Makes my blood boil

agarnett

Ah I'm on your ignore list am I, hyubh? But you choose to engage anyway? What a rather pompous type of person you must be to choose to broadcast that others need to know that you hyubh have put me agarnett on your ignore list :rotfl:

agarnett isn't even a real persona ! It's not my real name! Don't you struggle to understand threads that you are aching to contribute to when agarnett is making some of the running? It's perhaps a small price you are willing to pay for the immense satisfaction of sticking it to some imaginary persona I guess, but you have to tell people you've done it in order to extract the most satisfaction. How strange! Have you thought about sticking needles into dolls instead?

I bet you just log out when it is to hard to see who is replying to who, just to see the whole thread so you can get your bearings Tiny things please tiny minds perhaps :rotfl:

OK so there is general agreement that the burden upon taxpayers is currently about a trillion pounds - does anyone here know what a trillion looks like? I mean really? I am good at maths. I once even studied some Astrophysics. Back then trillion was not in our vocabulary, and billion wasn't used much because American's and Brits couldn't agree on what it was i.e. whether it was 1 million million or 1000 million or possibly 100 million (although most commentators have never re-established that we may have used that at one time!). 40 years ago, if trillion was mentioned in a scientific dictionary back then, printed in England, then it would probably have meant a million million million (123 - getit?) i.e. a 1 with 18 zeros behind it.

We pointy-heads therefore dumped the idea of using such confusing terms and used simple powers of 10 in all scientific calculations. Saves misunderstandings. Little did we know that within our lifetimes, trillions and billions would need to become commonplace used in discussing pension scheme liabilities, because most commentators and even the public sector populace on MSE would not know what was meant by 10^12 or 10^9. So it was kind of fudged by the UK Chancellor around 1974/75 and they ended up introducing the mighty American nomenclature which was actually first dreamed up by the French as their "small scale"!

Anyway, as a one-time trained scientist, let me remind readers that even a small scale trillion (£1,000,000M) is a number that stupifies most of our brains if we are honest, even though a human brain can contain as many as a quadrillion synapses by some estimates


Now it may be that some of our readers like hyubh do indeed have have a quadrillion synapses available in their finely tuned brains to assist in processing these types of numbers, but I'd offer that anyone here on MSE implying a trillion as pension liabilities is both well understood and under control - well MSE'ers like that are surely a bit delusional?

So, the point of me introducing these numbers, is that they are the at heart of the public sector pension problem, and I don't think anyone has previously reminded us of it. So again:

1 TRILLION POUNDS i.e. £1,000,000,000,000

That's broadly what it would immediately cost if we wound up public sector pension schemes and passed the liabilities to an insurance company (would have to be a fairly big insurance company I'd think!). That would be the ball park figure to knock those pension schemes on the head as happened to most in the private sector and let all current public servants take their chances alongside the rest of us in DC schemes.

Now, can we get that number back into context with something else we perhaps do feel we have heard about ? How about UK Government National Debt? Hands up who knows how much every man woman and child owes to whomever has bought UK government debt in the form of UK government sovereign debt securities ?

Well I think that one of the most recent estimates of national debt (which incidentally, does not include what is owed in UK public sector pensions liability, is around £1.6 Trillion.

God knows what we've spent all that money on, but there's no doubt we owe it just the same as we owe public sector retirees their windfalls, unless we change the rules and tone their entitlements down a bit.

Anyway, I'd be very surprised if any of them can come up with mathematical proof of sustainability of the existing public service schemes, so they could hardly complain, could they?

Meanwhile, there is one extra worrying factor here - whilst as far as I know, no UK public sector pension scheme liability has been repackaged yet as UK sovereign debt securities, what is normally referred to as the national debt has been so packaged and sold - mostly to UK private sector pension schemes :rotfl:

It looks like excluding the LGPS police and firefighters schemes that around £30BN or more goes out every year on public sector pensions. So for every public sector employee in work (remember we said there are about 5M of them), £6,000 is paid out annually in public sector pensions to those who have retired (and that doesn't include LGPS police or firefighters. There are some receipts that are shown offsetting what goes out, but in the main, they are recorded as "Employer Contributions" and since the employer is the state in every case, I am struggling to understand what kind of double entry accounting is needed to present the true picture properly

Is there anyone out there who can show us how this actually is supposed to work?

I think total UK government annual spending is of the order of £1million per head of population so actual payment of public service pensions benefits would appear to account for around 5% of the country's entire spending? That's more than three times what we spend on defence, is it not?

