New pension proposals

jamesd

Moby wrote: »

Yes but they should have tapered the cut off point more gradually!

Perhaps so, but it still seems like a useful improvement for those who have the least planning time available.

Moby wrote: »

People keep trotting out this line but public sector workers are also taxpayers. Everyone pays for everyone else’s pension. Companies with occupational pension provision for their employees include pension costs when pricing their goods and services. All taxpayers pay for the cost of inadequate pension saving (increasingly prevalent in the private sector) through the tax and national insurance spent on increased take up of state benefits, NHS and council care services.

In general I agree. The main difference is who does the negotiating. In the private sector it's people like Tesco's buyers refusing to even stock a product if they don't get the price they want, which applies price pressure to companies to get them to cut costs. In the public sector it's the government negotiators representing the buyers of the public sector services - those tax payers, including the ones who are public sector employees.

Moby wrote: »

Another myth you've bought from this Government.

Hardly. Have a read of the Turner Pensions Commission Reports from the Labour government back in 2003-5. Those covered the general pensions issues very well, doing an impressive job of covering the issues. The things advocated there included the increase in retirement ages that both the last and present governments are implementing.

Moby wrote: »

The costs of all defined benefit schemes fluctuate as do the benefits of defined contribution schemes.

Hmm, that's not quite fully true for DB schemes. There are two types of variation in general, the short term market variations and the longer term structural ones. Things like the current fiscal easing increase the cost of buying gilts and that in turn increases the cost of buying a certain amount of income with gilts or an annuity.

The longer term variation includes changes in life expectancy. In a DC scheme that change in life expectancy is done by annuity companies reducing their payouts for a set amount of capital. Since that's a free market the pensioners have no choice about it other than shopping around and perhaps paying in more money.

In a DB scheme there are two main possibilities:

1. In a standard genuinely fully funded scheme the employer and employees pay in enough during working years to fully cover the benefits in retirement. And the employer is required to provide a guarantee to make more payments if longevity increases, so gets to negotiate benefit levels and changes. Or more likely, to impose, in the private sector.

2. In many of the public sector schemes there's some contribution to current funding by member contributions but the payment of pensions is a future taxpayer liability and minimal or no current funding is involved. Negotiations cover how big those employee payments should be and how much should be paid out of future tax income. Like all spending from tax income the spending here also affects money available for other spending.

Moby wrote: »

My scheme the LGPS is in a better position than most other schemes as it can and should plan its funding over a longer period, making it substantively less vulnerable to short term fluctuations. Year on year, the LGPS takes £billions more in contributions and investment returns than it pays out in benefits.

Hopefully it does. It's also to be expected that there would be a substantial surplus of income over expenditure in any scheme that is relatively new, with few retired members compared to working. That's because the funded scheme needs to accumulate money for the later payouts. In an unfunded scheme the payments can go to reducing the national debt or whatever else so liabilities now are reduced to allow paying later.

Moby wrote: »

Its ridiculous to claim funding it will have an impact on health care policy!

Nothing ridiculous about it. Any government expenditure affects how the money can be allocated. But the main point of health care was to point out that the employees are reaping a substantial benefit in life expectancy and it's inevitable that the increased cost of pensions that results has to be dealt with in some way. Just a case of negotiating to sort out how.

If you haven't read the reports of the Turner Commission I recommend that you do. They make interesting reading and since it was done under a Labour government those who have reservations about the current one may find it more palatable.

NAR

atush wrote: »

Everything wrong with that/your stance, as no where in the real world where I live that the Union's 'never never' land can actually exist.

Well in that case I look forward to the squealing of private sector workers the next time the Government IMPOSE another tax/limit/contribution increase on you lot.

jamesd

Things like the recent 18% cut in maximum income taken on pension income using income drawdown, perhaps? Or the reduced pension annuity payouts because of fiscal easing that's reduced the payouts on government bonds? Both with minimal notice.

dshart

NAR wrote: »

Well in that case I look forward to the squealing of private sector workers the next time the Government IMPOSE another tax/limit/contribution increase on you lot.

The government regularly does this and it affects public and private sector workers just the same. The problem is that some of the tax increases are being used to fund the shortfall in public sector pensions.

If it was just an increase in NI contributions with a corresponding increase in state pension then at least we would all be in the same boat, but as it stands there is a disparity between public and private sector pensions that needs to be addressed and I do not see any suggestions from the unions on how to address that. They have already had concessions from the government but they still press for more.

NAR

dshart wrote: »

They have already had concessions from the government but they still press for more.

Amounting to very little. And on conditions/proposals that were not negotiated but being imposed, had they not been challenged.

dshart

NAR wrote: »

Amounting to very little. And on conditions/proposals that were not negotiated but being imposed, had they not been challenged.

So what are the unions proposing? That things stay as they are? That the black hole in government finances gets bigger and bigger? How do the unions propose that public sector pensions be financed without the shortfall being made up from government coffers, because even without the concessions there was still going to be a shortfall.

I understand that unions are only there to represent their members and it is not up to them to sort out the national debt, but they need to realise that public pensions is part of the problem and that unless the debt spiral is checked there will be no pensions for anyone fullstop.

Jessikita1983

Instead of going after the public sector workers as individuals, for the government choosing to give us perceived "gold plated pensions", even though we contribute to, why not go after the millions who chose not to contribute and scrounge off the state long term. Who you will be subsiding well into their old age after keeping them their whole lives!

Sounds like sour grapes to me, get a job in the blic sector and take advantage of it if you feel so strongly.

dshart

Jessikita1983 wrote: »

Instead of going after the public sector workers as individuals, for the government choosing to give us perceived "gold plated pensions", even though we contribute to, why not go after the millions who chose not to contribute and scrounge off the state long term. Who you will be subsiding well into their old age after keeping them their whole lives!

Sounds like sour grapes to me, get a job in the blic sector and take advantage of it if you feel so strongly.

This is the problem, people just bury their heads in the sand and say I contribute so I am entitled to it and if you don't like it then join the public sector. If everyone in the country joined the public sector the country would already be bankrupt.

This is not just a case of going after public sector workers and their pensions as there are many other cuts having to be made. I agree not enough is done to tackle the people who contribute nothing and scrounge off everyone else and urge the government to take a stronger line to stop such abuses of the system.

Yes you contribute to your pension, but what is in the pension pot is not enough to cover what they are paying out in pensions, so if you want to retain those pensions you have to pay in more or work longer or both. Because as it stands now public sector pensions are scrounging from tax payers money.

people with private pensions contribute a lot more for less return and have to work longer and contribute more to get a decent retirement why shouldn't public sector workers have to do the same. Call it sour grapes if you wish but the same can be said about public sector workers having sour grapes because they are now being asked to close the funding gap on their pensions. And bear in mind even with the changes there will still be a shortfall in funding.

jamesd

Jessikita1983 wrote: »

get a job in the blic sector and take advantage of it if you feel so strongly.

Or just convert public sector pensions to match the terms of normal private sector pensions, to equalise conditions and make it easier to move back and forth between public and private sector jobs. Something like a defined contribution plan with 6% employer match of 6% employee contributions is what the private sector offers.

dshart

jamesd wrote: »

Or just convert public sector pensions to match the terms of normal private sector pensions, to equalise conditions and make it easier to move back and forth between public and private sector jobs. Something like a defined contribution plan with 6% employer match of 6% employee contributions is what the private sector offers.

Do not for a second suggest that or we will have mass union walkouts and the country will be brought to a standstill Oh wait they are already planning to do that when the proposals are no where near as drastic.