Public Sector Pension Reform

[Mawsley]

The propaganda seems to have paid off anyway, on the evidence of this thread at least. No doubt most other red-top-reading knuckle draggers now think bin men are on £30k a year and are looking to retire at 50 with a golden handshake plus a huge pension. Wise up.

Quite.

or more truthfully, not quite. bin men are employed by private companies who have to bid against each other to secure the contract with the LA. they're not public sector employess but work in a competitive industry.

<Modorator intervention: If one can't post without the need to insult others then one doesn't get to post at all, have a nice day>

[Vorpal]

The problem in the US has been excessive Govt. spending, the defence budget in particular. Public sector pensions are not the cause of economic malaise in the US nor in the UK but do contribute to it. When budgets have to be tightened there can be no sacred cows, quite aside from the inequity of pension provision between the public and private sectors.

The cause of economic malaise is that the tax income of the US government has gone down as a percentage of the total economy. Unless this trend is reduced, no amount of budget cutting, short of eliminating the US federal government, will help.

http://www.youtube.com/watch?v=JTzMqm2TwgE

In 2 minutes and 15 seconds, he doens't have time for a couple of other points:
1) the creation of the super rich has contributed significantly to the financialisation of the US economy (i.e. Wall Street) which means that the folks at the top of the food chain control more and more of the economy; this also contributed ot the global economic crisis
2) the US consumes something like 25% of global oil production, so rising oil prices have a greater impact on the US economy; Replican governments (and oil money) have managed to avoid or do away with even feeble attempts to reduce American dependency on oil.

Public sector spending as a percentage of total economy has actually gone down in recent years. IT HAS NOT HELPED. It has only widened the divide between public and private sector employees. The reduction in public sector spending can only affect the poor and middle class, so it will makes things worse, not better. It just takes longer to see the results.

[philg]

http://www.youtube.com/watch?v=JTzMqm2TwgE

Hmm....

Since 1980 the US economy has doubled in size....but adjusting for inflation most peoples wages have barely increased

When someone kicks off by comparing apples with oranges, one isn't too inclined to believe the rest of it.

[Jonty]

Vorpal
The main economic problem in the UK is the size of the public sector financial deficit. The public sector is currently spending about £170b more than is raised through taxation. In other words our public expenditure is significantly larger than our public income.
The deficit is made up by the Government borrowing money.
What happens if a family or a business keeps spending more than they earn? Their debts keep increasing and the amount of interest they have to pay to service those debts keeps increasing.
Eventually our debtors call quits and call in their loans and the family loses its home or the firm goes bust and is sold and the employees lose their jobs.
That is why it is essential that the huge public sector deficit is reduced. The Government realises that and so did the last one in the shape of Alaistair Darling. The only dispute - and it is largely manufactured and spurious for political purposes - is the speed of the implementation of the reductions.
There needs to be a rebalancing of the economy, with a tight lid keep on public expenditure and expansion of the private sector, particularly exporting sectors especially manufacturing.
Virtually all economists agree on this but you may differ.
The vast majority if not all of the people in the UK will take a hit. Our GDP - the value of what the UK produces in a year - fell by 5% during the recession and has yet to recover. So we are already 5% worse off. It will take at least 10 years to get our public finances back into order and that means monies being used to pay off debts rather than been spent on public services.
It's going to be difficult.
There are even people around working in the public sector who are considering going on strike to protect their unaffordable, unsustainable, uneconomic and unfair pension arrangements in the midst of an economic crisis. So much for common sense and national solidarity.
Times are going to get a lot tougher and all of us will be hit.
We are beginning to relearn what our grandparents were too well aware of: if you can't afford it you can't have it. Period.
jonty

[meic]

Yes in hard times we have to share the pain.

A bit like in WW2 when we had rationing, well at least WE had rationing but the rich could still eat whatever they liked which was grown on their estates and rationing didnt apply if you were eating out in restaurants.
But we had national solidarity and the working classes did their bit by cutting their butter ration to 2 ounces (while the rich still ate pheasants by the brace, after their venison).

Having voted in a Conservative Government we will have plenty more chances for the less well off to make sacrifices for the National good and to make sure there is enough money in the pot for the MPs and other Fat Cats ever growing pensions.

[Jonty]

Yes in hard times we have to share the pain.

A bit like in WW2 when we had rationing, well at least WE had rationing but the rich could still eat whatever they liked which was grown on their estates and rationing didnt apply if you were eating out in restaurants.
But we had national solidarity and the working classes did their bit by cutting their butter ration to 2 ounces (while the rich still ate pheasants by the brace, after their venison).

Having voted in a Conservative Government we will have plenty more chances for the less well off to make sacrifices for the National good and to make sure there is enough money in the pot for the MPs and other Fat Cats ever growing pensions.

But you are one of the rich, Meic. You told me so in a previous thread. If memory serves me right you stated on this Forum that you own 2 houses and are eligible for Inheritance Tax.
Also aren't you a teacher with a fat final salary defined benefits pension scheme?
One fat cat rarely recognises another.
Perhaps you're just a champagne socialist? :wink :
jonty

[meic]

Ah, you are showing your usual firm grasp of the facts of the situation.

