The injustice of Local Government Pensions.
Posted by: Don Atkinson on 15 March 2015
BBC Radio 4 – so it MUST be true – at17:00 today.
4.5 million workers and pensioners are part of Local Government Pension Schemes. The aggregated value of these pension funds is c.£180bn and their liabilities are c.£230bn ie they have a deficit of c.£50bn. 98% of all the schemes are in deficit.
The schemes are funded jointly by employees (past, present, future) and the LAs. Employees make fixed (%) contributions as do the LAs as part of the employment contract. The deficit is made up by the LAs, not the employees.
Funding by the LAs is derived from Local taxation plus the Central Government allocation. You, me and all the rate-payers and tax-payers are therefore subsidising these Local Government Pension Schemes whether we like it or not. In turn therefore, we are all subsidising 4.5milloin LA employees and pensioners. We are forced to pay, either by increased taxation or by a reduction in the services provided by central and local governments.
This is grossly unfair and unsustainable.
Which political party will put an end to this injustice? They will have my vote in May !
I don't understand all this nonsense about tax payers making up the difference. The UK government just borrows the money to fill the gap in spending versus taxation anyway. Maybe the cuts in NHS spending will reduce the pension bill as well.
Don.
................., as far as I’m concerned, if a council employee joins a pension scheme on the basis that they are guaranteed a certain amount of pension, they should receive the guaranteed amount.
I totally agree with this, however the cost of providing these pensions is not visible or well understood - It is enormous (say around £500k for a modest £25k pension) and increasing. I don't think anyone, government or otherwise should be guaranteeing such a huge/ open ended financial committments in the first place. Might be a moot point as Uk Govt (along with much of the west) is well on the path to financial collapse before many of these pensions will be paid.
Maybe the cuts in NHS spending will reduce the pension bill as well.
What cuts in NHS spending? NHS spending is ring fenced - it may not be being spernt as well as it might and no doubt could do with more but cut it is not.
Maybe the cuts in NHS spending will reduce the pension bill as well.
What cuts in NHS spending? NHS spending is ring fenced - it may not be being spernt as well as it might and no doubt could do with more but cut it is not.
The UK population is increasing. Is the NHS budget increasing to compensate?
So what do you propose should be done?
As I said in my opening post, I am asking if anybody knows which Political Parties (if any) are planning to sort this out and what their proposals are ?
To answer your question, no party is planning to sort this out, not least because there is nothing to sort out.
To answer your question, no party is planning to sort this out, not least because there is nothing to sort out.
The BBC Radio 4 Repot said otherwise.
The BBC Radio 4 Repot said otherwise.
Opinion piece. Nothing more.
To answer your question, no party is planning to sort this out, not least because there is nothing to sort out.
The BBC Radio 4 Repot said otherwise.
Well, if the BBc said which party(ies) are planning to sort it out, wtf are you doing posting here to ask the question?
there is nothing to sort out.
The BBC Radio 4 Report said otherwise.
My mistake, I should have more carefully edited your post to focus more clearly on my response.
I've hopefully made it a bit clearer for you.
Don.
................., as far as I’m concerned, if a council employee joins a pension scheme on the basis that they are guaranteed a certain amount of pension, they should receive the guaranteed amount.
and................if a private sector employee joined a final salary pension scheme they also should receive the guaranteed amount.
I'm certain that you will agree, but would welcome your confirmation.
You might also care to add who, fundamentally will top up any shortcommings in each sector. (Obviously) this will be hypothetical in the case of the Private sector pension (because it doesn't happen and is unlikely to change any time soon). However, unless the BBC got it wrong, you will be confirming it is the taxpayer who is in the firing line for the £50bn LA deficit. It's an easy cop-out for the people who have failed to manage the LA Pension funds. It's unjust.
Funnily enough, that £50bn would cover HS2, or half the Trident upgrade or...........................
If a private sector employees pension fund is under funded, the employer should top up the fund, if this is not possible and the pension guarantee is not met this is obviously unfair.
