Quizzes & Puzzles5 mins ago
Public Sector Pensions
Teachers and other public workers are talking about 'fairness' and the fact that they don't want to be forced to increase their contributions and don't want to work beyond their current retirement age.
As I understand it the vast majority of their pension is paid for them out of the public purse.
Ignoring the point that I don't think we should be providing them with a pension at all - as I'm having to save for my retirement by paying into a private pension I don't see why they can't - if the reports are to be believed public sector pensions are among the best there are with many of them still being final salary and index-linked.
Am I missing something here?
Because I'm struggling to understand why they are moaning about having to contribute a little more and work a little longer.
As I understand it the vast majority of their pension is paid for them out of the public purse.
Ignoring the point that I don't think we should be providing them with a pension at all - as I'm having to save for my retirement by paying into a private pension I don't see why they can't - if the reports are to be believed public sector pensions are among the best there are with many of them still being final salary and index-linked.
Am I missing something here?
Because I'm struggling to understand why they are moaning about having to contribute a little more and work a little longer.
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jno
<<<< but it's actually grown faster in retirement than the public sector one despite vagaries and vicissitude>>>.
I don't understand that....the growth of one's pension depends upon the conditions of the pension plan both public and private.
Let us take a private sector worker who is retiring in 2000 and has amassed a pot of £500,000, this would give him a pension of £50,000 a year. In1996..Gordon Brown creamed the top of and left him overnight with a pot of £400,000 which would have given him a pension of £40,000 a year. Then the annuity rates started to fall due to world recession and other factors and that due to the fall in annuity rates That £400,00 would buy a pension of £20,000 a year.
Now I started with a "promise" of £50, 000 a year pension and have been left with a pension of £20,000 a year......during which time i, with my taxes, have supported the public sector pension.
So I ask......how has private sector pensions fared better than public sector pensions?
<<<< but it's actually grown faster in retirement than the public sector one despite vagaries and vicissitude>>>.
I don't understand that....the growth of one's pension depends upon the conditions of the pension plan both public and private.
Let us take a private sector worker who is retiring in 2000 and has amassed a pot of £500,000, this would give him a pension of £50,000 a year. In1996..Gordon Brown creamed the top of and left him overnight with a pot of £400,000 which would have given him a pension of £40,000 a year. Then the annuity rates started to fall due to world recession and other factors and that due to the fall in annuity rates That £400,00 would buy a pension of £20,000 a year.
Now I started with a "promise" of £50, 000 a year pension and have been left with a pension of £20,000 a year......during which time i, with my taxes, have supported the public sector pension.
So I ask......how has private sector pensions fared better than public sector pensions?
Agree with your analysis sqad. Would add that my private pension pot was with Equitable Life with a very attractive guaranteed annuity rate. Due to regulatory incompetence and House of Lords interference this was pulled and made the annuity option unappealing. MP's pensions trustees had their money with Equitable Life and negotiated a very satisfactory withdrawal on terms not available to the general public.
When I was 'retired' 15 years early, 18 years ago I was a bit unhappy but now I think I got a good deal. That was before Gordon the prudent bollixed it up so spectactularly, and stole everyones (except his friends) money. I paid 5% of my salary towards my pension and could have afforde more. I find it difficult to reconcile the evidence of reckless spending on everything from computer games to SUVs and pretentious weddings with a nation that is hard done by. Life is possible without the latest Blackberry, Ipod, etc.
Ed...that is my point....NHS doctors have a guaranteed salary .....their performance is scantily overseen until their is a National tragedy..e.g Brstol Paediatric Surgery and Radcliffe Infirmary Cardiology scandal and these doctors are still with their same salary and pension.
Private Medicine....if patients are not happy with their service, they make it known, referrals are reduced and the salary and pension disappear.
Private Medicine....if patients are not happy with their service, they make it known, referrals are reduced and the salary and pension disappear.
