Raising the pension age in order to pay for pensions

CLAPTON

Clifford_Pope wrote: »

The obvious answer which squares both circles is to invest in a worker.
As slavery is now illegal the acceptable solution is to aquire a younger spouse.
The deal is you provide a house, he/she provides an income from employment.

now that's what I call thinking outside the box

grizzly1911

MFW_ASAP wrote: »

The system is clearly broken, it's a scheme where part of the remuneration package of current workers is paid for by the next generation and it relies on a pyramid scheme of more taxpayers than pensioners. All things you have complained about in the past when 'kicking the can down the road' and 'pyramid schemes' have been applied to financial bailouts and house prices.

I therefore don't understand why you advocate staying with the status quo for pensions? The only (poor) reason I can think of is perhaps because you know I don't like the current system and you merely want an argument with me? That's fine, but don't you think you lose some integrity and look a bit foolish arguing against your own points?

How many existing private DB schemes are fully funded with no shortfalls? They keep kicking the can down the road.

Employees in the public sector already contribute towards their pensions.Benefits, retirement ages and contributions are constantly changing. The first reducing and the last two increasing. Many have been continue to be subject to pay freezes, on which the benefits are calculated, over the last 5 years. Many jobs have been transferred to the private sector where new (poorer) terms will be implemented and the government liability "crystallised". The gap is closing.

Is it more efficient for the government to fully fund a pension for 40+ years and simply have it sat in in an accounting entry rather than PAYG?

It is as much about what the benefits are as much as how they are funded. The government has benefited form lower relative pay for many by offering good pensions. Differed income as you put it. It also knows that a good proportion of those it employs will in fact not live to claim the pension.The government having a sizeable employee base and knows what the cost of that option is. It takes the decision to maintain it.

I wonder impact it would have to remove another 5% out of the public sector pay packet, year on year, would have on the economy at large?

Edit:- Not to mention the increase in taxation to pay for it and/or the removal of pension tax relief for contributions.

CLAPTON

one amusing side effect if the government actually did decide to set up fully funded schemes for both public sector and state pensions, is that it would amount to a virtual renationalisation of UK industry

Thrugelmir

CLAPTON wrote: »

one amusing side effect if the government actually did decide to set up fully funded schemes for both public sector and state pensions, is that it would amount to a virtual renationalisation of UK industry

What UK industry? Foreign owned/controlled in the main .

N1AK

grizzly1911 wrote: »

Many jobs have been transferred to the private sector where new (poorer) terms will be implemented and the government liability "crystallised". The gap is closing.

Why be so surprised? It turns out that it's massively cheaper for the government to employ someone via a private company than keep paying a public servant. Maybe if public pension schemes hadn't been so out of line with private ones there wouldn't have been such a big move to this.

Perhaps if the people representing the public sector workers being outsourced had been willing to compromise and accept terms closer to those a private organisation could employ people to do the work on rather than continuing to demand benefits completely out of line with the rest of society the people they represent wouldn't have been outsourced?

MFW_ASAP

grizzly1911 wrote: »

How many existing private DB schemes are fully funded with no shortfalls? They keep kicking the can down the road.

Employees in the public sector already contribute towards their pensions.Benefits, retirement ages and contributions are constantly changing. The first reducing and the last two increasing. Many have been continue to be subject to pay freezes, on which the benefits are calculated, over the last 5 years. Many jobs have been transferred to the private sector where new (poorer) terms will be implemented and the government liability "crystallised". The gap is closing.

Is it more efficient for the government to fully fund a pension for 40+ years and simply have it sat in in an accounting entry rather than PAYG?

It is as much about what the benefits are as much as how they are funded. The government has benefited form lower relative pay for many by offering good pensions. Differed income as you put it. It also knows that a good proportion of those it employs will in fact not live to claim the pension.The government having a sizeable employee base and knows what the cost of that option is. It takes the decision to maintain it.

I wonder impact it would have to remove another 5% out of the public sector pay packet, year on year, would have on the economy at large?

Edit:- Not to mention the increase in taxation to pay for it and/or the removal of pension tax relief for contributions.

