Incensed again

Old_Slaphead

dshart wrote: »

I also note that a lot of the argument on this forum seems to mention teachers, but out of all the public sector workers they usually contribute a greater percentage of their wage to their pensions,

No they don't.

I don't see why a group of people on well above the average wage should get 'gold plated' pensions anyway. It was originally justified as a recompense for below average earnings. These pension provisions should be significantly watered down for anyone paid more than £30,000pa.

People also mention the "race to the bottom" and mention how private sector workers should support them and fight for better pension provision for themselves, but how are we supposed to do that? we do not have the power to hold the country to ransom by calling national strikes.

To avoid the 'race to the bottom' I'll suggest reducing the higher rate of tax threshold to £20,000 use the proceeds to give anyone without a public sector pension an additional £5000 state pension. If there's any shortfall on that calculation then increase VAT to make up the difference.

Surely public sector workers couldn't object to that could they - fair pensions for all being their mantra.

dshart

Old_Slaphead wrote: »

No they don't.

I don't see why a group of people on well above the average wage should get 'gold plated' pensions anyway. It was originally justified as a recompense for below average earnings. These pension provisions should be significantly watered down for anyone paid more than £30,000pa.



To avoid the 'race to the bottom' I'll suggest reducing the higher rate of tax threshold to £20,000 use the proceeds to give anyone without a public sector pension an additional £5000 state pension. If there's any shortfall on that calculation then increase VAT to make up the difference.

Surely public sector workers couldn't object to that could they - fair pensions for all being their mantra.

To quote figures given in the Hutton report, teachers contribute 6.4% of their salary with employers paying 14.1% whilst civil servants contribute 1.5% with the employer contributing 19.9%.

So yes teachers do contribute more than most public sector workers.

I cannot agree with you on the reduction in higher rate tax threshold as this would have a bigger negative effect on private sector workers who have very little employer contributions and mainly fund their pensions themselves. Yes the tax incentive would be more but the additional tax would mean more could not afford to fund their pensions.

Old_Slaphead

dshart wrote: »

To quote figures given in the Hutton report, teachers contribute 6.4% of their salary with employers paying 14.1% whilst civil servants contribute 1.5% with the employer contributing 19.9%.
So yes teachers do contribute more than most public sector workers.

They pay pretty much the same as LG & NHS, less than Police, Firemen, MPs and more than CS (but CSs genuinely do tend to get below average pay). Overall they pay about average.

Yes the tax incentive would be more but the additional tax would mean more could not afford to fund their pensions

The state would fund an extra pension for all except the public sector pensioners out of the increased general taxation for all.

Andy_L

dshart wrote: »

To quote figures given in the Hutton report, teachers contribute 6.4% of their salary with employers paying 14.1% whilst civil servants contribute 1.5% with the employer contributing 19.9%.

So yes teachers do contribute more than most public sector workers.

Civil servants are a, surprisingly, small proportion of public sector workers. Both they & teachers are outweighed by the NHS & LGPS who are both paying ~6.5% ie teachers aren't contributing more than most public sector workers but about the same.

dshart

Andy_L wrote: »

Civil servants are a, surprisingly, small proportion of public sector workers. Both they & teachers are outweighed by the NHS & LGPS who are both paying ~6.5% ie teachers aren't contributing more than most public sector workers but about the same.

Apologies, I just took figures as stated in the Hutton report.

But even if the whole public sector were contributed 6.5% of their wages towards their pension fund the funds would still not cover the pension payouts proposed.

Where does the extra money come from to fund the shortfall?

If every private sector worker was offered the same conditions as public sector workers I am sure you would see almost 100% take up of the offer.

Why aren't private firms made to pay ~14% into employees pensions whilst the employees paid in ~6.5% and we get the same pension provisions as public sector workers? The answer is simple, the companies couldn't afford it and the schemes could not generate enough money to pay out pensions at the rates quoted, which again proves that the public sector pensions are under funded and are much more attractive than private sector pensions.

Old_Slaphead

dshart wrote: »

Why aren't private firms made to pay ~14% into employees pensions whilst the employees paid in ~6.5% and we get the same pension provisions as public sector workers? The answer is simple, the companies couldn't afford it and the schemes could not generate enough money to pay out pensions at the rates quoted, which again proves that the public sector pensions are under funded and are much more attractive than private sector pensions.

Inflation would rocket and cheaper imports would soar - unless import controls were imposed. Then there would be no incentive to be competitive and quality would decline.

Koicarp

Old_Slaphead wrote: »

I believe that the only publically funded scheme is the LGPS.

Employee contributions average around 5%.

Employer contributions vary between 16-20% (taken from a sample of several sets of published accounts).

