Makes my blood boil

hugheskevi

No-one has yet added up the total members in the public sector schemes for us, but we know there are about 5M active working public servants out of a total UK working population of about 30M i.e. about 1 in 6. But we don't know how many deferred members there are or actual pensioners already receiving payment of their public sector pensions.

Hutton report from 2010 is a good starting point - link here. Information is on page 24.

Every scheme also publishes Valuations, which has more recent information.

agarnett

Hi uk1
I am who I am, and as I have said before, I am very comfortable in my own skin. I feel very fulfilled in my life, I am content, I have less grey hair than most my age, I am lucky that I have always on the outside looked like someone others would like to know, and lucky that I was God-given more fireable braincells than average, and got the best possible education for them, I know I am loved, I know I am respected, and I know my edgier and verbose sides are tolerated by those who really know me, I know I have done good for others, I am still learning (have never stopped studying a wide variety of stuff). In short, nobody is perfect, and not everyone has the same idea about what is tolerable or what is irritating.

However I do have a voice which clearly I am not afraid to use, and some of the stuff I point at seems (to a sufficient number of people) to be worthy of being picked up and improved by others.

You say the discussion is derailed, uk1, and I have already said I consider you to be wise, but I know you will acknowledge that there are probably far more wise persons reading the thread than contributing to it - and you are all different in your perceptions.

You find my style irritating, others may be able to tolerate it.

I am of course no shrinking violet.

Now then, on the question of how the £1tn (or £2tn) is measured and whether it is worth measuring at all i.e. the "if it ain't broke, don't fix it" argument.

Taking the last analogy first, who among you, or who among Treasury officials at HMG is monitoring the machine with adequate sensors?

737 is a good aircraft, and I am now in a departure lounge shortly to get on one.

But what went wrong at Kegworth? That was then, but now the pros are all smart?

I dont think HMG have either the correct sensors or the ability to properly analyse those they have got.

Goldman Sachs might, but I wonder how many deliberate crashes they may have brought about by fiddling the levers to suit themselves! Very emotive for anyone at GS to read, I know, but selling products to one client and then betting against them performing in another area of their business - isn't that what we have read generally that they might do?

Or are they like another Google "We do no evil"?

So like you need me to be more succinct, and stylish, I and all of us, need a much more succinct analysis of the obvious problem of longevity and low investment yields (whether HMG chooses to indulge or not in investments) before I can be reassured to any extent that there is no problem worth flagging as Muscle750 and I, and many much more knowledgeable people before us, already have done.

uk1 and bowlhead99, and others who know in your heart of hearts that there is a problem we must not ignore, why not take a lead in this thread, and give readers a break from my style?

uk1

Thanks.

I didn't once say I found your style irritating. I was just suggesting (helpfully I had hoped) that the style might prove to be counter productive in that by suggesting that your motives were solely philanthropic rather than as well as or instead of self-interest, it tended to focus off of the topic but onto other minor things. That was all.

It is a shame my wife and I aren't on your flight. We have spent several hours on the 737 BA simulator at Cranebank and have quite a few takes offs and landings at Heathrow under our belt. If there was a problem we could jump up and save the flight. She was better at it than me as I kept heading off after landing to destroy T5. The BA Cranebank simulators should be on everyone's list to do as it is an experience of a lifetime. But that is a different story.

I've added a link in case anyone fancies it. As it happens the Captain in the picture was our training captain, as she was on maternity leave from her 737 job based at Gatwick and is sitting on the simulator we shared with her. She had a "baby on board" at the time! Sadly the 737 is no longer available. It was the best one because it is real; flying ie not fly by wire. That is progress.

https://www.britishairways.com/en-fr/baft/fly-a-simulator/fly-a-simulator-public/fly-a-simulator-public

https://www.britishairways.com/en-fr/baft/fly-a-simulator/fly-a-simulator-public/booking-your-experience/booking-your-experience


Jeff

agarnett wrote: »

Hi uk1
I am who I am, and as I have said before, I am very comfortable in my own skin. I feel very fulfilled in my life, I am content, I have less grey hair than most my age, I am lucky that I have always on the outside looked like someone others would like to know, and lucky that I was God-given more fireable braincells than average, and got the best possible education for them, I know I am loved, I know I am respected, and I know my edgier and verbose sides are tolerated by those who really know me, I know I have done good for others, I am still learning (have never stopped studying a wide variety of stuff). In short, nobody is perfect, and not everyone has the same idea about what is tolerable or what is irritating.

