Public Sector Pension Strikes – A JOKE !

lvader

I'm sick of unions of public workers claiming that the stikes are also for private pensions. Nothing they will do will help the private sector other than make it harder to lower the debt burden (more taxes)

It wouldn't surprise me if the more had been paid into public sector pensions than taken out, but that misses the point entirely. There has been a massive increase in public sector workers over the last 10-15 years, such increases are not sustainable in the future so you will quite likely have a flat or falling number of workers paying (eventually) for all the workers that started during the boom years. Taking any pension calculations based on 2007 in rediculous.

lvader

CLAPTON wrote: »

given that much of the plight of the private sector is caused by specific government policy (QE) there is a reasonable case that the government protect people nearing retirement age.
however as there is no public outcry about these pensions no action will be taken

Not that there was an alternative to QE, but QE is done by the BOE, not the government.

CLAPTON

lvader wrote: »

Not that there was an alternative to QE, but QE is done by the BOE, not the government.

Don't be rediculous

jamesd

Ygor wrote: »

I don't think anyone is claiming increased longevity is not a factor. The easiest way to deal with that is to honour the cap and share agreements that were already in place.

Are those really sufficient to deal with a change from life expectancy where an average person didn't live beyond age 65 to one where an average person lives for 23 years beyond age 65? That's at least those 23 years of extra retirement age that have to be funded somehow - and a combination of higher contributions and longer working lives, but also longer retired lives seems like the only viable way to do it.

Hard to see how just capping could achieve the required extra pension funding without making teachers excessively poorly paid during their working lives.

Ygor wrote: »

Instead the government has made 'savings' by putting 2% of salary less in the 'pot' (a real pot for LGPS, the SCAPE account for unfunded schemes). Really? A pay cut is now a 'saving'?

That looks like a tiny reduction compared to the change in life expectancy that has to be funded.

Ygor wrote: »

The double blow is the government has reduced the discount rate (effectively the rate of return for unfunded schemes) by about 1.3%. Hutton thought a 0.5% drop was the equivalent of 3% of salary so a 1.3% drop is about 8% of salary. Lets see them do that with Index linked Gilt coupons and keep a AAA rating! How many private sector pension funds would consider the drop in in investment returns to be a 'saving'?

All final salary private sector pension schemes. Their liability for additional payments by the employer is related to gilt yields. That's why they increase when fiscal easing is in effect. More generally there's some expectation that in the UK investment returns can be expected to drop over the next 25 years or so because many people will be switching from buying to selling of investments as the large baby boomer generation retires and starts drawing on their investments for income. That's more of a stressor for private sector schemes than public sector ones, though.

Ygor wrote: »

Now I get that markets have fallen and losses have been made. Oil and Gold seem to have done all right.
But Markets recover and inflation falls and I can't see the discount rate being so easily increased as it's only going to be reviewed every 5 years. The point of having a stable discount rate was so that it would be better when the market was down and worse when the market was up.

Those things are largely irrelevant compared to the elephant in the room, the longer life expectancy.

Ygor wrote: »

The main reason for the reforms is not increased longevity but the cut in pension funding equivalent to 10% (2%+8%) of pay.

You think 23 more years of pension payments costs nothing to provide? That's a huge burden. It's not even a stable one since life expectancies continue to increase.

Now I'm being a little unfair in saying 23 years because teachers about to retire didn't start working when the average man died before reaching 65 but there's still been a huge increase in life expectancy over the careers of teachers who are retiring now. And will, if current trends continue, be another big increase for a teacher starting work today, who may end up with more years retired than working if there's no change to retirement ages.

It's not easy or cheap to fund the very long retirements that we have to plan for these days but it beats the alternatives.

jamesd

Backbiter wrote: »

Their refusal to value the scheme is proof that they are not negotiating in good faith. What do they have to hide? Most people are convinced (by Government propaganda and irresponsible coverage in the media) that the scheme is in deficit but the latest figures indicate that it has built up a vast (notional) surplus.

Do you really expect most people to believe such misleading rubbish?

A final salary pension scheme can have a current year spending surplus and a massive long term deficit at the same time. This is routine and happens whenever the spending on benefits for those currently retired in the scheme is less than the funding required to pay for the future benefits of future retirees.

Since life expectancies are increasing it'll be normal for a long time to come for current year spending to be less than the amount that needs to be put away for future obligations.

And I suppose that some people will attempt to mislead others by pretending that current year surpluses mean there's no long term funding issue as long as this is happening.

This can change. One way for it to change is for the current teacher population to fall below the past teacher population by more than the increase in years in retirement. Things like firing lots of teachers could achieve it. That would reduce the future pension funding needs while the funding required for existing pensioners would remain the same, so the future needs might fall below the current ones. But who wants to fire lots of teachers? Instead the funding has to be kept in line with the anticipated number of years in retirement of the current teacher population. And that means current year surpluses to pay for those future obligations.

Backbiter

Life expectancy has been 70+ since the 1960s. Your figure of 23 years is miles out.
http://www.parliament.uk/documents/commons/lib/research/rp99/rp99-111.pdf

ONTHETILES

I'm a Public sector worker who for personal resons am NOT in the Union. Chances are my kids will be off for the day ( all under 5). As NO Leave is allowed that day I guess im gonna have to pay for extra child care that day.

lvader

CLAPTON wrote: »

Don't be rediculous

Would you like to back that up with any fact? As far as I can see the independant BOE hasn't changed it's policy even though the government has changed.

CLAPTON

lvader wrote: »

Would you like to back that up with any fact? As far as I can see the independant BOE hasn't changed it's policy even though the government has changed.

It is not credible that the bank would carry out policy at odds with that of the government

It is not credible that the government would allow the bank to carry out policies that it thought were damaging to the national interest

lvader

CLAPTON wrote: »

It is not credible that the bank would carry out policy at odds with that of the government

It is not credible that the government would allow the bank to carry out policies that it thought were damaging to the national interest

It isn't credible that both governments forced the BOE to do something that they were against. QE is a BOE move that has been backed by both governments.