The scheme is still only funded to around 83% of liabilities. therefore employers/taxpayer will have to contribute even more.

Thanks Slaphead (it sems rude to call you old!).
Hutton page 23 Box 1B shows details of the flow of money for the four largest schemes from year 2009-2010. Total payements were £20.8bn, employee contributions £4.6bn, employer contributions £13.1bn, Treasury contributions £3.1bn. Hutton goes on to show that employer contributions are similar in percentage terms to those of (the remaning) private sector DB schemes.
In discussions elsewhere some have tried to convince me that my contributions are taxpayer's money- they are not. the taxpayer gave his money to the treasury and the government used it to buy a service from a profit making NHS foundation trust. The NHS trust contracted me (I don't work for the government) to provide a service at an agreed cost to them, and the money became mine. In my view the employers contribution is not the taxpayers money any more either- it belongs to an NHS foundation trust which has been given the money in payment for healthcare. For me that leaves the £3.1bn, and I feel we should double employee payments immediately to cover that.
My short answer I guess is that I disagree that the taxpayer pays 4 out of every 5 pounds, but I see the need for us to increase our payments.

dshart

Koicarp wrote: »

Thanks Slaphead (it sems rude to call you old!).
Hutton page 23 Box 1B shows details of the flow of money for the four largest schemes from year 2009-2010. Total payements were £20.8bn, employee contributions £4.6bn, employer contributions £13.1bn, Treasury contributions £3.1bn. Hutton goes on to show that employer contributions are similar in percentage terms to those of (the remaning) private sector DB schemes.
In discussions elsewhere some have tried to convince me that my contributions are taxpayer's money- they are not. the taxpayer gave his money to the treasury and the government used it to buy a service from a profit making NHS foundation trust. The NHS trust contracted me (I don't work for the government) to provide a service at an agreed cost to them, and the money became mine. In my view the employers contribution is not the taxpayers money any more either- it belongs to an NHS foundation trust which has been given the money in payment for healthcare. For me that leaves the £3.1bn, and I feel we should double employee payments immediately to cover that.
My short answer I guess is that I disagree that the taxpayer pays 4 out of every 5 pounds, but I see the need for us to increase our payments.

Although these figures may be right for the year 2009/2010 it does not mean there is still just a 3.1bn shortfall to make up. The problem is that people are living longer so the total amount to be paid out is rising, couple that with staffing cut backs and you have smaller employee and employer contributions leading to an ever growing shortfall.

Even if it was a simple as the figures show and this remained static it would require the employee contributions to increase by over 67% to make up this shortfall, which I am sure would be unacceptable to most employees and the unions would still be calling for a strike.

The problem is the pension contributions are not invested to provide returns as for private pensions, they rely on current contributions topped up from government coffers to pay existing public service pensions and as the retired workforce gets bigger while the workers decline the imbalance grows.

Again the Hutton report compares the employer contributions as being similar to those in remaining private sector final salary schemes but these a few and far between now and getting smaller by the day as companies cannot afford to keep them up. Which again shows the disparity between public and private sector pensions which will still remain after the current proposals are implemented.

I am not an economist or well versed in pensions, but this is my simplified view of things, so if I have got it wrong I don't mind being corrected.

Koicarp

dshart wrote: »

Although these figures may be right for the year 2009/2010 it does not mean there is still just a 3.1bn shortfall to make up. The problem is that people are living longer so the total amount to be paid out is rising, couple that with staffing cut backs and you have smaller employee and employer contributions leading to an ever growing shortfall.

Hutton shows (as was discussed on here many times over the summer) that the future cost of pensions WITH NO CHANGE TO THE CURRENT ARRANGEMENTS will fall!
However as you say, as public service employees reduce in number due to the shrinking of services and privatisation, payments into the schemes will reduce. Perhaps with starving patients on our hospital wards and patients again waiting overnight on trollies in A&E we should think again about reducing those staff?

dshart

Koicarp wrote: »

Hutton shows (as was discussed on here many times over the summer) that the future cost of pensions WITH NO CHANGE TO THE CURRENT ARRANGEMENTS will fall!
However as you say, as public service employees reduce in number due to the shrinking of services and privatisation, payments into the schemes will reduce. Perhaps with starving patients on our hospital wards and patients again waiting overnight on trollies in A&E we should think again about reducing those staff?

I'm not arguing the rights and wrongs of reduction in staff, but the fact remains as you admit something needs to be done. One of the ways they reduce costs is by staff cutting, whether this is right or wrong is another matter as some would say it is rationalisation and streamlining the service and making it more efficient.

At the end of the day there is a huge problem that needs to be sorted out and I do not believe that the unions holding out for unrealistic deals is going to help solve the problem. Its easy to see the problems but there are no easy solutions.