Sorry Griz, but you just seem to be waffling around the subject to avoid answering my question - writing a load of information (that I already know about pensions) in order to pad out your post and hope it distracts from the reality that you're not answering why you think it's OK to 'kick the can down the road' or have Ponzi schemes with pensions when you are so opposed to them in other areas.

You also keep trying to distract with references to private sector schemes, even though we both know that most have closed to new members or closed completely because they are to expensive to fund.

This is my point with public sector pensions, they are too generous for the country to afford. Everyone should be on Defined contribution, with the onus on the employee to sort out his own pension - which is exactly what happens now for private sector workers. Why should public sector workers be any different?

grizzly1911

MFW_ASAP wrote: »

You also keep trying to distract with references to private sector schemes, even though we both know that most have closed to new members or closed completely because they are to expensive to fund.

This is my point with public sector pensions, they are too generous for the country to afford. Everyone should be on Defined contribution, with the onus on the employee to sort out his own pension - which is exactly what happens now for private sector workers. Why should public sector workers be any different?

Whether private sector schemes have closed or not many remain underfunded at this moment in time. They will need to be topped up at some point from future profits generated from future generations, or people may not actually live long enough to match the prescribed funding requirement.

So employers don't make any contributions under DC schemes?

You will be happy to pay more tax to fund the employee DC content building up the future pot? You will be happy to accept the impact on the economy of removing perhaps 5+% percent out of public sector pay packet?

grizzly1911

N1AK wrote: »

Why be so surprised? It turns out that it's massively cheaper for the government to employ someone via a private company than keep paying a public servant. Maybe if public pension schemes hadn't been so out of line with private ones there wouldn't have been such a big move to this.

I am not at all surprised hatcheting workers pay and benefits is cornerstone of outsourcing. That, providing a poorer quality service and a degree of automation where applicable further reducing employment.

It may work out cheaper in the short term to outsource. How long that will actually hold true is another matter. Whether it is cheaper for the whole of society in the long term is unknown. Not just fiancilly but in terms of social and issues too.

I made the point previously that lots of money has been "saved" in these moves. The standard of living for many will have fallen as a result as will future prospects.

What will happen next when the current pay and rations packets become unaffordable which they will?

Who will end up picking up the pieces?

MFW_ASAP

grizzly1911 wrote: »

Whether private sector schemes have closed or not many remain underfunded at this moment in time. They will need to be topped up at some point from future profits generated from future generations, or people may not actually live long enough to match the prescribed funding requirement.

So employers don't make any contributions under DC schemes?

You will be happy to pay more tax to fund the employee DC content building up the future pot? You will be happy to accept the impact on the economy of removing perhaps 5+% percent out of public sector pay packet?

Again with the distraction to closed/rare pivate sector DB schemes? Really? Well as they are not financed by the taxpayer they are not relevent to the discussion. Let's park them a ditch the distraction, huh? It's not working anyway, I'm seeing through it.

Employers do make contributions under DC schemes, but they are not open ended commitments to pay the employee an income no matter what happens with the economy.

I'd argue that as DC schemes are not as wildly generous, nay extravagant as DB schemes, that my taxes would not rise to pay for them. Indeed, my taxes may reduce. However, to answer your question, I am happy to pay for the services I receive from central and local government and other government department. I expect that the people woking in these departments will receive remuneration appropriate to the positions they work in and I accept that part of their remuneration package includes an element of pay to go into a pension scheme. What I like about fully funded schemesis that they are transparent - there is no hiding public sector workers pay levels by deferring pay to another generation. I also strongly feel that I receivve the sevices these workers supply and I should pay for them - not my kids, they should pay for the services they receive.

Your last sentence is nonsense because all you are doing is moving money around - using tax money to pay to public sector workers to then take back as tax. All thathappens is that 5% of their income will go into a pension and be invested (like mine and other private sector workers) into the economy via shares, bonds and gilts.

So, ar you going to answer the original question: Why do you think it's OK to 'kick the can down the road' for pubic sector pensions but not other financial areas and why do you think it's OK to have a Ponzi scheme for pensions but you moan about it with house prices?

I wait in excited anticipation to see your next tactic for dodging these questions.

Loughton_Monkey

CLAPTON wrote: »

goods and services are produced by the economically active

Both here and abroad. True.

CLAPTON wrote: »

goods and services are consumed by all members of society

True.

