Public Sector Strike(s)

jem16

bigheadxx wrote: »

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.

The total of the rebates is 5.3% (1.6% plus 3.7%) as discussed earlier but the value of the benefits of S2P is more like 9% so somewhere along the line another 3.7% is having to be funded.

bigheadxx

jem16 wrote: »

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.



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.



It's not a fact as yet.

The flat rate pension will automatically mean the end of contacting out as there will be no S2P to contract out of. S2P has already lost its value to the better of as that is already tailing off to a flat rate, albeit over a 30 year period.

I doubt that strike action will receive ongoing public support if the public was made aware that public sector workers pay less NI for effectively the same level of benefit.

thescouselander

All this talk of S2P is a bit redundant isn't it? The relevant paragraph from the report is as follows:

National insurance and contracting-out. Members of public sector pension schemes are generally contracted-out of the State Second Pension (S2P), as indeed, are some members of private sector occupational schemes. This means that members do not accrue S2P rights, but they pay a lower level of national insurance. The rationale for paying lower national insurance is that taxpayers will not have to pay for S2P in future years, because the employees’ private pension scheme will provide that. However, with an unfunded public sector scheme, taxpayers will have to pay these costs in future anyway. In addition, it can be argued that, given that public sector pensions are generally payable from age 60 (for existing members), compared with 65 rising to 68 for S2P, public sector employees should either not be contracted-out, or should remain contracted-out but pay higher employee pension contributions.

The current proposal by the government is based on the second option to raise employee contributions and that increase is higher than the reduction in NI through contracting out. If the increased contributions were to be scrapped in favour of removing contracting out I would suggest that is actually a substantial improvement in the governments offer. It also removes the possibility of contracting out being removed at a later date if S2P were to be scrapped.

Andy_L

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 pay the same level of NI as any contracted out DB pension scheme member

Andy_L

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.

and then cost the treasury (ie the tax payer) the cost of paying them all S2P, although offset slightly by the extra contributions

Andy_L

thescouselander wrote: »

All this talk of S2P is a bit redundant isn't it? The relevant paragraph from the report is as follows:

"However, with an unfunded public sector scheme, taxpayers will have to pay these costs in future anyway"

So it seems to accept that funded schems, eg the LGPS, can legitimatly contract out whilst unfunded schems, eg NHS, can't. Since taxpayers pay the costs for both unfunded & funded schemes (just at a different point in time: as they are accrued in funded, as they are paid out in unfunded) why the difference?

jem16

thescouselander wrote: »

The current proposal by the government is based on the second option to raise employee contributions and that increase is higher than the reduction in NI through contracting out.

Yes I'd go for that. 1.6% increase as opposed to 3%. It would mean paying an extra £550pa approximately but being entitled to the flat rate pension of £140pw which is £40 more than what was being talked about for those contracted out. That would see an extra £2080 for £550 - sounds like a bargain. Perhaps I'll contact the unions and let them know.

It also removes the possibility of contracting out being removed at a later date if S2P were to be scrapped.

So government plan is to increase contributions by 3% then scrap the contracting out rebate of 1.6%. Sounds like a very cunning plan.

Sounds like bigheadxx has done public sector workers a favour by highlighting this.

bigheadxx

jem16 wrote: »

Yes I'd go for that. 1.6% increase as opposed to 3%. It would mean paying an extra £550pa approximately but being entitled to the flat rate pension of £140pw which is £40 more than what was being talked about for those contracted out. That would see an extra £2080 for £550 - sounds like a bargain. Perhaps I'll contact the unions and let them know.



So government plan is to increase contributions by 3% then scrap the contracting out rebate of 1.6%. Sounds like a very cunning plan.

Sounds like bigheadxx has done public sector workers a favour by highlighting this.

I am very happy to help, however I doubt that the unions are going to make a big fuss over this as it is more complicated to explain than "pay more, get less, work longer"

"you've paid less, you'll get more, you'll get it before everybody else" is not quite as catchy and is unlikely to be popular with the public at large.

jem16

bigheadxx wrote: »

I am very happy to help, however I doubt that the unions are going to make a big fuss over this as it is more complicated to explain than "pay more, get less, work longer"

I think if the unions came back and said that the contribution rates were not going to be increased by 3% but that NI was going to increase by 1.6% instead it would be seen as a victory as 1.6% is less than 3%.

"you've paid less, you'll get more, you'll get it before everybody else" is not quite as catchy and is unlikely to be popular with the public at large.

Especially as it's not factual.

The fact still remains that public sector workers do not receive S2P/SERPS. Their pensions give them an entitlement that is equivalent but is still not S2P.

bigheadxx

jem16 wrote: »

I think if the unions came back and said that the contribution rates were not going to be increased by 3% but that NI was going to increase by 1.6% instead it would be seen as a victory as 1.6% is less than 3%.



Especially as it's not factual.

The fact still remains that public sector workers do not receive S2P/SERPS. Their pensions give them an entitlement that is equivalent but is still not S2P.

But they haven't paid for that entitlement as they pay less NI contributions on the basis that the state does not fund their S2P (or its equivalent). Does the state fund the S2P equivalent of private sector defined benefit pension schemes? No. That liability has been transferred to the pension scheme. It DOES fund public sector pensions and the S2P equivalent, which is generally paid from age 60. On that basis you will have paid less, you will get it earlier and you will get more.