[Jonty]

Meic
Let's explore your finances.
You've previously stated that you own 2 houses and that you'll be caught by Inheritance Tax. So apart from any savings you have capital assets of about £750k.
I suspect you also have some savings; you seem to be quite economical in pursuance of your cycling habit so I suspect there's a bit hidden away.
Also do you have a wife or partner? Does she work? Perhaps she came with a diary? Perhaps she's also a teacher.
Also why do you live off-shore in Wales?
Then of course you are a teacher. Of mathematics I believe. I suspect that you will be moderately successful in your career. Only moderately because as you have stated you are not "well-rounded" and have little interest in literature or the Arts.
But maths teachers are in great demand so with a little effort you should easily make Head of Department on about £45k a year.
Assuming you work for 40 years you will retire on a £22.5k index-linked pension and a tax-free lump sum of £67.5k.
To get a pension of £22 5k on retirement which offers the same benefits as a teacher's pension you would need a pension pot of about £750k.
And of course your investments in real estate and fine bicycles could appreciate substantially by the time you retire.
In addition when you retire you will receive the enhanced State Pension of £7k and so probably will your wife, is she works. You would need a capital sum of about £400k to buy similar pensions.
So let's add it up: £750k real estate + £100k for savings +£750k for estimated capital value of pension pot + £67.5k for lump sum + £400k for estimated capital sum of state pensions, which gives a grand total of over £2m.
And this is a minimum - no allowance has been made for your partner possibly having an occupational pension or being left a capital asset eg a house.
So, Meic, when you retire you will be a MULTI-MILLIONAIRE, just like me.
No need to shoot pheasants on your estate. You will be able to afford to buy them at Sainsburys.
jonty

[meic]

I see that you used to work in the Council Tax Benefit section of your local council, they seem to have similar suspicions.

I think that my wife does actually have a public sector pension, she worked for a couple of months for the electoral register and made pension contributions. Her projected payments of pennies rather than pounds will have quite an effect towards balancing out your pension when they compile the average figure for a public sector pension.

[Jonty]

I see that you used to work in the Council Tax Benefit section of your local council, they seem to have similar suspicions.

I think that my wife does actually have a public sector pension, she worked for a couple of months for the electoral register and made pension contributions. Her projected payments of pennies rather than pounds will have quite an effect towards balancing out your pension when they compile the average figure for a public sector pension.

No, would never have worked in anything so boring if I could help it.
Refreshing to exchange posts with someone who gets the maths. For people with substantial public sector pensions their pensions can represent a major or even the major part of their net assets or wealth compared with less fortunate people with defined contribution private pensions.
Of course you will only be a multi-millionaire for perhaps several years after retirement.
The capitalised value of your pension(s) will decline as you get older. For example the capital sum to fund a pension of x pounds will be much larger at age 65 than at 80 due to reduced life expectancy at the later date.
That's why the pension costs of being able to retire early on an occupational pension, say at 55, are astronomical. And it is also why even delaying retirement by an average of 1 year makes such a big contribution to reducing pension costs.
Obviously the shorter we spend drawing pensions the lower the cost will be to the individuals involved and the taxpayer.
That's why I think the priority of the NHS with regard to older people's health should be to try and extend healthy active life rather than longevity as such.
jonty

[Edwards]

Jonty I see you have finally lost your grip totally. The bit about teacher pensions is wrong the figures are way out.
Do you want some of my tablets instead of the what ever else you would appear to be on.

A teacher on £36 k after 32 years the pension is just over £12k and the lump sum is less than £30k.
But not to worry I will get the wife to let the pension service know their calculations are wrong.

[Jonty]

Jonty I see you have finally lost your grip totally. The bit about teacher pensions is wrong the figures are way out.
Do you want some of my tablets instead of the what ever else you would appear to be on.

A teacher on £36 k after 32 years the pension is just over £12k and the lump sum is less than £30k.
But not to worry I will get the wife to let the pension service know their calculations are wrong.

If a teacher retired on £36k after 32 years service and did not retire early their pension would be 32 eightieths of £36k which is £14.4k per annum. In order to obtain the same pension with the same benefits a worker in the private sector who contributed to a defined contribution pension scheme would need a pot of about £500k. If the teacher retired early then their pension would be acturially reduced by 5% for each year (ie if they retired 3 years early, then their pension would be reduced by 15%).
The lump sum is one and a half times salary if the teacher has worked for 40 years. Assuming the teacher you have in mind did not retire early I have worked out that their lump sum would be £45.5k.
This information is readily available on the Teachers' Pension website.
If you keep taking the tablets even you may be able to understand it.
jonty

[Jonty]

Apologies, the lump sum would be £43.2k not £45.5k.
jonty

[The Mechanic]

There was an advert on the TV in Scotland not long ago that stated that 5% of the population of Scotland worked in the public sector.

There was another advert around the same time that said that about 5% of adults in Scotland had difficulty with reading and writing.

Are we talking about the same 5%? Just asking a question!

[jan19]

There was an advert on the TV in Scotland not long ago that stated that 5% of the population of Scotland worked in the public sector.

There was another advert around the same time that said that about 5% of adults in Scotland had difficulty with reading and writing.

Are we talking about the same 5%? Just asking a question!

No - the 5% working in the public sector (teachers in the main in this example, but possibly others such as speech therapists) would be helping the 5% with literacy and numeracy needs. Can't imagine anyone in the private sector doing that unless it was on a voluntary basis. As I've said before, cut back the public sector and you'll hurt those who need us most.

Jan