However I do have a voice which clearly I am not afraid to use, and some of the stuff I point at seems (to a sufficient number of people) to be worthy of being picked up and improved by others.

You say the discussion is derailed, uk1, and I have already said I consider you to be wise, but I know you will acknowledge that there are probably far more wise persons reading the thread than contributing to it - and you are all different in your perceptions.

You find my style irritating, others may be able to tolerate it.

I am of course no shrinking violet.

Now then, on the question of how the £1tn (or £2tn) is measured and whether it is worth measuring at all i.e. the "if it ain't broke, don't fix it" argument.

Taking the last analogy first, who among you, or who among Treasury officials at HMG is monitoring the machine with adequate sensors?

737 is a good aircraft, and I am now in a departure lounge shortly to get on one.

But what went wrong at Kegworth? That was then, but now the pros are all smart?

I dont think HMG have either the correct sensors or the ability to properly analyse those they have got.

Goldman Sachs might, but I wonder how many deliberate crashes they may have brought about by fiddling the levers to suit themselves! Very emotive for anyone at GS to read, I know, but selling products to one client and then betting against them performing in another area of their business - isn't that what we have read generally that they might do?

Or are they like another Google "We do no evil"?

So like you need me to be more succinct, and stylish, I and all of us, need a much more succinct analysis of the obvious problem of longevity and low investment yields (whether HMG chooses to indulge or not in investments) before I can be reassured to any extent that there is no problem worth flagging as Muscle750 and I, and many much more knowledgeable people before us, already have done.

uk1 and bowlhead99, and others who know in your heart of hearts that there is a problem we must not ignore, why not take a lead in this thread, and give readers a break from my style?

BobQ

agarnett wrote: »

I must admit having been away from the keyboard for a few hours I am heartened in that we do seem to have sparked a little more debate on the scale of the problem,.....

Too long to give this the attention you think it deserves! I note the personal barbs which are quite unnecessary.

One of you accused me of spin to my arguments - like most in the thread with one or two exceptions who will be wise enough to know who they are, I am not immune to that, but could you please stick to the problem at hand and stop trying to knock us down as individuals.

Given the rest of your verbose contribution, and re-direction of the OP, this is rather hypocritical.

Forgive me not acknowledging by name, but another of you implored that some of the public service employees are now contributing 10% of salary to their own pensions.

It is true whatever you might be implying. I suspect that this is now more than most people contribute to a DC pension, yet they still complain that they do not have a decent pension.

The biggest contributions to addressing the projected shortfalls are now in place, the move to CPI, higher contributions by members and the move of retirement date to be the State Retirement Age. I imagine that within the next 5 years we will see further plans to defer the retirement age which will also reduce costs of DB schemes. I suspect we will also see changes to accrual rates to improve affordability.

I did hope some kind soul would jump in and correct me by explaining which bit of the £153BN was simple State Pension for all, and which was public service pension payments.

Try doing your own research.

Someone else has wittered about longevity and discount rates as if they are unique features of calculation of public sector pension liability. They are the common jargon employed for all DB pension schemes, albeit they are all tweaked (spun) to suit the separate scheme agendas.

LOL - You accusing others of wittering! I never said it was not common jargon. My point was that you could use different parametric assumptions and reach a higher or lower figure.

I guess the corollary to "wind up" in public service pensions would simply be a retrospective change of the pensions promise.

