Time to start a thread on public sector pensions

vivatifosi

I was really surprised that this story isn't already being run with so thought I'd better start a thread:

http://www.guardian.co.uk/society/2011/mar/10/pension-reforms-public-sector-hutton

http://www.telegraph.co.uk/finance/personalfinance/pensions/8372704/Pensions-reforms-could-light-the-blue-touch-paper-for-strikes-GMB-leader-warns.html

Have given articles from both sides of the political spectrum for balance.

From the Guardian:

The plans, published in a 200-page document on Thursday, recommend:
• The normal pension age of 60 should increase to match the state pension age, which by 2018 will be 65 for men and women, rising to 66 in 2020. The changes should be brought in by the end of this parliament.
• The most generous schemes that link pensions to final salaries – the so-called "gold plated" versions – will be scrapped and replaced with payments based on career averages. Hutton said the system would be "fairer" compared with private sector pension schemes.
• Uniformed workers — including the armed forces – should not qualify for their full pensions until they are 60. Currently, the armed forces can draw a full pension after 22 years, and must retire at 55. They should get longer than the four-year target for other workers to make the changes.
• Ministers should get more powers to raise employee contributions if schemes are becoming unaffordable but there will be moves to protect the lowest paid from proposed increases in contributions.


And Telegraph:
The recommendations are in a landmark report, which was published this morning following a nine-month review. Should they be implemented, the Government has been told to expect an “exodus” of public sector workers now in their fifties, who could quit their jobs rather than be forced to work for 10 or even 15 years longer than they had planned.
Lord Hutton was asked to draw up plans for the future of public sector pensions, which have become increasingly unaffordable as life expectancy rises. He will sound the death knell for generous final salary schemes, which have largely disappeared in the private sector.
This morning Lord Hutton defended the proposals, telling BBC Radio 4's Today programme: "I want the system to be fairer, fairer to scheme members themselves and fairer to taxpayers obviously. I want the reforms to address the rising cost of these schemes. I want to make sure we can deliver adequate good quality retirement incomes for public servant and on a sustainable basis.
"If we go on along the path we are, which is basically to deny that costs are rising, to deny that there is rising life expectancy, and just assume we can carry on, we are heading for the rocks and I don't want that to happen."
Doctors’ leaders warned that thousands of GPs in their fifties would almost certainly retire rather than submit to the new system. A spokesman for the British Medical Association said: “The BMA believes that an increase in the normal pensionable age for existing NHS staff would be unacceptable, particularly so soon after the introduction of a new scheme to which both unions and employers agreed. There would be a real risk of a staff exodus, as doctors in their fifties – many of whom are eligible for voluntary early retirement – consider their futures.”
Employees in other services are likely to be equally opposed to the plans.
Civil servants can currently take early retirement at the age of 55, or 50 if they are in a scheme which closed in 2006 and have more than five years’ service.
Members of the “uniformed services” have traditionally been able to retire in their early fifties or even late forties, to reflect the physical burden of their duties.

abaxas

Since all pensions are based of age discrimination or legalised fraud.

Give it 10-15 years and we wont have to pay anyways. Morality/legislation always trumps contractual law.

kabayiri

Can I just ask.....what did we pay the Labour MPs to do for 13 years ?

They commission Frank Fields to look at the pension problem, then push him off to the sidelines when they don't like the answer.

Why has it taken until now for anybody to deal with the problem?

vivatifosi

The issue of retirement at 65 was dealt with by many private sector schemes in or around 1995, so we can blame governments of both shades for not addressing this before now.

I am a public sector worker at the moment and would point out that the new schemes still appear to be defined benefit, ie where the employer takes the risk, rather than defined contribution (the norm now in the private sector) where the employee takes the risk.

Generali

It doesn't really matter how you dice it. The UK Government (and in fact most Western Governments) aren't able to afford to pay what has been promised to state employees and the population at large in pensions and health care. Promises were first made when men weren't that likely to live a couple of years past the day they retired and women were unlikely to accrue a work pension at all.

Now at 65 a man has an average life expectancy of 17 years and a woman of almost 20 years in the UK (link) and that figure is constantly rising.

People are either going to have to save a lot more during their working life on average or work a lot longer. I know that people that do physical work probably can't work longer but they also can't afford to sit on their Aris for the last 20 years of their lives any more than Britain can afford for hundreds of thousands of dole bludgers to do the same.

This is true of people in the public and private sectors. The public sector has the bigger problem as the entirety of the Civil Service pension is unfunded. Those working in local Government and the private sector have at least partly funded pensions.

The Aussies have the right idea. Put everyone on defined contribution schemes and set up a fund to address the unfunded liabilities gradually. No other country in The West has a politician that I am aware of (except perhaps Frank Field and some Republican wing-nuts that happen to be right on this issue) that is even prepared to admit there's a colossal problem let alone actually come up with policies that will properly fix it.

ruggedtoast

Generali wrote: »

It doesn't really matter how you dice it. The UK Government (and in fact most Western Governments) aren't able to afford to pay what has been promised to state employees and the population at large in pensions and health care.

I dont care. I want my money.

As far as I can see everyone else in the UK gets money when there isnt enough money to give them, when I retire I want mine.

kabayiri

For me the problem extends beyond pure financials.

How do we encourage companies to employ people who are into their 50s and beyond?

I know people who have breached the 50 mark, and genuinely feel they are on the scrap heap. It's distressing to hear someone talk like that.

If we are not careful we are going to have a whole load of economically inactive people in their late 50s and beyond; another large set of young people in extended education / etc who are economically inactive at the other end, and a narrower set of people in the middle who are expected to pay for all this.

It's probably obvious but people should be encouraged to keep themselves both physically and mentally active when they approach retirement age. It will help reduce the state burden.

abaxas

ruggedtoast wrote: »

I dont care. I want my money.

As far as I can see everyone else in the UK gets money when there isnt enough money to give them, when I retire I want mine.

Since the money comes from the working populace.

It's their choice if they give it to you, not yours to take.

ILW

abaxas wrote: »

Since the money comes from the working populace.

It's their choice if they give it to you, not yours to take.

Where did you get that idea from?

ruggedtoast

ILW wrote: »

Where did you get that idea from?

State pensions are unfunded, in the sense that your NI and pension contributions now are used for paying pensioners today, not you tomorrow.

We're relying on a future generation to pay our pensions at the rate we agreed.

I still dont care. I want my money and I will have it.

HAMISH_MCTAVISH

abaxas wrote: »

Since the money comes from the working populace.

It's their choice if they give it to you, not yours to take.

Oh you can choose not to give it.

I think they call that..... "Tax evasion". Punishable by a jail term.