits from current public servants so should pay their pensions as well as their salaries. Why should our kids pay the pensions of the servants we used?

Oldernotwiser

kabayiri wrote: »

2 people on the 'Tonight' program a while back (during the good years!).

Person A is a 28 yr old bloke; Person B is 44.

Both wanted to know what to save Pension-wise to achieve a modest 15K pa income.

Person A was told : 250 a month; Person B was told 440.

Both laughed and said it aint gonna happen. They were normal working blokes, and didnt have that level of disposable cash.

Herein lies a big issue.....a lost generation who feel disenfranchised from the whole pension process. Somehow, they need to be enticed back into some sort of savings arrangement. I doubt the answer is glossy government advertising on TV either....

But is 15K a "modest" income when many people currently earn less than that?

Surely by setting the required income that high you just make it unattainabe for many people and they give up. If you set more realistic targets then more people might be prepared to work towards them.

Old_Slaphead

andygb wrote: »

Excellent illustration of why people are as you say "disenfranchised". I could have been person "B" at aged 40, where I was advised to up my contributions from £300 to £450 per month in order to achieve a similar sum. I just shook my head and walked away. That particular plan, which I paid into for six years is worth virtually nothing, despite it being mixed fund investment, and not high risk.

If you'd being paying net contribs of £300pm into a mixed fund pension scheme for 6 years and it's worth 'virtually nothing' then you've been stitched up big time....fund value should be £30-40,000. If you'd paid into Equitable, like I did, I could understand your dismay.

However, the annuity payable from such accumulated funds have been going down rapidly over the past few years which supports your overall sentiments ie what a poor deal private pension provision is these days

Generali

Old_Slaphead wrote: »

If you'd being paying net contribs of £300pm into a mixed fund pension scheme for 6 years and it's worth 'virtually nothing' then you've been stitched up big time....fund value should be £30-40,000.

However, the annuity payable from such accumulated funds have been going down rapidly over the past few years which supports your overall sentiments ie what a poor deal private pension provision is these days

If you're paying into a defined contribution private sector scheme then you know what's going in and you can hope to control what you'll get out, subject to the vicissitudes of the markets.

If you're a member of the Civil Service pension scheme then money is taken from your pay in return for a promise that someone in the future will pay your pension. What happens if my kids don't fancy paying for the services my parents consumed?