NHS pensions are bleeding the taxpayer dry

BucksLady

uk1 wrote: »

It wouldn't surprise me if your husband were under paid for the work he does.

Jeff

No, he wouldn't agree. In fact he would say he is paid very generously. Having worked in parts of the country where there is extreme deprivation, he is acutely aware of how difficult life is for many people and wishes it was not this way. I guess that goes for the majority of us

uk1

BucksLady wrote: »

No, he wouldn't agree. In fact he would say he is paid very generously. Having worked in parts of the country where there is extreme deprivation, he is acutely aware of how difficult life is for many people and wishes it was not this way. I guess that goes for the majority of us

Well then I agree with him.

I misunderstood and thought that you were arguing that he was underpaid for his commitment, and in the absence of anything to the contrary I was agreeing.

I am with your husband in considering myself fortunate .... hate the word "luck" ... and one of rhe great things I like about this forum is that people can come with "whatever" and seek views and help etc.

Jeff

Thrugelmir

RickyB2000 wrote: »

We should be questioning whether this ultimately allowed them to close schemes to increase profits / boardroom bonus / dividend payments.

Cutting dividends would also cut income to other pension schemes, i.e. money purchase schemes. Fixing one problem, i.e. reducing funds deficits. Actually creates another lower pensions. One senses that a train crash is inenvitable as no one is tackling the issues in a meaningful way. A little tinkering here and there just isn't enough action.

uk1

Thrugelmir wrote: »

Cutting dividends would also cut income to other pension schemes, i.e. money purchase schemes. Fixing one problem, i.e. reducing funds deficits. Actually creates another lower pensions. One senses that a train crash is inenvitable as no one is tackling the issues in a meaningful way. A little tinkering here and there just isn't enough action.

I must admit that reading one item in the press today made me consider an option I hadn't previously considered. It seems that in companies where there was a pension deficit, they were paying total dividends at roughly the same total level (£47bn?) as the deficit.

I would be in favour of organisations not being allowed to pay dividends until deficits were cleared.

Jeff

bigadaj

uk1 wrote: »

I must admit that reading one item in the press today made me consider an option I hadn't previously considered. It seems that in companies where there was a pension deficit, they were paying total dividends at roughly the same total level (£47bn?) as the deficit.

I would be in favour of organisations not being allowed to pay dividends until deficits were cleared.

Jeff

But it's a nil sum game.

Following that suggestion would simply drive that comoany into administration in all likelihood; a halfway house approach might be more workable, restricting the payments of dividnends or more appropriately large executive incentive schemes until deficits were reduce or eliminated.

However there are very few private companies left with any sort of defined benefit pension in any case, and the restrictions above would in all likelihood just hasten their demise and closure.

uk1

bigadaj wrote: »

But it's a nil sum game.

Following that suggestion would simply drive that comoany into administration in all likelihood; a halfway house approach might be more workable, restricting the payments of dividnends or more appropriately large executive incentive schemes until deficits were reduce or eliminated.

However there are very few private companies left with any sort of defined benefit pension in any case, and the restrictions above would in all likelihood just hasten their demise and closure.

Why would not paying dividends drive a company into administration?

Jeff

bigadaj

uk1 wrote: »

Why would not paying dividends drive a company into administration?

Jeff

Because there is no prospect of return, it's effectively loading it up with debt which has to be paid back at some stage.

It may not collapse but would be massively constrained for many years, I'd admit the debt is already there in many cases but it often depends how long the debt or pension liability can get pushed back.

BHS as well as Tata steel are the obvious examples, and it'll be interesting to see how they play out. Philip green obviously had a rough ride and teh comparison of the dividends extracts against the pension deficit is obviously striking.

There's also the issue of how the pension liability is calculated, even rational calculations can end up with wide differences of liability, in some cases varying from deficit to surplus.

RickyB2000

Thrugelmir wrote: »

Cutting dividends would also cut income to other pension schemes, i.e. money purchase schemes. Fixing one problem, i.e. reducing funds deficits. Actually creates another lower pensions. One senses that a train crash is inenvitable as no one is tackling the issues in a meaningful way. A little tinkering here and there just isn't enough action.

I wasn't nessicarily thinking of cutting dividends for ordinary shareholders (though they should be appropriate and reasonable in light of the state of the business and I reduced if needed). I was thinking more about the owners of ltd companies extracting large dividend payments for themselves.

uk1

bigadaj wrote: »

Because there is no prospect of return, it's effectively loading it up with debt which has to be paid back at some stage.

It may not collapse but would be massively constrained for many years, I'd admit the debt is already there in many cases but it often depends how long the debt or pension liability can get pushed back.

BHS as well as Tata steel are the obvious examples, and it'll be interesting to see how they play out. Philip green obviously had a rough ride and teh comparison of the dividends extracts against the pension deficit is obviously striking.

There's also the issue of how the pension liability is calculated, even rational calculations can end up with wide differences of liability, in some cases varying from deficit to surplus.

Companies are forced into administration when they have an unsustainable cash flow. A dividend isn't a debt. Not paying dividends doesn't increase debt. In fact, if anything not paying dividends improves a company's cash situation and has the opposite effect of "hastening it into administration".

Additionaly, a company not paying dividends but using the cash instead to pay down it's obligations - like their pension fund - will be seen by the market as a better long term risk.

So although shareholders might have lost some dividends in the short term they should - all other things being equal - instead see long term capital growth.

Jeff

uk1

............what Philip Green did I think was marvelously described in yesterday's Times in Hugo Rifkind's "A Week In The Life Of Philip Green". You might find it amusing, although sadly accurate.

Friday

I’m having dinner in one of London’s most expensive restaurants. It’s just me, although right at the end I have my driver bring in a drunk homeless man he’s found in the gutter. Then I lend him 50p, so he can buy me out of my entire meal. Then I tell the waiter I’ll be off, and the tramp will settle up.

“Sir?” says the waiter. “He’s a random tramp off the street. And doesn’t appear to have any money.”

Not my problem, I says, standing up. He bought it off me, lock, stock and barrel. Check the contract.

“Right,” says the waiter. “Only hadn’t you already eaten it?”

“This is a situation we all want to resolve,” I tell him.

Then I walk out.

Jeff