Sqad, I agree with your argument but cannot see the relevance to the topic. Let's suppose that poor teachers and good teachers do get paid the same and do receive the same pension. What difference does reducing the pension make?
It seems to me that the poor teachers would hang around and the good teachers would go where their talents were better appreciated.
If you want performance related pay for teachers, that's fine - but it's a separate issue to their pensions.
McMouse, as the husband of a good mid-career teacher who gets great results for her kids, who maintains contact with some of them many years after they have left and receives feedback about what a difference she has made to their lives ... I can tell you that one of the few things stopping her packing it all in is the pension, which is part of the pact she made with the state 22 years ago. Parents, kids, bosses and government between them can make her life an absolute misery, without even trying or meaning to (let alone when they do). If you want quality teachers to leave the profession or not go into it in the first place, just take away one of the few things left that says "We value you and will stick to our word" ...
It seems to me that the poor teachers would hang around and the good teachers would go where their talents were better appreciated.
If you want performance related pay for teachers, that's fine - but it's a separate issue to their pensions.
McMouse, as the husband of a good mid-career teacher who gets great results for her kids, who maintains contact with some of them many years after they have left and receives feedback about what a difference she has made to their lives ... I can tell you that one of the few things stopping her packing it all in is the pension, which is part of the pact she made with the state 22 years ago. Parents, kids, bosses and government between them can make her life an absolute misery, without even trying or meaning to (let alone when they do). If you want quality teachers to leave the profession or not go into it in the first place, just take away one of the few things left that says "We value you and will stick to our word" ...
Ellipsis......I contributed to a private pension that, over many years, produced a 'pension pot' from which I draw down a monthly pension. Although invested wisely, this pot is subject to the vagaries of national and international market and currency fluctuations. If the pot shrinks in size my draw down will be affected. Public sector pensions are not similarly at risk and are funded entirely by current tax-payers. Irrespective of past commitments, it is not tenable for the growing public sector pension liability to continue without radical reform.
Did I mishear the letter read out on "Breakfast" from someone who claimed that she and her husband were facing an annual drop of £80 THOUSAND in their pension? I'd like to be earning that sort of cash, let alone be getting a pension of (presumably) considerably more than that.
Many on here have suggested private pension funds are the way to go. Problem is, when some thieving banker loses all the money, he'll get another job after a fat golden handshake. You'll get NOTHING.
Many on here have suggested private pension funds are the way to go. Problem is, when some thieving banker loses all the money, he'll get another job after a fat golden handshake. You'll get NOTHING.
The awful reality is that Pensions arithmetic as we have been conditioned to expect it, just doesn't stack up.
The only time it looked like it might was in the heady days of yore when the Stock Market was magicking money out of thin air.
Fact is, you can't pay in (as an example quoted earlier) 5% of salary for 30 years, then expect to draw a high percentage of your final - or average- salary for what could be 25 years of retirement.
The problem is that whilst we might be extending that period of dependency by living longer, there is no reason to believe we are significantly more 'fit to work' beyond 65 than we ever were.
If it is necessary, what jobs are we going to generate for the 68 year old builder, paramedic, mechanic or teacher who no longer feels up to climbing scaffolding, carrying stretchers, crawling under cars or facing 30 boisterous kids?
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The only time it looked like it might was in the heady days of yore when the Stock Market was magicking money out of thin air.
Fact is, you can't pay in (as an example quoted earlier) 5% of salary for 30 years, then expect to draw a high percentage of your final - or average- salary for what could be 25 years of retirement.
The problem is that whilst we might be extending that period of dependency by living longer, there is no reason to believe we are significantly more 'fit to work' beyond 65 than we ever were.
If it is necessary, what jobs are we going to generate for the 68 year old builder, paramedic, mechanic or teacher who no longer feels up to climbing scaffolding, carrying stretchers, crawling under cars or facing 30 boisterous kids?
