Raising the pension age in order to pay for pensions

BobQ

CLAPTON wrote: »

I doubt there is any evidence for that.

I'm sure in any case there would be lots for technical ways of reducing the value of the pot or of the payout (if fact just like private pension funds).

Agreed, we have seen the same tinkering with public sector pensions and the index. Evidence is not there (one way or the other) but I think that its easier to tamper with the expectations of a minority than those of the majority.

MFW_ASAP

BobQ wrote: »

Technically you are right about funded/unfunded, but as we have seen with the debate over public sector pensions, its far easier to attack unfunded pensions as being unaffordable than those that are based on a fund.

I agree with this to a point, as the main issue I have with public sector schemes is that they defer part of the remuneration of public sector employees and in doing so, put a burden on future taxpayers. Employees should receive all of the pay they earn this year in this year's salary.

The other issue I have is how generous the pensions are and how little the employee contributions are. This would be addressed by having fully funded schemes because the government would not be able to shoulder all of the contributions (unlike now where they kick the can down the road).

grizzly1911

MFW_ASAP wrote: »

I agree with this to a point, as the main issue I have with public sector schemes is that they defer part of the remuneration of public sector employees and in doing so, put a burden on future taxpayers. Employees should receive all of the pay they earn this year in this year's salary.

The other issue I have is how generous the pensions are and how little the employee contributions are. This would be addressed by having fully funded schemes because the government would not be able to shoulder all of the contributions (unlike now where they kick the can down the road).

Paying public sector pensions in full now would not prevent future generations being hit. More would need to be borrowed today to fund them. The debt would need to be serviced and "repaid".

Fully funded schemes aren't funded soley by the government the employees contribute too. ( I know that the initial salary is paid for by the government but the service would have to be paid for who ever supplied it).

CLAPTON

grizzly1911 wrote: »

Paying public sector pensions in full now would not prevent future generations being hit. More would need to be borrowed today to fund them. The debt would need to be serviced and "repaid".

Fully funded schemes aren't funded so let by the government the employees contribute to. ( I know that the initial salary is paid for by the government but the service would have to be paid for who ever supplied it).

it's a mathematical absurdity

public debt = 1000 bn (say)
if we had a funded public scheme lets say annul contributions would be (made up figure) = 100bn


scheme 1 unfunded then public debt = 1000bn -100bn = 900bn

scheme 2 funded
then public debt = 1000bn
public pension savings = 100bn
net debt is of course 900bn

how is one better than the other?

like a person who owes say 300,000 but has saving of 50,000
thinks be's better off than some-one who simply has debts of 250,000 (and it happens ; just read the loan boards/DFW etc.)

plus of course that is all cases all pensions are paid by the working people at the time just as we are paying the pensions (and for other non working people) now.

MFW_ASAP

CLAPTON wrote: »

it's a mathematical absurdity

public debt = 1000 bn (say)
if we had a funded public scheme lets say annul contributions would be (made up figure) = 100bn


scheme 1 unfunded then public debt = 1000bn -100bn = 900bn

scheme 2 funded
then public debt = 1000bn
public pension savings = 100bn
net debt is of course 900bn

how is one better than the other?

like a person who owes say 300,000 but has saving of 50,000
thinks be's better off than some-one who simply has debts of 250,000 (and it happens ; just read the loan boards/DFW etc.)

plus of course that is all cases all pensions are paid by the working people at the time just as we are paying the pensions (and for other non working people) now.

The point you seem to be missing is with fully funded pensions, that the costs of funding the pension are met by current taxpayers who are in receipt of the services provided by the public sector worker. If the pension is not fully funded, then the cost of the pension is met by future taxpayers who have not received the services provided by the public sector worker.

We hear a lot from certain posters on here (especially Griz) who are against 'kicking the can down the road' and against the 'ponzi' scheme of high house prices. I therefore don't understand their objections to fully public sector pensions, unless it's because they have their own snout in the trough and don't want to change the status quo. If that is the case then they lack integrity.

CLAPTON

MFW_ASAP wrote: »

The point you seem to be missing is with fully funded pensions, that the costs of funding the pension are met by current taxpayers who are in receipt of the services provided by the public sector worker. If the pension is not fully funded, then the cost of the pension is met by future taxpayers.

We hear a lot from certain posters on here (especially Griz) who are against 'kicking the can down the road'. I therefore don't understand their objections to fully public sector pensions, unless it's because they have their own snout in the trough and don't want to change the status quo.

the can is ALWAYs kicked down the road because the only people who can provide food, clothing, health care etc in the future are the people working then.