I think that is not the only solution and would be unfair to those who have worked on the basis of a contract that guaranteed their pension. I also think Government has lost an opportunity here. When this problem emerged, the Government could have closed the current schemes and moved all staff on to a less generous scheme. It would have been easier to afford to have honoured the pensions if they had done that.

I have no intention of responding to further posts from you if you persist in the insulting remarks. I will just let you witter on!

atush

Bob, you do realize why he is on so many ignore lists?

BobQ

agarnett wrote: »

Thanks bowlhead99.

There are far too many references to public sector employees having made clever choices and having important jobs in society and even I read yesterday, that they might be generally more skilled than private sector!

If that was so then why are we in such a state and why has so much been outsourced to private sector?

!

I will ignore the witterings in your post, the snide remarks etc.

Specifically, like many people I have worked in the public sector and the private sector, I now work in the private sector but regularly deal with parts of the public sector. In general people do not go out and say 'I want to be in the public sector' or 'I want to be in the private sector' - some do but most float between them. What they do is look at what it offers them individually and make a choice (informed or otherwise). So yes, people have made choices that they would rather have higher pay now and do not think of the pension while others make the choice that a good pension is worth a lower salary. I would not call these "clever choices" but they are choices that sometimes pay off or not.

It is a fact that on average the levels of qualifications/skills in the public sector are higher. That is simply the consequences of outsourcing. Over the years all sorts of unskilled jobs have been moved to the private sector (cleaning, security staff, catering assistants, some clerical jobs). This is not to demean those valuable jobs, but it means on average more public sector staff have degrees etc and this has risen as more work is outsourced to the private sector. Is it really such a shock that GCHQ is packed full of clever graduates and McDonalds is mainly staffed by lower skilled workers?

BobQ

atush wrote: »

Bob, you do realize why he is on so many ignore lists?

The ignore button may come, but it would deprive me of the opportunity to see a master witterer at work.

agarnett

Sir Humphrey’s Legacy; facing up to the true cost of public sector pensions a book by Neil Record

Thanks to Andy L for the prompt

Written in 2006 before you know what, I see!

bowlhead99

agarnett wrote: »

Sir Humphrey’s Legacy; facing up to the true cost of public sector pensions a book by Neil Record

Thanks to Andy L for the prompt

Written in 2006 before you know what, I see!

So you've now gone from writing 500-1000 words per post to just 3 lines of which one of them is a link to a 127-page tome. We would truly be gluttons for punishment if we were to ask for your opinions on the commentary held within.

Here are a couple of extracts from that report by the Institute of Economic Affairs:

Are unfunded pension schemes a bad idea ?
Is there anything inherently wrong in unfunded pension schemes in the public sector? Probably not. The arguments for funding public sector pensions per se are not strong. The main purpose of funding, after all, is to ensure that pensioners get paid, and the one employer who is certain to continue to be solvent, and to be able to fulfil its promises to pensioners, is the government. Its tax-raising powers make this a near-certainty, rather than just highly probable.

So, according to the IEA author, using an unfunded scheme is fine.

Annual cost of pensions
I have concentrated on the headline liability. Knowing this value accurately can do little but scare policy-makers and is unlikely to change the balance of power in negotiations between employers
and employees (and their unions). Unless the government changes the way it accounts for its occupational pension liabilities, and includes them in the national debt, then little hangs
on the scale of the liabilities except shock headline value. Most relevantly, the current outstanding liability has already been incurred, and apart from reneging on its promises (which later it may have to do), the government can do little to mitigate this debt.

The government can, however, act to reduce the liabilities’ growth rate, and indeed with a thorough revision of its pension arrangements it would be able to begin to bring them down.

So, bandying about a number like £1tn is not useful. It has some shock value because there are a lot of zeros on the end of it when you write it out as a number rather than just saying 'tn', but to most hearing it, it's an abstract concept, a large number which doesn't relate to their daily life.

