Public Sector Strike(s)

bigheadxx

jem16 wrote: »

As you say it is not yet clear but the indications are that those who have contracted out would receive £40 less.



It has been indicated that those who have built up a higher amount of S2P than the flat rate would still receive it.



I suspect that the real reason behind the flat rate is to do away for any need for pension credit rather than to do with any S2P entitlement.

The fact that public sector workers will not get the full "flat rate" state pension has not been mentioned by the unions even though it will see those retiring after 2015 getting £40 per week less. This is extraordinary, that would amount to 1/3 of a lower paid (£12,000 p/a) public sector pension of around £6000.

It would suggest to me that using the "low paid" is just a smoke screen for what this really is which is a "middle class", middle income protest by people who think they have a god given right to better pay and better pensions than everybody else.

jem16

bigheadxx wrote: »

The fact that public sector workers will not get the full "flat rate" state pension has not been mentioned by the unions even though it will see those retiring after 2015 getting £40 per week less.

I suspect it has not been mentioned by the unions as nothing concrete has actually been published on who will or will not get the full flat rate state pension. There would be no point in mentioning it as the unions would simply be accused of misleading their members.

bigheadxx

http://www.thisismoney.co.uk/money/pensions/article-2068056/Public-sector-workers-pensions-worth-20-times-value-contributions.html

How to get a pension worth 20X what you pay in.

<H3 class=wocc>Huge gap between public and private pensions

Alexander Forbes' sums show that someone earning £40,000 at retirement, having spent a forty-year career working for the state, is likely to be on course for a pension worth £26,667.
In his calculations, Mr Carey assumed that a worker's salary increased in line with RPI inflation at 4 per cent over the forty-year period, finally reaching £40,000 by the age of 62; and that gross contributions were at 6 per cent of salary*.

Contributions over the forty years tally £46,000.

To buy an inflation-linked pension worth £26,667 in the annuity market, a saver would need a pot worth around £900,000, according to pension provider Hargreaves Lansdown, due to the equivalent inflation-linked annuity rate being 2.88 per cent.

While annuity rates have crashed below 6,000 per £100,000 for healthy pensioners, they are even lower for those who want their payouts to rise with inflation each year, says Hargreaves' Danny Cox.
Carey points out that several assumptions underpin his analysis. However, he insists they are fair and fairly representative of wider public sector.

*The numbers in the example will vary for different schemes.

</H3>

Read more: http://www.thisismoney.co.uk/money/pensions/article-2068056/Public-sector-workers-pensions-worth-20-times-value-contributions.html#ixzz1fmrskovc

bigheadxx

jem16 wrote: »

I suspect it has not been mentioned by the unions as nothing concrete has actually been published on who will or will not get the full flat rate state pension. There would be no point in mentioning it as the unions would simply be accused of misleading their members.

It has not been mentioned because it would alert the general public to the fact that public sector workers pay less NI than the rest of us and that would put an end to the possibility of future strike action. They are misleading their members by NOT "mentioning" it because they are obviously aware of the fact.

StevieJ

bigheadxx wrote: »

Yes it will cost the taxpayer about £4 BN per annum to meet this shortfall in contributions.

Another thing which the unions seem to have not picked up on is the implications for public sector workers if contracting out is brought to an end with the advent of the flat rate pension. It is not yet clear as to how those who have contracted out will be treated with regard to the flat rate pension as they will have built up pension benefits via reduced NI contributions that those who have not contracted out and paid full NI contributions will not have. It is clearly unfair to those who have built up S2P entitlement with the state to receive the same flat rate pension as those who have not especially as those who have not will also have paid less NI and receive the equivalent benefit from elsewhere.

I suspect that the flat rate will not be as straight forward as people imagine and that those who have contracted out will receive less as a result especially given that the proposal is not intending to cost any more.

It would not surprise me if the discount for contracting out will mean that such pensioners will in fact receive less than the current state pension.

StevieJ

bigheadxx wrote: »

It has not been mentioned because it would alert the general public to the fact that public sector workers pay less NI than the rest of us and that would put an end to the possibility of future strike action. They are misleading their members by NOT "mentioning" it because they are obviously aware of the fact.

Are you saying that public sector workers contract out of SP2 yet still receive it in retirement?

bigheadxx

StevieJ wrote: »

Are you saying that public sector workers contract out of SP2 yet still receive it in retirement?

They contract out of S2P but receive the equivalent via their pension scheme (as with all "contracted out" defined benefit schemes, including private sector)

The crucial difference is that the public sector workers pensions are unfunded and paid by the state. It therefore makes no sense for public workers to "contract out" and pay lower national insurance contributions because in effect they receive it for free.

see page 62 63:]

http://www.public-sector-pensions-co...ion-Report.pdf

jem16

bigheadxx wrote: »

It has not been mentioned because it would alert the general public to the fact that public sector workers pay less NI than the rest of us

Anyone with a defined benefit pension will be/will have been contracted out. Anyone with a money purchase scheme can have chosen to contract out.

Contracting out for money purchase schems ends in April 2012. At the moment defined benefit schemes will remain contracted out but this may change.

As to the flat rate pension, it is only a proposal at the moment and may never come to fruition.

and that would put an end to the possibility of future strike action.

I would have said it would make further strike action even more inevitable if they were told they had to pay 3% extra contributions plus 1.6% extra NI.

They are misleading their members by NOT "mentioning" it because they are obviously aware of the fact.

It's not a fact as yet.

jem16

bigheadxx wrote: »

It therefore makes no sense for public workers to "contract out" and pay lower national insurance contributions because in effect they receive it for free.

You keep saying that but then concede that it would cost the employer ( ie the taxpayer) an extra £4bn per annum if contracting out was abolished.

That makes no sense.

bigheadxx

jem16 wrote: »

You keep saying that but then concede that it would cost the employer ( ie the taxpayer) an extra £4bn per annum if contracting out was abolished.

That makes no sense.

It would cost public sector employers £4BN, which as you say is paid by the taxpayer. However that same £4BN would be received as revenue by HMRC therefore the actual cost to the taxpayer is zero.