If the LA employees pension fund is under funded, again, the employer (the LA) should top up the fund. The LAs, obviously have the means to raise the money.
Just because one group of employees is treated unfairly that's no justification to treat others unfairly. I'm quite happy to contribute in higher taxes. Don't forget LA workers are working for you, me and everybody else.
If a private sector employees pension fund is under funded, the employer should top up the fund, if this is not possible and the pension guarantee is not met this is obviously unfair. And your proposal to resolve this would be.....?
If the LA employees pension fund is under funded, again, the employer (the LA) should top up the fund. The LAs, obviously have the means to raise the money.Only because they have access to tax revenues. If there was a very clear exposition of this practise and it's consequences, and a properly informed referendum or election manifeto, that would help. If such referendum or manifesto showed that the population at large shared your view - fine. But I have a distinct feeling that LA employees and the LAs themselves would not be happy to promote such an open discussion and "free vote". I'm not convinced that such a free vote would deliver an outcome that matched your view of increased taxation.
Just because one group of employees is treated unfairly that's no justification to treat others unfairly. The Private sector workforce are being unfairly treated in repect of their poor pension prospects. But they are also being made (not asked) to rectify what would otherwise be the plight of LA workers. That is unjust.
there is nothing to sort out.
The BBC Radio 4 Report said otherwise.
My mistake, I should have more carefully edited your post to focus more clearly on my response.
I've hopefully made it a bit clearer for you.
You, and the BBC, think something needs sorting, I do not. No point our discussing it further really.
But I have a distinct feeling that LA employees and the LAs themselves would not be happy to promote such an open discussion and "free vote". I'm not convinced that such a free vote would deliver an outcome that matched your view of increased taxation.
...
The obligation to pay the pension is contractual.
How would you feel if there was a free vote as to whether
1 your contract of employment should be terminated
2 your pay reduced
3 your income tax (and yours only, not income tax in general) raised.
This is directly comparable to your suggestion given above.
Which political party will put an end to this injustice? They will have my vote in May !
A couple of things occurred to me on re-reading that.
1. How many political parties have you asked?
2. Is this the only criterion for a party to get your vote? Surely there are several more important issues?
steve
steve
...
The obligation to pay the pension is contractual.
Agreed, but the means of meeting the contractual obligations should not simply rely on the ratepayer/taxpayer funding the deficit. That is unjust.
Other possible examples of eliminating the deficit............
- All new employees could be contracted on a defined contribution basis. eg large contributions, small pensions. Somewhat similar to the Private sector. (Yes HH I know.....!!)
- Existing staff could be put on a decreasing wage structure, say 5% pa below inflation, or whatever minimum future wage their contract permits.
- Contributions from existing staff could be increased to the maximum permitted under their contract.
- The scheme administrators and advisers could be paid for their services on a performance basis.
Now, i'm quite sure other people will have far better ideas than the few that I have outlined in this post and elsewhere in this thread.
Which political party will put an end to this injustice? They will have my vote in May !
A couple of things occurred to me on re-reading that.
1. How many political parties have you asked? None. That's why I asked the question in the opening post.
2. Is this the only criterion for a party to get your vote? Surely there are several more important issues? The two main parties aren't a million miles apart on many of the big issues, and will probably have to cope with a coalition party's demands as well. Pensions are a major issue with a large proportion of the voting population. Inadequate provision in the private sector, together with generous pensions in the Public sector might create a social divide. I think that the two major parties know that pension arrangements are an important factor in our society.
...
The obligation to pay the pension is contractual.
Agreed, but the means of meeting the contractual obligations should not simply rely on the ratepayer/taxpayer funding the deficit. That is unjust.
Other possible examples of eliminating the deficit............
- All new employees could be contracted on a defined contribution basis. eg large contributions, small pensions. Somewhat similar to the Private sector. (Yes HH I know.....!!)
- Existing staff could be put on a decreasing wage structure, say 5% pa below inflation, or whatever minimum future wage their contract permits.
