MSE News: Public sector pension benefits should be cut – report

Onyourcase

Andy_L wrote: »

The lump sum is tax free. The pension is taxed as if it were income so, unless your total income is over ~£38k it will only be subject to 20% tax

True, but remember tax rates can change. What is it they say "Past Returns are not an Indication of Future Performance " Same with pensions.

jamesd

Andy_L wrote: »

Unions should be on the side of all their members equally regardless of relative salary.

True but it's likely that the union leaders are going to be of higher than average incomes and would be losing more than typical members, so one thing to watch out for is relatively highly ranked union people advocating what's good for them rather than the more general membership.

It's rather nice for a change to have a case where the bosses might be getting less from some deal than the more general workers.

Andy_L wrote: »

However I suspect they think that the gov will use the change to career average to reduce the benefits to all rather than just share out pensions more equitably between different employees

No sign of that so far at least. RPI plus one percent is about right for earnings inflation - good enough that it's what I normally use to approximate it.

Still have to wait to see what the government does with it, though.

Stargazer57

will-in-estoril wrote: »

http://blogs.channel4.com/faisal-islam-on-economics/public-sector-pension-reform-a-recipe-for-strife/13859

Yes the comments are good too. I particularly enjoyed the young surgeon who complained that any move away from a final salary pension scheme (which for him probably requires a contribution rate of around 70% of pay) would lead to surgeons like him leaving the country. He is obviously a subscriber to the "We are all in this together as long as I don't have to join an average salary pension scheme" group.

Also the person who pointed out that if you tweak the assumptions you can make any graph slope downwards. Hutton's central assumption is that the proportion of the workforce employed in the public sector will decline at 0.25% a year for the next 50 years. Whilst this is a possible scenario I can't see why it is a better central assumption than assuming the public sector employment remains constant as a proportion of the whole.

Andy_L

jamesd wrote: »

True but it's likely that the union leaders are going to be of higher than average incomes and would be losing more than typical members, so one thing to watch out for is relatively highly ranked union people advocating what's good for them rather than the more general membership.

Union leaders (rather than reps) are usually employed by the Union not the public sector so would be unaffected by any changes

Andy_L

Stargazer57 wrote: »

Yes the comments are good too. I particularly enjoyed the young surgeon who complained that any move away from a final salary pension scheme (which for him probably requires a contribution rate of around 70% of pay) would lead to surgeons like him leaving the country. He is obviously a subscriber to the "We are all in this together as long as I don't have to join an average salary pension scheme" group.

Which is odd because medics' earning path (fast salary rises till they reach consultant then no real promotion related pay growth for the rest of their career) would be one of the least affected by the change

Thicko2

What is interesting is who is going to pay the extra 3% contributions on their pension as proposed by the con dems. They have ruled out the armed forces and hinted on the low pay as well excluded as well.

The irony of this its is the lack of employee armed forces contributions which make the 30bn a year to support public sector pension figures look so high.

It does make a mockery of the fairness of the situation to me. Currently the NHS scheme annually makes a net contribution back to the treasury of £2b - see hutton report. Armed forces have no employee contribution. So looks like us NHS'ers will be subsidsing the rest of public sctor even more.

I think i am really doing my part of we are all in it together for millionaire trust fund cameron and his buddies, no pay rises for 2 years, loss of child benefit, higher NI and 40% tax threshold changes and at least 50% higher pension contributions. Net impact i reckon about a 25% reduction in take home pay over the next 4 years. At the end of this i will be paying more to recieve less in the future on pension as well.

DO these fools in the lib dems think their natural consituency of middle class, caring people are going to vote for them again?

Thicko2

Andy - you forget the discretionary points and merit wards and extra p.a.. which can boost their salarys significantly at the end of their careers.

Andy_L

Thicko2 wrote: »

The irony of this its is the lack of employee armed forces contributions which make the 30bn a year to support public sector pension figures look so high.

For some archaic reason that probably made sense at the time, armed forces pay is abated before they receive it to reflect an employees contribution (currently about 6% IIRC) rather than making a deduction after they receive it.

Thicko2

THanks Andy - perhaps people who quote such figures should understand the facts rather than create such misleading info.

tocsin

Andy_L wrote: »

For some archaic reason that probably made sense at the time, armed forces pay is abated before they receive it to reflect an employees contribution (currently about 6% IIRC) rather than making a deduction after they receive it.

When I think about it... if pay is abated, the "final salary" will be less, and so will the pension - devious, innit