Perhaps we should look at the numbers in more detail - there is some old information provided via a bbc.com webpage about how many pensioners (already receiving pension), how many active (still working) and how many deferred members there were in 2011 in each of the major UK pubic service pensions schemes here: http://www.bbc.com/news/business-10912958 . Again, I haven't yet come across any newer figures. I guess someone might oblige.

hugheskevi

That's broadly what it would immediately cost if we wound up public sector pension schemes and passed the liabilities to an insurance company (would have to be a fairly big insurance company I'd think!). That would be the ball park figure to knock those pension schemes on the head as happened to most in the private sector and let all current public servants take their chances alongside the rest of us in DC schemes.

If only most private sector schemes had been fully bought out...PPF Purple Book 2015 shows the liabilities of private sector Defined Benefit schemes to be £2.1 trillion on a full buy-out basis, with assets of £1.3 trillion. The total deficit of schemes in deficit is £805bn.

That means lots of hard working public sector workers are paying inflated prices for goods and services, just to pay the under-funded pension promises made by irresponsible private companies in the past

fatbeetle

Ive found out that someone i know who was in the civil service for all of their working life and did do very well in their career is now retired on a £100k a year pension, for lets say not exactly what you would have to contribute in the private sector to have such a return.

I saw a guy driving a Bugatti once, I was so furious, as only drive a Subaru.

!!!!!!!

Muscle750

fatbeetle wrote: »

I saw a guy driving a Bugatti once, I was so furious, as only drive a Subaru.

!!!!!!!

Impreza? Third of the engines go bang within 30k miles seen it loads of times

Muscle750

Just seen the article on pensions on todays BBC news website, Take a read

MPD

If the public sector DB pensions were fully funded that would mean there would be a £1 trillion investment fund answerable directly to the public sector pension members. How would the Daily Mail and Telegraph feel about that? :eek:

Muscle750

Meanwhile its down to us lot in the private sector to provide it for them as ive said shame they dont return the favour . Plus im pretty sure im correct in saying that in the Public domain the FS pensions can be accessed at 50 althou i intially thought it was 55 yet i cant get to mine till my retirement age. Thats if i live long enough to see it ...............then what happens ?

GunJack

Muscle750 wrote: »

. Plus im pretty sure im correct in saying that in the Public domain the FS pensions can be accessed at 50 althou i intially thought it was 55 yet i cant get to mine till my retirement age. Thats if i live long enough to see it ...............then what happens ?

the earlier versions of the CS pension could be taken at 50, but with 10 years actuarial reduction, at 5% per year early, so take at 50 = only 50% of what your pension should have been... always been the rules. So, at max 34 years service = 34/80ths of salary at leaving, minus 50% = 17/80ths of salary....

..not such a great deal to go early....

hugheskevi

Plus im pretty sure im correct in saying that in the Public domain the FS pensions can be accessed at 50

You are not correct. It is only if the pension scheme provided members an unconditional right to retire (ie no employer permission required) prior to age 55 in 2006. Some schemes did, some didn't.

the earlier versions of the CS pension could be taken at 50, but with 10 years actuarial reduction, at 5% per year early, so take at 50 = only 50% of what your pension should have been... always been the rules. So, at max 34 years service = 34/80ths of salary at leaving, minus 50% = 17/80ths of salary....

..not such a great deal to go early....

The deduction is about 5% for a small number of years of early access, but if you take the pension many years early the deduction per year is a bit lower. So accessing the pension 10 years early reduces the value by only about 36%

There would also have been the option to purchase added years prior to 2007, and added pension too, boosting the pension beyond 34/80ths.

Given the pension doesn't have National Insurance deductions, there is only income tax and if retired at 50 the Personal Allowance should make a decent slice of the pension non-taxable. So if shifting 40%/45% taxed income into added years/added pension, it is extremely tax efficient. Particularly when combined with the new pension flexibilities, personal pensions become very good too, providing tax efficient capital to fill the gap between 50 and State Pension age before other pensions and the State Pension start. That means no concerns about the Defined Contribution pot running out before death, so no longevity risk to manage, just the investment risk.

So not the most valuable option, but with financial planning it can be made to be very valuable in some circumstances. But that applies to many things in life, not just public sector pensions.

Andy_L

Muscle750 wrote: »

Meanwhile its down to us lot in the private sector to provide it for them as ive said shame they dont return the favour . Plus im pretty sure im correct in saying that in the Public domain the FS pensions can be accessed at 50 althou i intially thought it was 55 yet i cant get to mine till my retirement age.

Really? Your FS bit has no rules for early retirement & your DC bit somehow has stricter rules than the general right to access it at 55? Seems unlikely