- Contributions from existing staff could be increased to the maximum permitted under their contract.
- The scheme administrators and advisers could be paid for their services on a performance basis.
Now, i'm quite sure other people will have far better ideas than the few that I have outlined in this post and elsewhere in this thread.
I assume you'd be perfectly happy for any of the first three of those to be applied to yourself?
Don
I think you’ve seriously misjudged the number of people who agree that there is injustice in the method of funding LA pensions. I don’t think anybody has posted in agreement with you.
The figures given in the OP don’t actually mean much.
The aggregated value of these pension funds is c.£180bn and their liabilities are c.£230bn ie they have a deficit of c.£50bn.
What does this actually mean in terms of cost per annum to the taxpayer?
...
The obligation to pay the pension is contractual.
Agreed, but the means of meeting the contractual obligations should not simply rely on the ratepayer/taxpayer funding the deficit. That is unjust.
Other possible examples of eliminating the deficit............
- All new employees could be contracted on a defined contribution basis. eg large contributions, small pensions. Somewhat similar to the Private sector. (Yes HH I know.....!!)
- Existing staff could be put on a decreasing wage structure, say 5% pa below inflation, or whatever minimum future wage their contract permits.
- Contributions from existing staff could be increased to the maximum permitted under their contract.
- The scheme administrators and advisers could be paid for their services on a performance basis.
Now, i'm quite sure other people will have far better ideas than the few that I have outlined in this post and elsewhere in this thread.
I assume you'd be perfectly happy for any of the first three of those to be applied to yourself?
Nope ! and I don't imagine every LA worker would be perfectly happy either.
But we are not talking about me. This is about the injustice of LAs taking the easy option of press-ganging taxpayers to make good a massive deficit in the funding of LA pensions.
Life isn't always a bed of roses. Being perfectly happy isn't always achievable.
Don
I think you’ve seriously misjudged the number of people who agree that there is injustice in the method of funding LA pensions. I don’t think anybody has posted in agreement with you.
The figures given in the OP don’t actually mean much.
The aggregated value of these pension funds is c.£180bn and their liabilities are c.£230bn ie they have a deficit of c.£50bn.
What does this actually mean in terms of cost per annum to the taxpayer?
One swallow doesn't make a Spring. Half a dozen commentators on this Forum doesn't constitute a "serious misjudgement". But I wasn't conducting a Poll. I was asking if anybody was aware of a Political Party that had plans to rectify this injustice.
The figures quoted were those of the BBC Radio 4 programme. Assuming 25m taxpayers, I guess that would mean each one contributing £2,000. 50m tapayers and the contribution drops to £1,000.
I assume you'd be perfectly happy for any of the first three of those to be applied to yourself?
Nope ! and I don't imagine every LA worker would be perfectly happy either.
But we are not talking about me. This is about the injustice of LAs taking the easy option of press-ganging taxpayers to make good a massive deficit in the funding of LA pensions.
Life isn't always a bed of roses. Being perfectly happy isn't always achievable.
So, if you're not prepared to take your own medicine...
Perhaps you should now reconsider your view of what constitutes 'injustice'.
So, if you're not prepared to take your own medicine...
Perhaps you should now reconsider your view of what constitutes 'injustice'.
Yawn !
+1
Well that is this topic put to bed for another 12 months...
So, if you're not prepared to take your own medicine...
Perhaps you should now reconsider your view of what constitutes 'injustice'.
Yawn !
Well it was 11:00 pm and well past my bedtime.
"Nope" = I wouldn't be perfectly happy". It doesn't mean i'd not be prepared to take my own medcine, it just means I wouldn't be perfectly happy and as I said, I doubt if too many LA employees would be perfectly happy either.
As I have indicated before, I have a number of pensions, some from the Public sector and others from the Private sector.Both types of pension (but not all of them) and terms of employment have been subjected to the three types of change refered to above. The medcine wasn't pleasant.
None-the-less, I consider that sort of criteria ("if you're not prepared to take your own medcine.....etc") to be a very weak argument for rejecting change.