NHS pensions are bleeding the taxpayer dry

uk1

I hasten to add, not my personal opinion but the heading of the article in today's Times!



Jeff


The NHS pension scheme has liabilities of £390 billion, more than two and a half times what the government will spend on health this year.

JONATHAN ISABY
june 16 2016, 12:01am, the times
NHS pensions are bleeding the taxpayer dry
jonathan isaby

16,000 health service staff get retirement income of £50,000

The sorry tale of BHS’s collapse highlights the need for better safeguards on pensions, but watching MPs question Sir Philip Green yesterday I think they’ve got their priorities wrong.

The BHS pension scheme will end up in the Pension Protection Fund, a lifeboat paid for by a levy on eligible schemes. The fund will struggle to rescue the hundreds of other schemes which have no chance of keeping their pension promises. But no such problems face public sector schemes, where taxpayers pay for the lifeboat.

These schemes are exceptionally generous. Someone joining the NHS today must pay between 5 and 15 per cent of salary into its scheme to be a member. To get the same retirement income from a private sector money purchase scheme, the figure would be 43 per cent. Broadly speaking, public sector pensions are worth five times as much as private sector pensions.

So the news that 16,000 NHS staff are receiving £50,000 a year in pension income, twice the number of just five years ago, comes as no surprise. By comparison, £100,000 in a private pension pot will buy you an inflation-linked annuity worth just over £3,000 today.

The generosity of the health service scheme is a major cause of the NHS’s staffing problems. GPs are retiring in their fifties not because the work is so stressful but because they can afford to.

The NHS pension scheme has liabilities of £390 billion, more than two and a half times what the government will spend on health this year. Its assets? Nil. The NHS pension scheme, like those of the civil service, teachers, armed forces, police and firefighters is unfunded and has a deficit 684 times greater than that of BHS.

Once upon a time, these pensions were justified on the grounds that public sector workers received lower salaries than their private sector counterparts. But despite the government’s pay freezes, today’s public sector workers still get paid more than those in the private sector after adjusting for skills, qualifications and other factors.

It is unjustifiable that private sector workers are struggling to save for their own retirement, partly because they’re having to pay taxes to fund retirements for public sector workers that they could never afford for themselves.

Jonathan Isaby is chief executive of the Taxpayers’ Alliance, which campaigns for a low-tax society

greenglide

I found this amusing / silly / depressing in equal amounts

The generosity of the health service scheme is a major cause of the NHS’s staffing problems. GPs are retiring in their fifties not because the work is so stressful but because they can afford to.

So if we reduced the benefits of GP pensions staffing would no longer be an issue?

Somwhat simplistic methinks.

d70cw6

scrubbers!

daveyjp

Taxpayers Alliance. They only world where 2+2 really does equal 5.

PensionTech

The NHS pension scheme has liabilities of £390 billion, more than two and a half times what the government will spend on health this year.

Somewhat disingenuous - the liabilities are spread over the next 80+ years, they are not the annual contribution by the government to the NHS pension scheme. It is like saying "My buy-to-let is worth £250,000 - yet my tenants are only paying me £1000 per month!". Apples and oranges.

Its assets? Nil. The NHS pension scheme, like those of the civil service, teachers, armed forces, police and firefighters is unfunded and has a deficit 684 times greater than that of BHS.

Again, this is a bit poor. The NHS scheme, like NHS staff salaries, are funded by the government. It is not particularly relevant to therefore call all its liabilities (which almost certainly include future service liabilities, as that would produce a bigger number which looks better in print) a "deficit" and compare it to that of a private scheme in which an employer has to pay money in and hold assets for the purpose of the pension scheme. If you want to talk unfunded pensions, look at the State Pension.

But I would not expect any less from the Taxpayer's Alliance.

uk1

PensionTech wrote: »

Somewhat disingenuous - the liabilities are spread over the next 80+ years, they are not the annual contribution by the government to the NHS pension scheme. It is like saying "My buy-to-let is worth £250,000 - yet my tenants are only paying me £1000 per month!". Apples and oranges.



Again, this is a bit poor. The NHS scheme, like NHS staff salaries, are funded by the government. It is not particularly relevant to therefore call all its liabilities (which almost certainly include future service liabilities, as that would produce a bigger number which looks better in print) a "deficit" and compare it to that of a private scheme in which an employer has to pay money in and hold assets for the purpose of the pension scheme. If you want to talk unfunded pensions, look at the State Pension.

But I would not expect any less from the Taxpayer's Alliance.

Name calling aside ...... what number would you use to more accurately describe the liability?

Jeff

le_loup

Future salary.
Because they are due to be paid for next weeks work next week, is that an unfunded liability?

uk1

le_loup wrote: »

Future salary.
Because they are due to be paid for next weeks work next week, is that an unfunded liability?

I'm not clear about what you are trying to say.

Next week's salary is a funded liability from current years budgeted taxation, but some of it is from borrowings - so mostly "no" but in part "yes".

We have a one weeks liability for salary but a lifetime's liability for the pension they have earned for that one week worked.

What is your point?

Jeff

System

Pensions are just part of a pay package so they should never really be treated as separate to nhs/bhs/whatever organisation's finances, it simply means that for some people their pay is more future than it is present

Saying any pension pot is in deficit generally just means too many promises for the amount of employer funding its getting, either they reconsider pension promises or the company funds the shortfall

Remember that there's been a long and continuing government pay freeze and national luving wage will soon catch up, pension is one of the only things keeping it a relatively competitive employer in the jobs market

uk1

MatthewAinsworth wrote: »

Pensions are just part of a pay package so they should never really be treated as separate to nhs/bhs/whatever organisation's finances, it simply means that for some people their pay is more future than it is present

Saying any pension pot is in deficit generally just means too many promises for the amount of employer funding its getting, either they reconsider pension promises or the company funds the shortfall

Remember that there's been a long and continuing government pay freeze and national luving wage will soon catch up, pension is one of the only things keeping it a relatively competitive employer in the jobs market

I understand all of that, but what is incorrect about the article?

Jeff

System

Jeff/uk1 - just that to say the pension deficit is worse than the actual NHS finances, like saying the BHS pension is worse than the finances of the company BHS, is like pretending that the company doesn't really owe the pay it owes people. Separating the two is like creating a toxic bank that you're happy to allow to go bust, and looking only at the pension is not considering that it makes up for pay within the companies being less than they ought to be, whereas other companies may have a better basic rate but crap pension.

I think we ought to be careful attacking pension schemes without looking at whether the overall remuneration package can hold up without it