worst pension ever

hyubh

Old_Slaphead wrote: »

But it doesn't contribute anything towards the eyewateringly large future liabilities being accrued - to be paid for by future generations. One reason why the public sector will be radically reduced over the next decade or two.

Old Slaphead - I apologise for not including you earlier! (Slaps forehead!) Still, just as well, given kidmugsy has been strangely silent. I'm curious about your 'radically reduced' theorem however - how does a radically reduced payroll help reduce the historical liablities in a final salary pension scheme exactly? (I assume you would abolish TUPE and 'fair deal' protections too in your 'perfect' world.)

Your talk of 'eyewateringly large future liabilities being accrued' is pure ignorance by the way, but I'll let that pass. The upcoming LGPS fund valuations (for example) will be 'fun', but so due to historical liabilities + mediocre stock market performance. Employer rates may be high, but they cover liabilities relating to current service nicely. Give thanks to the EU for that!

SeekTruth

hugheskevi wrote: »

...
Would be interesting to look at some Monte Carlo analysis to see which of uncapped CPI or RPI capped at 5% has the higher expected value - my guess is that there wouldn't be much difference.

Agree it may be of interest (particularly what factors you intend to include in your simulation) but, assuming you're using 'expected' in its mathematical/probabilistic sense I'm not convinced it is particularly relevant.

I only expect to have one attempt at life, and it's now. I make many financial decisions that I know have a negative expected value, e.g. I've just paid out for buildings insurance on my house.

Suggest that for many financial decisions it is more appropriate to take a MiniMax approach than to maximise expected value.

Thicko2

Stargazer57 wrote: »

Except that longevity is heavily correlated with wealth, which is in turn heavily correlated with income. To put it another way the highly paid get a better deal from most DB schemes (even the career average type) than those on lower incomes.

Thats a fair point, but in terms of career average, we are buying a proportion of salay per annum. I don't see tesco directors paying a higher rate compared to the till workers on this basis?



I'll happily offer you a deal. You can keep all the excess of contributions over benefits now as long as I (and other taxpayers) never have to pay when benefits exceed contributions.

That was the deal signed up to for the NHS after the 2007ish reforms of pensions. It was the risk share deal where extra contributions were agreed to fall on members if required over the medium term.

Its predominately the non-contributory armed forces deal (still with no increase in members contrbutions) driving cost growth.

hyubh

Thicko2 wrote: »

Its predominately the non-contributory armed forces deal (still with no increase in members contrbutions) driving cost growth.

That's too rosy a picture to be honest. In a pay-as-you-go scheme like the NHS one it's harder to see, but in the funded LGPS, liabilities pertaining to before DB schemes generally had to look at liabilities realistically (which wasn't so long ago) are pretty painful, getting worse with poor stock market performance, and largely unaffected by the lack of general pay rises in recent years.