Unacceptable pensions divide?

whambamboo

ReportInvestor wrote:

Didn't have you down as a Grauniad reader, wbb . Gotta link?

The article is here, but the graphs are missing and are only in the paper:

http://business.guardian.co.uk/story/0,,1955821,00.html

EdInvestor

olly300 wrote:

What most governments are going to do is cut public sector jobs in the areas where people think it's a waste of money i.e. DHSS and council admin jobs or can hide. Most non-labour councils have done this already. However all that happens is that they employ temporary workers from agencies at a greater cost per worker which makes their books look better to any accountant or auditor.

It also removes the pension liabilities: this is a not inconsiderable advantage. These costs are mounting rapidly.

ReportInvestor

Indeed. It is a prime reason for outsourcing.

Those that would like to keep more of a "public service ethos" in public services would do well to address the burgeoning pensions bill of existing pubic servants in order to limit the need for outsourcing.

But those same people, especially the pubic sector unions, usually want to have their cake and eat it.

ReportInvestor

How would a new MP do starting now and staying in Parliament for 20 years (to earn half his final salary with a 1/40 accrual rate).

Assumptions:
60,277 starting pay
4% - annual pay increase
20 years service - retires at 60
179,493 - Total contributions to pension scheme @ 10% of salary

MP's Final salary pension payable in 2026 = £63,497

Comparison:
The same contributions made by a private sector worker into a stakeholder pension and growing at 7% pa [with luck] = £360,870 by 2026.

This would buy the following pension (inflation linked, annuity rates staying the same - [unlikely] and with 50% to spouse on death - not quite the same as MPs can nominate any partner and will have probably have further benefits.

Ordinary person's pension in 2026 having paid in the same as an MP = £12,000 (Always assuming investment companies and/or stock markets don't mess up his investments .)

This implies a cost to the taxpayer for each MP's pension for 20 years of over £1.5m compared to the cost for an MP's pay over the same 20 year period @ under £1.8m.

So an MP's pension costs the taxpayer, the guy struggling with his own pension, nearly as much as an MP's salary :eek:.

What would people think if they knew this? The trick is keeping them in the dark.

conradmum

cheerfulcat wrote:

What is specifically Labour about it is that it was Labour which decided firstly to stuff the public sector with unneccessary extras and then to back down over the question of making them work a few years past 65, like the rest of us.

Having said that, there is a deafening silence from the Opposition benches regarding pensions...

Sorry but this is wrong. Public sector workers will have as long to wait for the state pension as everyone else.
Their work pensions may well kick in at 60, but this can apply to private pensions too.

cheerfulcat

And of course the MP's pension is iron-clad, being paid by the taxpayer.

Sorry but this is wrong. Public sector workers will have as long to wait for the state pension as everyone else.

It's their public sector ("work") pensions we are discussing; the ones everyone else pays for.

A_Nice_Englishman

Don't forget that 'the taxpayer' includes those who have retired with a "work" pension (whether public or private sector). They will be taxed to pay for benefits for those who haven't been able to (or bothered to) save for their retirement.

conradmum

cheerfulcat wrote:

And of course the MP's pension is iron-clad, being paid by the taxpayer.

It's their public sector ("work") pensions we are discussing; the ones everyone else pays for.

Your original statement was that the Government backed down over plans to make them work past 65 'like the rest of us'. This implies state pensions. People on private pensions don't have to work past 65 to receive their private pension - why should public sector workers? Private pensions can be taken at 55 - or is it going to be 60? - anyway, it is only state pensions that we will ALL have to wait longer for.

Andy_L

ReportInvestor wrote:

179,493 - Total contributions to pension scheme @ 10% of salary

MP's Final salary pension payable in 2026 = £63,497

Comparison:
The same contributions made by a private sector worker into a stakeholder pension and growing at 7% pa [with luck] = £360,870 by 2026.

Much as I hate sticking up for MPs, why have you not grown the MPs contributions by a 7% pa investment return?

So basicly what you are saying is that a final salary scheme with employers contributions is better than a money purchase scheme without. Hardly surprising news

ReportInvestor

Alan Pickering tries to play down the state/public sector divide by highlighting a generational divide - although he is primarily talking about the state pension he starts to confuse the two in his own mind and others.

BBC

"....."There is still time to mend our ways and avoid the clash of the generations.

"But if people in their late 40s and early 50s, in both private and public sector pensions, insist on hanging on to everything they are expecting from the pension system, younger workers will resent it."

He said that people now paying in to a pension were not "buying and freezing loaves of bread". Instead the contributions were a down payment.

"We have staked a claim on the wealth that is going to be created by the next generation. But if we are greedy in that demand the next generation will refuse to pay for it," he said.

Mr Pickering said there was a simple solution - work longer....."

## - Pickering wants a bigger state pension but later, in order to cut down on means testing - and more people working into their late 60s.