CLAPTON wrote: »

there is thus a redistribution from the people that create the g&S to those that consume them

because we are a not a barter economy then much of distribution is done via the mechanism called money

Not quite sure of the word "redistribution". But certainly I understand the gist. I take £70K in crisp tenners from my wallet and give it to the BMW salesman. He keeps £5K and throws the rest to Germany with an instruction to make a car of my specification. They spend that money on materials and labour and shipping the thing to England, pay their labourers, and presumably bank a nice little profit for later distribution to the German tax authorities and shareholders in BMW....

At the other end of the spectrum, I take out £15 and distribute this to the window cleaner who's just cleaned the windows. I guess he throws £10 of that to the woolly hatted youths who did the work. With any luck, HMRC may see a small slice of this....

So basically what we have here is a 'distribution' of cash from a consumer to a business. Then we have the 'distribution' of a product (tangible or intangible) from the business to the consumer, of equal value to the cash. And finally we have a distribution of the cash to lots of people, including the hard-pressed working man who put in most of the effort.....

Don't know where all this is going.....

CLAPTON wrote: »

so we need to understand how money is distributed between the people so they can obtain the G&S that have been produced

Well I [sort of] explained that above didn't I?

CLAPTON wrote: »

The important to note is that what is consumed by the population is the G&Ss and that pensions, wages, benefit payment, rent, dividend, interest etc are mechanism for the distribution and are not primary G&S

You're breaking up a bit here. All I can understand is some bits about what I've been trying to explain to you.

In this case, the £70K car and the £15 clean windows are, indeed, the GDP. Both these Goods/Services have been exchanged for cash of equal value.

Seems fair to me! And yes... the resulting 2,746 little slices of that cash going in a myriad of directions is purely the normal distribution of cash that occurs every minute of every day according to natural market mechanics.

CLAPTON wrote: »

Irrespective of how much 'money' we have it is the per capita quantity of G&S (broadly measured by GDP) what makes us 'rich' or 'poor'.

Well that's what I really call "Cart before the Horse thinking".

If I read you correctly, all we have to do to increase GDP is to send out instructions to the Jaguar Car Plant begging "Quick! Get everyone on overtime! Produce more goods! Make £100 million worth of cars and chuck them in the parking lot." QED we have £100 million extra GDP!

Hate to disappoint you, but that's not GDP until they are sold. It's the cash that drives the GDP and not the other way round. So the only true measure of 'wealth' at any one time is the amount of cash [or other assets]. Some of it is in my wallet. Some of it is in your wallet. A lot of it is in the pockets of businesses [or more correctly, perhaps, the owners of the business]. For logical reasons, there is a very strong correlation between GDP per head, and change in wealth (amount of cash per head) for any particular year, but I really don't see where that takes us or what you are trying to say. The vast, vast, vast amount of wealth in UK was produced tens and literally hundreds of years ago! Just ask the Duke of Portland.

Over 40 years ago, I started being a little worker bee. I slaved hard and helped the business I worked for produce goods and services to boost GDP. In return I got cash. Luckily, I chose to save a lot of that, and now I don't personally produce one iota of GDP for anyone. I just sit around consuming G&T all day.

In round figures, therefore, I've made my pile and to a large extent, whether you (or anyone else) produces another £1,000 of GDP today has no effect on my own wealth. So GDP doesn't drive my wealth very much at all. Perhaps marginally on my investment returns if the truth is known, although I need rather more Indians & Chinese to produce GDP than UK workers. Every day, I sit here and look at my wallet. The other day, I decided to 'create' £20 of GDP so I went and had a pint and a haircut.

I'm a bit of a nerd in that I have kept personal accounts all my working life. Give me a bit of time, and I could probably use a bit of 'fifo' logic to tell you that the £75 currently in my wallet came from my August 1982 salary.

Today, I can decide to take another £20 out of my wallet, walk down the town, and boost GDP by buying Mrs LM some flowers..... Shall I or shan't I?.... Nah..... they tend to wilt over a couple of days and are then worth nothing. Alternatively, I could take £50 out and buy her a gold pendant. It will retain some of that value even after a year. May even be worth more one day.......

Or I could just stay in, read an economics book, and have a nice gin & tonic.....