Whilst that concept may be difficult to relate to private sector pensions it is obvious for public sector pensions:

by having a 'fund' is exactly like having two bank accounts:
one has a positive balance that you are proud off (called pension fund)
but the other has an increased overdraft (exactly matching the 'funded' ) scheme


so in 20 years or so we may well have a large book keeping entry in the savings a/c called pensions
but we have a large booking keeping entry is the a/c called national debt
which, if netted off, would be exactly the same number if there was no fund and all payments came off the entry called 'national debt'

MFW_ASAP

CLAPTON wrote: »

the can is ALWAYs kicked down the road because the only people who can provide food, clothing, health care etc in the future are the people working then.

Whilst that concept may be difficult to relate to private sector pensions it is obvious for public sector pensions:

by having a 'fund' is exactly like having two bank accounts:
one has a positive balance that you are proud off (called pension fund)
but the other has an increased overdraft (exactly matching the 'funded' ) scheme


so in 20 years or so we may well have a large book keeping entry in the savings a/c called pensions
but we have a large booking keeping entry is the a/c called national debt
which, if netted off, would be exactly the same number if there was no fund and all payments came off the entry called 'national debt'

We'll have to agree to disagree about this as I haven't the stamina anymore. Basically if someone states that a millionaire and a benefit claimant have the same burden on the state (the taxpayer) and cannot be dissuaded from this stance no matter how illogical it is, then there is no point trying to discuss it.

The good thing is that while you may hold these views for discussion purposes on the forum, your actual views are completely different because you DO have a fully funded personal pension. A case of "do what I do, not what I say"?

CLAPTON

MFW_ASAP wrote: »

We'll have to agree to disagree about this as I haven't the stamina anymore. Basically if someone states that a millionaire and a benefit claimant have the same burden on the state (the taxpayer) and cannot be dissuaded from this stance no matter how illogical it is, then there is no point trying to discuss it.

The good thing is that while you may hold these views for discussion purposes on the forum, your actual views are completely different because you DO have a fully funded personal pension. A case of "do what I do, not what I say"?

whatever your view about real resources
surely you must see that the state having two bank a/cs
one labelled 'general debt' and one labelled 'pension fund' makes no sense.


As far an my personal stances is concerned, there is an massive difference between what is advantageous for a small number of individuals than for everyone.

As with the savings paradox (paradox of thrift) ; in specific circumstances everyone trying to save will fail: how for a small number it many be an excellent strategy
In economics the sum of the parts is not necessarily equal to the whole.

One last example (nothing to do with pensions)
suppose tomorrow Loughton Monkey, in an alcohol fuelled moment gave a deserving person 10 million pounds (without strings)
I hope we would both agree that that the recipient would now be a rich person and could buy all sorts of things that they couldn't do before. (maybe give up work, buy a big house, world cruise, never work again etc)
Now suppose that LM gave every single person 10 million pounds
would they all be equally rich like the first; could they all retire?
Is there any difference between one person being given 10 million pounds and everyone being given 10 million?


and one last thing, I hope I didn't say that an idle rich man son was the same burden on the taxpayers as some-one on JSA: I meant to say they are the same burden on the economically active as each other (in the conventional meaning of the term)

MFW_ASAP

CLAPTON wrote: »

whatever your view about real resources
surely you must see that the state having two bank a/cs
one labelled 'general debt' and one labelled 'pension fund' makes no sense.

Depends on whether you believe that public sector pensions would be quite so generous if they were fully funded by current taxpayers instead of kicking the problem towards future generations?

Personally I don't, and indeed with the current pension reforms we are seeing exactly that. The employee contributions are increasing and the guaranteed pension incomes are decreasing. We are also seeing a move towards career averages to prevent the abuse of raising someone's salary just before they retire so they get a better payout.

CLAPTON

MFW_ASAP wrote: »

Depends on whether you believe that public sector pensions would be quite so generous if they were fully funded by current taxpayers instead of kicking the problem towards future generations?

Personally I don't, and indeed with the current pension reforms we are seeing exactly that. The employee contributions are increasing and the guaranteed pension incomes are decreasing. We are also seeing a move towards career averages to prevent the abuse of raising someone's salary just before they retire so they get a better payout.

indeed so, the future pensions for both state and public sector are being reduced without any reference to being funded which reflects the concern about the demographic changes to the population mix.

The increasing contributions aren't (in general) going into a pension fund but are simply going into the government bank account and reducing current debt.

Very sensible compared to going into a second bank account called 'pensions' whilst maintaining a higher level of debt in the general a/c:
although of course it makes absolutely no difference how many a/cs you have: it's the netted off total that counts.