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> Ellipsis......I contributed to a private pension that, over many years, produced a 'pension pot' from which I draw down a monthly pension. Although invested wisely, this pot is subject to the vagaries of national and international market and currency fluctuations. If the pot shrinks in size my draw down will be affected.
I also pay into a private pension and suffer the same risks. My wife doesn't pay into a private pension because she works for the state and therefore pays into a public sector pension. We each choose our different ways in life ...
> Public sector pensions are not similarly at risk and are funded entirely by current tax-payers. Irrespective of past commitments, it is not tenable for the growing public sector pension liability to continue without radical reform.
OK let's break this down.
1) "Public sector pensions are not similarly at risk". They are at risk and that's why the teachers are striking.
2) "and are funded entirely by current tax-payers". False. Teachers pay about 7% of their salary into their pension scheme and their employer pays about 14%. This adds up to 17.5% of their total compensation going into their pension scheme, i.e. it is fully funded from day 1 out of their own pay. In the private sector, often that money would all be paid to you to do with as you would. Most people in the private sector do not fully fund their pensions from their early twenties! Teachers do.
3) "Irrespective of past commitments". To disregard past commitments is to go back on your word. Again, that's why they're striking.
4) "it is not tenable for the growing public sector pension liability to continue without radical reform" The public sector pension liability is not growing, it is shrinking by 25% as a percentage of GDP!
I also pay into a private pension and suffer the same risks. My wife doesn't pay into a private pension because she works for the state and therefore pays into a public sector pension. We each choose our different ways in life ...
> Public sector pensions are not similarly at risk and are funded entirely by current tax-payers. Irrespective of past commitments, it is not tenable for the growing public sector pension liability to continue without radical reform.
OK let's break this down.
1) "Public sector pensions are not similarly at risk". They are at risk and that's why the teachers are striking.
2) "and are funded entirely by current tax-payers". False. Teachers pay about 7% of their salary into their pension scheme and their employer pays about 14%. This adds up to 17.5% of their total compensation going into their pension scheme, i.e. it is fully funded from day 1 out of their own pay. In the private sector, often that money would all be paid to you to do with as you would. Most people in the private sector do not fully fund their pensions from their early twenties! Teachers do.
3) "Irrespective of past commitments". To disregard past commitments is to go back on your word. Again, that's why they're striking.
4) "it is not tenable for the growing public sector pension liability to continue without radical reform" The public sector pension liability is not growing, it is shrinking by 25% as a percentage of GDP!
Ellipsis
By "at risk" one means ravaged by the fluctuations of the markets and the past history of public pensions is that they have been "shielded"
I take your point, but public sector pensions are not at risk NOW but they may well be in a decade unless there is radical reform
Your 3rd point....again i have some sympathy with.....but life is not a guarantee, one never should say never........there are always changes.....one never knows what is around the corner and our financial black hole is greater than that of Greece.
The Welfare State...we will look after you from cradle to the grave.... affordable 40 years ago, is no longer affordable.....don't blame any political Party...blame the advances in medicine which have made this so.
Your point number 2....I agree with entirely.
The money is running out.
As to your 4th point.......that depends on to whom you speak and what figures that you quote.
Difficult situation for both sides.
By "at risk" one means ravaged by the fluctuations of the markets and the past history of public pensions is that they have been "shielded"
I take your point, but public sector pensions are not at risk NOW but they may well be in a decade unless there is radical reform
Your 3rd point....again i have some sympathy with.....but life is not a guarantee, one never should say never........there are always changes.....one never knows what is around the corner and our financial black hole is greater than that of Greece.
The Welfare State...we will look after you from cradle to the grave.... affordable 40 years ago, is no longer affordable.....don't blame any political Party...blame the advances in medicine which have made this so.
Your point number 2....I agree with entirely.
The money is running out.
As to your 4th point.......that depends on to whom you speak and what figures that you quote.
Difficult situation for both sides.
