New pension proposals

dshart

Koicarp wrote: »

The government could not currently afford to put us all into "funded" schemes, because it would then have to meet the total cost of paying the pensions of all those already retired staff. I think that was around £24bn for the four largest schemes in 2009/10, the treasury paid £3.1bn of that.

So what you are saying is that because the scheme has not been properly funded from the start that the status quo should remain?

If so at what stage should there be a redress? The amount to properly fund the schemes will constantly grow and the deficit to maintain it on the current system will also grow.

The only outcome if it continues is that eventually the whole system will collapse. But I think quite a few know that already but are just hoping that they will have had their money before it collapses.

Koicarp

dshart wrote: »

So what you are saying is that because the scheme has not been properly funded from the start that the status quo should remain?

If so at what stage should there be a redress? The amount to properly fund the schemes will constantly grow and the deficit to maintain it on the current system will also grow.

The only outcome if it continues is that eventually the whole system will collapse. But I think quite a few know that already but are just hoping that they will have had their money before it collapses.

Para 1. Nope I didn't say any of that.
Para 2. I suggest you give Lord Hutton a ring, and let him know this because he and his team think the opposite.
Para 3. See my response to Para 2.

dshart

Koicarp wrote: »

Para 1. Nope I didn't say any of that.
Para 2. I suggest you give Lord Hutton a ring, and let him know this because he and his team think the opposite.
Para 3. See my response to Para 2.

So how is it proposed to make up the deficit? All you seem to say is that the deficit will be greater if public sector pensions are properly funded so we should remain with the current deficit. That is not a solution.

jamesd

There are a number of solutions. One of them is reducing the current and future numbers of employees. That reduces the future pension liability that is being accumulated. It also reduces the pension contributions from the employees but that would be a smaller effect since the biggest part of the contributions is the unfunded employer part.

Do that by moving more work to private companies and it's possible that cost savings could keep the total current year bill at a level closer to the current one than simply going fully funded.

Another way is to carry out the same change as has already happened in the private sector: abandoning defined benefit schemes and switching to defined contribution, but with the 6% match from the government remaining unfunded until the employee takes benefits, tracked as notional investments rather than actual ones. Or do a blend of DC and DB with unfunded DB for the employer part.

To keep total benefit value the same a switch from the current high levels of employer contributions would need an increase in base pay. Switching services to the private sector would be one way to counter that but of course some services aren't amenable to switching. With the higher base pay each employee could choose who much of their pay they want to go into their pension instead of being stuck with the current less flexible system. It'd also deliver a lot more flexibility in pension taking age, since DC schemes can have income taken from age 55.

dshart

jamesd wrote: »

There are a number of solutions. One of them is reducing the current and future numbers of employees. That reduces the future pension liability that is being accumulated. It also reduces the pension contributions from the employees but that would be a smaller effect since the biggest part of the contributions is the unfunded employer part.

Do that by moving more work to private companies and it's possible that cost savings could keep the total current year bill at a level closer to the current one than simply going fully funded.

Another way is to carry out the same change as has already happened in the private sector: abandoning defined benefit schemes and switching to defined contribution, but with the 6% match from the government remaining unfunded until the employee takes benefits, tracked as notional investments rather than actual ones. Or do a blend of DC and DB with unfunded DB for the employer part.

To keep total benefit value the same a switch from the current high levels of employer contributions would need an increase in base pay. Switching services to the private sector would be one way to counter that but of course some services aren't amenable to switching. With the higher base pay each employee could choose who much of their pay they want to go into their pension instead of being stuck with the current less flexible system. It'd also deliver a lot more flexibility in pension taking age, since DC schemes can have income taken from age 55.

And which of these solutions are acceptable to the unions?

BobQ

atush wrote: »

If you are earing around 15K, then you are out of the proposed changes.

You are out of the contribution rate increases, not the changes in the scheme.

BobQ

dshart wrote: »

And which of these solutions are acceptable to the unions?

I do not know but it sounds as if the Government is doing the telling in public rather than negotiating on what might be acceptable.

The Government firstly attacked the indexation which has retrospectively devalued accrued benefits of workers and pensioners in both sectors. They could have kept their election promise and just used CPI for future accrued pension and left RPI for benefits accrued to date.

Then they introduced arbitrary contribution rate increases. Even people who accept the case that contribution rates need to increase were incensed with a pay cut during a pay freeze. They could have negotiated a slower increase in contributions (initially for those on the higher salaries and later for those on below average pay, maybe after the pay freeze is lifted)

They could have proposed introducing the career average scheme (which in principle benefits the lower paid and those taking career breaks) with a better accrual rate in the short term and reduced it to that proposed in more gradual steps based on actual cost data instead of making an arbitrary calculation based on the deficit.

They could have closed the current public sector schemes for new members and introduced a career average scheme for new staff as the civil service did 5 years ago.

My impression is that negotiation is not on the Government agenda. Its no wonder there are strike ballots.

sammyjammy

I'm a civil servant. I'll be affected by the changes having been a civil servant for 21 years and still with a possible 27 to go, if I'm lucky enough to keep my job.

