cleggeron corporate tax cuts

bioboybill

Thrugelmir wrote: »

Um. What's the states contribution?

I've spent my life in the private sector personally contributing 10% -15% of salary to a personal pension plan for the a majority of the past 25 years. But my pension projection even now falls far short of friends who work in the Public Sector. Who as you say have to only contribute 6% - 7%. There is a real disparity.

I'm not sure in percentage terms, but it's 1.7% of GDP, so obviously it's quite a bit, but what I'm saying is that our pensions are certainly not free.

We know that something has to be done to close the blackhole but we have accepted changes to our scheme in the last year or so which make the scheme worth less to us. My fear is that the public sector will be made a scapegoat for this recession and our pensions will be slashed.

I am the first to admit that there are some ridiculous wages in senior management at times, but i just ask people on here not to tar all public sector workers with the same brush.

As for your pension and how it compares with others. Well I can't comment since I don't know what your scheme provides, but I can tell you one thing. There is no way I can afford to retire early on my pension, since it won't be enough.

lemonjelly

Kohoutek wrote: »

It's because the government wants to have a sustainable recovery based on more private sector investment and jobs. Do you think the other way round (higher public spending paid for by higher business taxes) would be better?

I'm thinking that the private sector should be rolling its sleeves up & looking at how it too can join in to resolve this situation.

What each private sector institution appears to be doing though, is looking after its own margins. Nothing else.

Kohoutek

lemonjelly wrote: »

I'm thinking that the private sector should be rolling its sleeves up & looking at how it too can join in to resolve this situation.

Well it's very difficult for the private sector to expand when access to credit is still substantially lower than before the credit crunch - in fact, credit availability to businesses is contracting at the moment, not expanding.

A completely different situation to the public sector, which has the power of taxation and borrowing very cheaply. I suppose the lack of credit may be one of the reasons why the government thinks that lowering corporation tax is an appropriate means of stimulating private investment and job creation.

lemonjelly wrote: »

What each private sector institution appears to be doing though, is looking after its own margins. Nothing else.

The directors of companies have fiduciary obligations to act in the best interests of shareholders - unfortunately it's inherent to the nature of the private sector that it will 'look after itself'. I dare say the public sector looks after itself too - like the PCS Union strike over a contract variation leaving them with 'only' two years redundancy pay.

Thrugelmir

bioboybill wrote: »

I'm not sure in percentage terms, but it's 1.7% of GDP, so obviously it's quite a bit, but what I'm saying is that our pensions are certainly not free.

We know that something has to be done to close the blackhole but we have accepted changes to our scheme in the last year or so which make the scheme worth less to us. My fear is that the public sector will be made a scapegoat for this recession and our pensions will be slashed.

I am the first to admit that there are some ridiculous wages in senior management at times, but i just ask people on here not to tar all public sector workers with the same brush.

As for your pension and how it compares with others. Well I can't comment since I don't know what your scheme provides, but I can tell you one thing. There is no way I can afford to retire early on my pension, since it won't be enough.

I will limited by what my fund value buys me when I finally retire. I'm not anti public sector pensions either by the way. To me whether the employer funds a pension scheme is part of the overall remuneration package. It may not be cash to spend today but has a considerable value if its pay inflation linked.

Not sure that the public sector is being made a scape goat. Last year one Company I work for imposed an 8% pay cut across the board ( in exchange working hours were reduced), and froze pay for the whole of 2010. Without doing so finances would have been severely stretched as the bank reduced the Company's borrowing facility. All in all the exercise was fairly painless. As employees are all fairly treated and prefered being in work to no work. The Company has continued to trade and and is in a good position to weather whatever the future brings. Last year public sector pay was still rising. If it wasn't for the election action would have occured well before now.

Thrugelmir

lemonjelly wrote: »

I'm thinking that the private sector should be rolling its sleeves up & looking at how it too can join in to resolve this situation.

What each private sector institution appears to be doing though, is looking after its own margins. Nothing else.

Have you ever worked in the private sector? I wish it was as simple as maintaining margins.

princeofpounds

I'm also a bit annoyed at some people on here who think that public sector workers are getting free pensions whereas those in the private sector pay for theirs. I have been paying 6% (and now 7%) of my wages into my pension for 25 years. No nice free pension here.

Local Government employers used to make a matching contribution, but under Thatcher there was a surplus in the fund, so employers decided to temporarily suspend their contribution. When the stockmarket crashed and the surplus disappeared employers refused to start contributing again. Even now that some councils have large surpluses they refuse to contribute.

Actually, many people in the public sector ARE getting exceptionally generous pensions. You are right in one regard though - the council pension schemes are actually not the real problem. They have been contributory for a long time and the deficits in those schemes is only a few hundred million pounds. Painful, but it can be dealt with.

It is all the other pension schemes that are crippling. Army, police, MPs, in particular the NHS, teachers etc. These schemes are unfunded to the tune of about £1 trillion. Yes, you read that right.

When I say unfunded, they are funded in the make-believe world of public sector accounting. The government underwrites them with a promise of future tax receipts, but not with cash or other real investments. This is not entirely illogical, as government borrowing (effectively, the government is borrowing this money by issuing one big IOU) is a cheap source of financing, but it raises a massive problem...

It has been possible for the taxpayers of the last generation to pay low salaries to public sector workers by compensating them with high pension promises (many of the schemes were somewhat contributory, but the promises were such that employee contributions should have been in the 20% range to fund the scheme, not the 5% range).

The cunning part of this is that the low salaries meant that taxes could be kept low throughout this generation as the demands on cash were low. However, now that the government has finally reached a limit on its obscene borrowing binge and the older generation are retiring and leaving a shrinking workforce behind, the bill now needs to be paid. Conveniently, the people that set the rules of the game and benefitted from it are now stepping away from taxable employment, or at least have earnt most of their wealth by now.

It presents a very difficult situation. Older people will rightly claim that they had a legal contract that shouldn't be broken and that the money must be found somewhere. But younger people will also rightly claim that they are being forced to pay for a contract which they never had any part in 'signing' and was constructed to be as disadvantageous to them as possible.

So you have a severe case of intergenerational inequity, and no possibility of a fair outcome for all. Of course the really fair thing to do would be to go back to the taxpayers of the last 40 years and demand they stump up the difference, but that is clearly impossible.