90% Public Sector Final Salary Pension Meltdown Scandal

Sir_Humphrey

Harry_Powell wrote: »

You can provide financial incentives to encourage staff to change their terms & conditions, you can create new contracts for new employees and you can close Final Salary schemes to new and existing members, while retaining existing pension benefits.

It's not an empasse, it just needs a strong leader and strong party who are determined to get the changes through, no matter what.

It is the existing accruals I am arguing about, which is exactly why it will take decades before this produces any actual savings (and even claiming it would produce savings means pretending that market forces have no influence on public sector wages). It perfectly possible to switch my future pension to career average, although as I said all that will do is force up wages. Cameron made a t!t of himself when he suggested a money purchase scheme, no-one would work for the government if that happened, (unless there were huge pay rises or they were corrupt and had other ways of topping up their income)

The point is that swinging the axe will increase the deficit even further in the period of time we are talking about, whereas raising taxes will not.

Generali

Sir_Humphrey wrote: »

Sorry, I misread your original quote.

Future entitlements have already been cut, all new civil servants are on career average pensions now. Of course, that now removes the only major financial incentive for older civil servants to gain promotion, so in the longer run I expect this to increase wage stratification in the civil service (i.e. push up wages with wider gaps between grades).

But my point is this: we are arguing about cutting the current deficit, and even if I were switched to a career average tomorrow, savings (if any) will not appear for decades.

Civil Servants can be made compulsorily redundant, at a price.

It always amuses me that free marketeers think that the public sector can magically buck the employment market. LOL!

What I expect to happen is an increase in pension contributions from civil servants, as Vince Cable proposes.

AFAIK, nobody has discussed bucking the employment market. Clearly, the public sector competes for workers with the private and charity sectors. What has been discussed is making people redundant as their salaries can't be afforded by the UK.

Out of interest, what would you do to sort out the public finances or do you feel that a one-off jump of the stated deficit to 80+% of GDP is worthwhile given the rather nasty circumstances the world's economy finds itself in? If the latter do you envisage the deficit remain at the elevated level or would you like to see the deficit paid back down again as the economy (hopefully) improves?

Sir_Humphrey

Generali wrote: »

AFAIK, nobody has discussed bucking the employment market. Clearly, the public sector competes for workers with the private and charity sectors. What has been discussed is making people redundant as their salaries can't be afforded by the UK.

Out of interest, what would you do to sort out the public finances or do you feel that a one-off jump of the stated deficit to 80+% of GDP is worthwhile given the rather nasty circumstances the world's economy finds itself in? If the latter do you envisage the deficit remain at the elevated level or would you like to see the deficit paid back down again as the economy (hopefully) improves?

I think having a jump to 80% of GDP (one off) is getting off lightly. Last time we got in this sort of pickle, we had a higher % and a World War. I know which I would prefer.

The costs of paying down the debt is simply too high in terms of lost potential output and wasted human potential. There is no need to pay it down quickly.

My worry for the UK is how the economy will recover. If the Tories are serious about cutting debt now, they will simply crash the economy again, and push up the national debt further. In other words they will do exactly what the Japanese government did in the early 1990s.

BTW based on chatting to a reliable source, I suspect the free marketeers will be disappointed with Cameron. One of their policy consultants (Dieter Helm) advocates publically provided monoline insurance. You heard it here first!

ruggedtoast

I have a public sector friend who also has a final salary pension , and she also works for the final salary pension people, thereby getting a final salary pension for handing out final salary pensions (I can hear the sound of blood boiling as I type).

Anyway - she says the problem with the fund isnt really the regular joes, as the books balance if you average out payments against contributions over a normal career, followed by how long people live on average.

Its the people at Director level who are virtually bankrupting the scheme.

Basically they seem to have all got together and arranged a cosy little arrangement whereby all these already very senior people manage to obtain stellar promotions less than a year before they retire.

That means they in some cases double their pension entitlement based solely on their last few months salary payment.

As usual those people will still be rich and giving eachother a leg up on another gravy train long after the final salary schemes are closed.

mewbie_2

ruggedtoast wrote: »

Its the people at Director level who are virtually bankrupting the scheme.

Basically they seem to have all got together and arranged a cosy little arrangement whereby all these already very senior people manage to obtain stellar promotions less than a year before they retire.

That means they in some cases double their pension entitlement based solely on their last few months salary payment.

As usual those people will still be rich and giving eachother a leg up on another gravy train long after the final salary schemes are closed.

Happens in the private sector too. Equally wrong, equally ripping off the workers down below.

Sir_Humphrey

mewbie wrote: »

Happens in the private sector too. Equally wrong, equally ripping off the workers down below.

This is the heart of the matter, and why, despite the UK economy being light years ahead of the 1960s in terms of per capita GDP, technology and productivity, seems to be gradually providing worse outcomes for the majority of working class and middle class citizens.

StevieJ

Harry_Powell wrote: »

As an economy and therefore private enterprise grows, there has to be a corresponding growth in the public sector to support it .

Looks like we could have GDP growth Q3 does that mean we will see a growth in public services :eek:

StevieJ

Sir_Humphrey wrote: »

This is the heart of the matter, and why, despite the UK economy being light years ahead of the 1960s in terms of per capita GDP, technology and productivity, seems to be gradually providing worse outcomes for the majority of working class and middle class citizens.

Good to see you back posting , where have you been?

Sir_Humphrey

StevieJ wrote: »

Good to see you back posting , where have you been?

Working damn hard!

I don't expect to be posting here regularly BTW, just having a quiet day today (first in ages).

chewmylegoff

Sir_Humphrey wrote: »

Cameron made a t!t of himself when he suggested a money purchase scheme, no-one would work for the government if that happened, (unless there were huge pay rises or they were corrupt and had other ways of topping up their income)

i love this argument - as if the 6,000,000 people employed in the public sector would just up sticks and leave. where would they go?

if the people who are only staying there for the pension benefits all left, that would probably be a good thing.