I've read a lot over the last six months about the pension changes and am astounded by the lack of knowledge of public sector workers in general about the changes and how they affect them.

I know i'm very very lucky to have the pension I get and will get. I also think I get paid more than fairly for the work I do, I would be very unlikely to find myself a similar job (if one existed in the private sector) paying the same wage in the private sector. My major gripe with regards pay is the individual pay bargaining that goes on (fought for by the unions 20 plus years ago) which means there are other civil servants in many other departments that get paid up to £5000 more than me in an equivalent job of the same grade.

What I will admit to is striking on the 30th June. This was only the 2nd time in my career and I did so thinking it was unfair to be asked to pay more, work 7 years longer and get less as well as the change to CPI inflation. I swallowed what the union and their pension calculator told me.

If I live until I am 95 (god help me) I will overall be, on my own calculations based on current salary without taking the inflation factors into account, better off by £105,000. Even if I stop working at 60 (collecting my pension under new terms at 67) then I will be better off than continuing under the new scheme. Its only in the first few yeasrs that the old scheme works out better due to the lump sum and receiving it at 60.

I'll stop ranting soon but a few more points:

1) Anyone talking of leaving the scheme and taking out a private pension really needs to get real and scrape every penny they have together to pay them otherwise they will have a long long retirement to regret it. If you want an equivalent pension you would need to pay contributions of over a third of your salary.

2) Nobody but nobody is being forced to work until they are 67 (or more) its all about choice, when you are of an age to know whether the additional money is more important to you than health/giving up work YOU will make that decision.

3) There are masses of reductions that can be made in the public sector (I exclude education from this), the waste and the useless tasks we are forced to undertake is a joke. In my department we are currently cutting our HO costs by 40%, this is being done by cutting staff in the main, the procurement is a joke, we pay an outside company over £2.50 every month to backup and store one kilabyte of information on our behalf over a basic storage amount per person :eek:. We will cut the staff but then we will recruit again because the same practices are being followed and we won't be able to cope.

BobQ

sammyjammy wrote: »

My major gripe with regards pay is the individual pay bargaining that goes on (fought for by the unions 20 plus years ago) which means there are other civil servants in many other departments that get paid up to £5000 more than me in an equivalent job of the same grade.

.

I think you will find that it was not the unions that advocated this.

In many ways centralised bargaining helps the unions, they have less negotiations to conduct and if necessary less industrial action to organise. It reduces their costs.

The employers prefer local bargaining, it gives them the chance to have regional pay differences between agencies in the north and south for example, and relatively lower pay rates and allowances in some departments (especially those with less bargaining power).

atush

sammyjammy wrote: »

I'm a civil servant. I'll be affected by the changes having been a civil servant for 21 years and still with a possible 27 to go, if I'm lucky enough to keep my job.

I've read a lot over the last six months about the pension changes and am astounded by the lack of knowledge of public sector workers in general about the changes and how they affect them.

I know i'm very very lucky to have the pension I get and will get. I also think I get paid more than fairly for the work I do, I would be very unlikely to find myself a similar job (if one existed in the private sector) paying the same wage in the private sector. My major gripe with regards pay is the individual pay bargaining that goes on (fought for by the unions 20 plus years ago) which means there are other civil servants in many other departments that get paid up to £5000 more than me in an equivalent job of the same grade.

What I will admit to is striking on the 30th June. This was only the 2nd time in my career and I did so thinking it was unfair to be asked to pay more, work 7 years longer and get less as well as the change to CPI inflation. I swallowed what the union and their pension calculator told me.

If I live until I am 95 (god help me) I will overall be, on my own calculations based on current salary without taking the inflation factors into account, better off by £105,000. Even if I stop working at 60 (collecting my pension under new terms at 67) then I will be better off than continuing under the new scheme. Its only in the first few yeasrs that the old scheme works out better due to the lump sum and receiving it at 60.

I'll stop ranting soon but a few more points:

1) Anyone talking of leaving the scheme and taking out a private pension really needs to get real and scrape every penny they have together to pay them otherwise they will have a long long retirement to regret it. If you want an equivalent pension you would need to pay contributions of over a third of your salary.

2) Nobody but nobody is being forced to work until they are 67 (or more) its all about choice, when you are of an age to know whether the additional money is more important to you than health/giving up work YOU will make that decision.

3) There are masses of reductions that can be made in the public sector (I exclude education from this), the waste and the useless tasks we are forced to undertake is a joke. In my department we are currently cutting our HO costs by 40%, this is being done by cutting staff in the main, the procurement is a joke, we pay an outside company over £2.50 every month to backup and store one kilabyte of information on our behalf over a basic storage amount per person :eek:. We will cut the staff but then we will recruit again because the same practices are being followed and we won't be able to cope.

Well done'1 That was all something resembling good sens!

Btu will you strike in future, now you know what you know? ;-)