It's not just the public sector....

treliac

I think that everyone who works should end up with a reasonable pension in retirement. It might act as an incentive to those not inclined to bother with working.

Many current retirees from the private sector benefit from FS pensions and it has been a great shame to see those closing down over the years. Retirement will be far more difficult for lots of people in the future.

I'm not sure what benefits the new workplace pension arrangements due in the next year or so will bring but it's clear that many people don't see themselves as being able to afford to pay into pensions nowadays and many don't trust pensions to perform well enough to make it worthwhile trying.

kabayiri

Let's face it; what we are seeing is tinkering with the pension system. Companies like Unilever and Shell are acting now to try and shore up their pension provisions, but there is no guarantee. If pension funds are forced to buy more government bonds their performance could fall significantly from what we saw in the 90s. The same tinkering applies to the public sector. Future government will find it hard to fund pension commitments.

Perhaps we need to look again at the topic of supporting our elderly as a whole, how to leverage assets such as property effectively and how to minimise living costs when needed. It's a tough ask, because we have a self-centred culture.

CLAPTON

RenovationMan wrote: »

The 'burden' of producing a profit for companies (which then indirectly fund pensions via dividends, share price increases, etc.) is already there for people who work in the the private sector, it's part of their job. They are then put under an additional burden through taxation to fund the gilt-edged pensions of public sector workers and let's not forget the state pension.

With the increase in the numbers of pensioners and the increase in life expectancy, the government have grasped the mettle and increased the state pension retirement age, etc. They now need to grasp the mettle with public sector pensions (which is simply a more generous version of the state pension) in the same way.

The country simply cannot afford to put the burden of generous public sector pensions, state pensions and pensioners healthcare on top of the shoulders of a population of workers who are already carrying their student loan debts, high mortgages and pension contributions, their own children, the army of loafers on benefits and their children, etc. etc.

It's time people woke up and smelled the coffee. The country simply cannot afford to be this generous to one sector of employees just because they are heavily unionised and unbelievably short-sighted and selfish.

my point is that is ALL pensions produce the SAME burden on the currrent working population

basically everything that is produced (products and services) are produced by the working population

so every thing that is consumed by the economically inactive (non working people like children, students, pensioners, unemployed, disabled, rich and lazy) is produced by the working population


the WAY this shows itself is through taxation for public sector non-workers and through excessive profits for private sector pensioners

the 'burden ' is exactly the same for any given level of pensioner total income

so if a public sector pensioner gets 10k pa and a private sector pensioner gets 10k pa then the workers at that time have to forego 20k of their income to fund that

it really is that simple

now whether to not the public sector workers get more than their fair share (currently 2% of gdp falling to 1.4% by 2040 ) is too much is another matter

kabayiri

CLAPTON wrote: »

my point is that is ALL pensions produce the SAME burden on the currrent working population

basically everything that is produced (products and services) are produced by the working population

so every thing that is consumed by the economically inactive (non working people like children, students, pensioners, unemployed, disabled, rich and lazy) is produced by the working population


the WAY this shows itself is through taxation for public sector non-workers and through excessive profits for private sector pensioners

the 'burden ' is exactly the same for any given level of pensioner total income

so if a public sector pensioner gets 10k pa and a private sector pensioner gets 10k pa then the workers at that time have to forego 20k of their income to fund that

it really is that simple

now whether to not the public sector workers get more than their fair share (currently 2% of gdp falling to 1.4% by 2040 ) is too much is another matter

By extension, what you seem to be saying is that pensioner prosperity is intrinsically linked to the nations prosperity. It's a reasonable concept, but there is an issue.

The prosperity of the nation is pretty elastic, expanding in good times and contracting in bad. Private pensions directly reflect this elasticity. Public sector pensions do not. There is a disconnect.

CLAPTON

kabayiri wrote: »

By extension, what you seem to be saying is that pensioner prosperity is intrinsically linked to the nations prosperity. It's a reasonable concept, but there is an issue.