I am not personally paying a trillion. My neighbour who will at some point be a retired teacher, is not personally receiving a trillion. And whether the number we have accrued is a billion or a trillion or a quadrillion, it is a liability that has already been incurred, because the person has already gone to work and fulfilled his contract and we owe him, so unless you think it's morally right to say "haha only kidding, we're not paying you a penny", you can't save the trillion.

Bizarrely though, you think that it is morally wrong that the trillion be paid, even though it was agreed between the employer and the employee, and that we should not pay our debt as it falls due. By contrast, many of the rest of us (including people like me who are private sector and making my own pension provision) think it would be morally wrong to renege, to welch on our debt.

What can be done, as the author suggests, is to change the way public sector employees are compensated going forward, which requires education of the various public sector employers to recognise the true annual cost of the pension promise, and public sector employees be educated to recognise its value, because these things are very expensive as they stand. The cost of employing someone by giving them a pension promise should be made more explicit, and that would assist in negotiating the pay deals in terms of sitting round a table with unions, because simply ranting as you have, "OMG, we've spent a trillion !!!!1!!11!one!!" is not going to practically move the situation forward.

One of the Commentaries to the report concludes at page 125:

Union intransigence, which is an inevitable result of the schemes’ structures, has made the possibility of reform unlikely in the current climate. The extremely high cost of the schemes means, however, that employees can be offered generous extra salaries as inducements to voluntarily leave the schemes, avoiding the need for confrontation

The report is from 2006 and various changes have certainly been made in the decade since but have not stopped public sector DB pensions from being expensive. If we don't want the open ended cost of a 'pension promise', we should induce people to take DC instead, or shift the overall compensation structure to more salary and less DB pension provision.

So, you probably posted the report because you wanted to hammer home your 'shock value' point that there is a trillion of unfunded liability out there. But it is quite trivial to go through the report and pull out the common sense comments with which most of us would agree, and note that they do not particularly support your idea that we should be ranting about a trillion of existing cost and weaseling out of it by just refusing to pay it or charging a huge special tax on anyone who receives a part of it.

agarnett

I just set 'em up bowlhead99. So you read it ? But you added very little of your own to the interpretation - pray why not?

This one then, is not a three liner ...

For the truly wise amongst us, it should be obvious from that report that the £1tn figure is 10 years out of date AND that it predated the totally unexpected Financial Crisis, AND that if the basis of it is indeed the assumed cost of gilts (in 2006) that would provide the necessary yield (in 2006) to support public service pensions then it is totally incorrect now (in 2016). Funded private sector schemes have mandatory 3 year revaluations for a reason. Many would say that full annual revaluations are necessary thesedays.

Are you therefore satisfied with no revaluation in 10 years?

Have you read the 2010 Hutton report which was kindly linked to by hugheskevi which is at least written with a background of the financial crisis? Since the periods overlap, something Hutton said about the growth of the problem might be pertinent to note: he said that the number of pensioners the number of pensioners in the five largest (public service) schemes had increased 27 per cent in a decade. We can hardly be surprised at that ... it was the early baby boomers coming through.

So, care to take a guess at what the true measure of public service pensions might be ? Is it perhaps £5tn? Pick a number. And forget it if so disposed ...

You think it is bizarre for me to stop doing what successive governments have blindly been doing for decades now?