The prosperity of the nation is pretty elastic, expanding in good times and contracting in bad. Private pensions directly reflect this elasticity. Public sector pensions do not. There is a disconnect.

well actually private pensioner incomes don't fluctuate because the vast majority of annunities are fixed or index linked

however it is true that new pensioners annunities are heavily influenced by the market and more importantly government policy

so currently new annunity rate are being hammered by government policy of keeping interest rate low (and hence annunity rates low),

whilst not discussed here much it seems to me to be a major scandle;
but I guess it suits the government to highlight public sector pension issues rather than how they are destroying private sector new pensioners income




so we need a more thoughtful and non political debate on the issues for both public and private sector pensions

Graham_Devon

RenovationMan wrote: »

The 'burden' of producing a profit for companies (which then indirectly fund pensions via dividends, share price increases, etc.) is already there for people who work in the the private sector, it's part of their job. They are then put under an additional burden through taxation to fund the gilt-edged pensions of public sector workers and let's not forget the state pension.

With the increase in the numbers of pensioners and the increase in life expectancy, the government have grasped the mettle and increased the state pension retirement age, etc. They now need to grasp the mettle with public sector pensions (which is simply a more generous version of the state pension) in the same way.

The country simply cannot afford to put the burden of generous public sector pensions, state pensions and pensioners healthcare on top of the shoulders of a population of workers who are already carrying their student loan debts, high mortgages and pension contributions, their own children, the army of loafers on benefits and their children, etc. etc.

It's time people woke up and smelled the coffee. The country simply cannot afford to be this generous to one sector of employees just because they are heavily unionised and unbelievably short-sighted and selfish.

So what do you suggest?

Let public sector workers retire with no pension and then fund them with benefits?

Should the private sector employess, such as BT employees also have lost their pensions? Or is it OK for the public purse to step in at that point?

ILW

Graham_Devon wrote: »

So what do you suggest?

Let public sector workers retire with no pension and then fund them with benefits?

Should the private sector employess, such as BT employees also have lost their pensions? Or is it OK for the public purse to step in at that point?

Or pay into funded pension schemes and take their chances like most other people. Let the unions run them if you like.

CLAPTON

ILW wrote: »

Or pay into funded pension schemes and take their chances like most other people. Let the unions run them if you like.

again
why do you think funded schemes are better than unfunded schemes

do you rejoice in the fact that people retiring now have poorer pensions (for the rest of their lives) compared to people retiring say 4 years ago or probably 4 years hence simply because the government has made a decision to bail out the banks by printing loads of money (QE)

is that your vision of a fair and just system?
is there nothing we can invent that's better than that?
could we not have a system that shares the pain and shares the good times too?

RenovationMan

Graham_Devon wrote: »

So what do you suggest?

Let public sector workers retire with no pension and then fund them with benefits??

Is that really the only option, Graham? Why do you create these overly-dramatic scenarios? It really is a poor way to debate and discuss an issue and I really wish you'd stop it.

Graham_Devon wrote: »

So what do you suggest?

The template already exists for what we can do with public sector pensions because it has already been used for private sector pensions and the state pension.

1) Follow the model for state pensions and increase the age limit for retiring. Follow the model for private sector pensions and allow people to retire before this set age limit but with reduced benefits.

2) Freeze Final Salary pensions on a certain date (1st April). Ensure that existing FS benefit rights that have been accrued up until the cut-off date are maintained.

3) Create a Career Average pension for existing members, beginning from the 1st April. Going forward, instead of members pension amounts being determined by the final salary over the last three or so years of their career (which will obviously be higher due to promotions, etc at the end of their careers), you average their salary out over the whole of their career in the public sector. This will stop higher managers from getting large payrises just before they retire in order to bump up their final salaries and therefore their pensions. It also means that if someone works the majority of thier life in low level jobs and then gets promoted towards the end of their career, their pension refects the whole of their service, not just the latter end as a higher paid manager.

4) Reduce the Career Average calculation percentage down from 1/66th (or whatever it is) but allow the employee to make higher contributions in return for the 1/66th calculation.

5) All new joiners go into a Money Purchase Scheme, funded by both employee and employer and invested in stockmarket funds. The percentage of salary used to fund the pension will be comparable to private sector pensions.

Graham_Devon wrote: »

Should the private sector employess, such as BT employees also have lost their pensions? Or is it OK for the public purse to step in at that point?

I don't know what you're talking about here.

drwho2011

RenovationMan wrote: »

3) It also means that if someone works the majority of thier life in low level jobs and then gets promoted towards the end of their career, their pension refects the whole of their service, not just the latter end as a higher paid manager.

Unfortunately promotion in the civil service is often dead shoes.

Having said that I agree with your suggestions.