If this was a properly built society with decent provision for social responsibility, maybe we'd all have decent pensions, but it isn't. It is stilted by shallow thinking like yours. Failure to pay fair wages. Promulgation of a Victorian culture of inequality on the basis you think you are more clever, industrious and deserving than your wage slave neighbours. Failure to tax everyone to ensure they are truly included, from students through the lowest paid and on to better things. We need to create hoards of motivated young people who are unbridled sufficiently to help us solve the problems we are so unthinkingly dumping them with. Students should have free university tuition up to seven years if they can perform. We don't just need doctors. We need data scientists who can truly model the problems, and we need engineers who truly engineer great machines and inventions and materials which will create the economies and efficiencies that will enable us to concentrate on funding all our livings and retirements on a fairer basis, not just 1 in 6 or whatever it is, who - no matter how you put it emotively about being entitled to realise what they were promised - are now feeding in Victorian ways on the rest. It may actually be working towards 1 in 3. It wasn't always so. Prime Minister Harold MacMillan said, at the time when the last of the baby boomers was entering this world "You will see a state of prosperity such as we have never had in my lifetime ... "Indeed let us be frank about it - most of our people have never had it so good." He was right about it for both public sector and private sector. A period of fairness and equality and previously unheard of general prosperity did prevail. People like me born into families with no history of education or anything other than poverty and low pay until WW2 went to grammar schools and were paid through university. Then what happened. Lots of us grammar school boys got excellent starts and gradually got to thinking we were clever enough to deserve aristocratic type wealth! We started steering wealth into our own pockets, hoards of us. And dog ate dog in the race. Trades unions were indeed part of the problem, but their weakness now in the private sector is very definitely the problem, and I think is the biggest single reason why corporates have managed in the main to totally renege on their covenants - to their lower paid workforces, anyway.

The Hutton report suggests in 2010 that there may actually be 12M public service pension scheme members (only 5M still active in public sector jobs).

Minimum wages should be doubled. Personal allowance should be halved. Basic rate income tax should be almost doubled. Fat cat toy tax should be doubled e.g. a 150% purchase tax on new luxury cars. Fat cat mansion tax should be imposed without delay.

Then you can have your pensions and so can everyone else, and we can also truly then say we believe in something good.

Your pleading about the immorality of breaking promises which were stupidly continued and are still greedily accepted if not demanded by the windfall beneficiaries is not something good. There is indeed a moral dilemma, but it is not a difficult one to rationalise. The only difficulty is the intransigence of thse expecting the crazy windfalls that they never originally expected. You can spin it if you like by saying that they only expect what they originally were promised but that just isn't an honest spin, is it?

You will deceive readers by suggesting there is no problem in funding the original promise and you will decieve them if you do not take into account the relative effects compared to private sector.

It is reckoned that around 1/3rd of private sector had no private pension provision at all in 2010 - just state pension to look forward to - whatever that might be!

I know longer ask myself why you have your view and are hung up on the prospect of "welching" on a stupid deal. Our successive government doesn't commit us to stupid deals. We do! Because we are general stupid as sheep and apathetic and appoint governments who are steered by civil servants in complicated matters such as this.

Bowlhead99, you did at least acknowledge the report was from 2006, but then oh so limply said there'd been a lot of changes since then. That must be the understatement of the last 100 years!

If you think I do, then you too are obstructing proper analysis - not your fault I suppose, as we are all different, but on such a major subject, such obstruction is so damaging to proper social equality and fairness.

Do read that Hutton report. Then drop back to the Neil Record report and use it to form up to date opinion, you mustn't blandly try to tell us that such things as "unfunded is fine" still holds true. Cleary that elusive £1tn estimate - the only one that seems to have been given any credence that any of us have found so far in the public domain - originally came from Neil Record. That's what Andy L was trying to remind us, right Andy?

He was inviting us to take a look, not to start thumping it like some radical bible-basher! But even if it is like a bible of a report in some way, what has happened in the intervening period is like Old Testament versus New! Because the habit of stoning (of workers and the generally defenceless) stopped, and because the hoi polloi found special medicinal benefits when swimming pools full of post war German water were turned into refreshing Black Tower Liebraumilch wine for us, the victors (our respective economies might argue for a different description!), and because we then soon developed sophisticated palettes for the even more medicinal Claret and Chardonnay, and even single malts once reserved only for senior civil servants, hoards of us are now still waking each morning with hangovers looking forward to doing it all again at way past three score years and ten! But soon only the public service workers will be the ones who can afford the medicine.

Put another way, we just can't seem to get the same quality loaves and fishes to solve the problem of looking after the massed crowds as they used to! And they did use to look after the crowds, didn't they? Why aren't we so disposed? Are they unworthy?

So can we please take a quantum leap into the present and get real, please?