Who is paying for your pension ?

Enjoy your wait.

Don

You clearly have no interest except to peddle your sour-grape driven agenda and to wilfully ignore, misconstrue or twist what is said in response.

I have nothing more to say to you.

Lionel, Not at all.

Despite your persistant provocation, I have simply continued to ask, fairly politely, who is funding the necessary top-up of public sector pensions. You, and others appear reluctant to even accept any possibility that this is happening, despite my personal evidence, government changes to reduce this top-up, and press reports such as the Telegragh that I abstracted for Luka.

Even Bruce (or others) have not sofar explained how the NHS is able to contribute £1.5bn pa to UKplc. It really would be nice to find out, and whether this would provide a sustainable model for the private sector going forward.

You know full well that 18% pa (ie a typical public sector input by employee/employer) doesn't cover the cost of a 2/3 final salary pension for 17 years but you fail to even acknowledge this. You simply continue to demand your right to a generous pension regardless of changing circumstances. I think it takes more like 30-40% of salary to fund such a pension, and if that's the case IMHO the gov. should make that clear and explain how everybody, public and private might achieve this.

As for "sour-grapes", there are none here, but you can't seem to accept even that. You simply keep trying to use that as a diversion.

Public sector pensions are payed for from general taxation, as are the salaries of public servants.

I don't find either proposition to be unreasonable!

I am not a public servant, but is there a crisis where public servants are unreasonably rewarded?

I think not. Bankers on the other hand ...

ATB from George

Eloquently put.

Tog

This topic could probably be expanded by asking who is paying to subsidise the private sector employers low wages?  The answer is everyone and a large proportion of the private sector employers are 'subsidised' by the likes of working tax credits, child tax credits to ensure their employees have the basic minimum income.

This is a strong argument in favour of the minimum wage being set as a living wage.

It is also an argument for a much higher tax threshold than currently, and a higher tax percentage take above the threshold ....

It must always be worth a person's while to work rather than merely take benefits, though many do work when they might be better off as unemployed in our perverse system

ATB from George

Hello George,

Comparing a few high-profile bankers to public servants in general, is disingenuous. I am not defending high=profile bankers - they are a disgrace to humanity IMHO. But since you mention bankers and public servants it might be more appropriate to look a few high-profile public servants, eg a few well-paid administrators in the NHS who were recently made redundant with generous payments, only to be re-engaged imediately on a contract basis with equally generous remuneration. All i'm suggesting here,is, maintain a level playing field. ie when considering pensions, compare the average bod in the private sector with the average bod in the public sector.

Now to your first comment. Good, you recognise that public sector workers are paid and their pensions are paid, by tax-payers. In my last job, ie one which was in the public sector, my contibution to the pension scheme was 7.2% and my emplyer's declared contribution was 10.8%. For the avoidance of doubt, his was into a CARE scheme. Any public sector worker will be able to quote the equivalent figures applicable to their own employment.

I invite all the public sector workers on the Forum to actually quote their equivalent percentages. Just to give you and me a few figures to work with !

Cheers

Don

Just to give you and me a few figures to work with !

Priceless - 

Tog

Abstracted from an article in the Gardian (I think)

As an example, NHS worker Peter retires after 20 years of service with an average salary of £25,000. 

Under the pre-reform scheme, Peter would receive a pension of £6,250 (calculated as 1/80 x 20 x £25,000) plus a tax-free lump sum of £18,750 (3/80 x 20 x £25,000). 

Under the new scheme, Peter would receive a pension of £9,259.25 (1/54 x 20 x £25,000) with no automatic lump sum. 

I think there is an error in this part of the article. Anybody else agree ? (I think he would have received more pension under the old scheme, but is still better off pension-wise under the new scheme.

Indeed.

The other question more pertinent to the original proposition is what the Government should do to ensure that the private sector provide appropriate pension provision for their employees.

"The other question more pertinent to the original proposition is what the Government should do to ensure that the private sector provide appropriate pension provision for their employees."

more crucially what successive governments did to pensions and what companies also did with Government approval.

Back in the 70's/80's the private sector pensions were the Gold Standard and public sector the poor relations. Unfortunately our dear PM of the time, Milk Snatcher Thatcher, listened to her friends in industry and as "times were good"  and pensions funds were "overfunded",  allowed them to take pension holidays, so not contributing their part to the scheme and then allowed them to raid the pension pots to use for "other purposes" and what happened, they never made up the lost contributions and could not pay back what they had taken out of the  pension funds- result- private sector pension scheme closures as the schemes were now underfunded.

Robert Maxwell- took £450 million out of the company pension scheme

Equitable Life, Over several decades, Equitable Life sold pension scheme memberships which guaranteed a certain amount of annual pension on retirement. Unfortunately, the money required to honour these promises was not available, and in the nineteen nineties the company had to admit to a total funding shortfall of many millions of pounds

Without all this bad practice by Companies and Pension providers  the Private Sector would not now be in the mess it is with pensions.

Also remember Public Sector workers are taxpayers as well- our taxes help pay tax relief on private sector pensions + we do not get annual bonuses, company cars, private health care, relocation expenses, entertainment allowances, mobile phones etc etc etc etc etc

Steve

So historically we have had good times and bad times both in the public sector and private sector and none of the workforce in either sector is responsible for these fluctuations, its either the fault of the Government or the bad bosses.

The Public sector has decent pensions. Funded by the tax-payer and topped up by the taxpayer as and when necessary.

Building on HH's initial suggestion that the Private sector should be forced (ie legislation) to create CARE schemes for all employees (I'm not entirely convinced this is viable and sustainable in the current global economy but I would be happy to give it a try) I would add an obligation on the Government to guarantee the defined benefits in much the same way as they guarantee the defined benefits in the public sector.

To avoid mis-use and mismanagement of the private sector schemes, I would insist that they are operated and managed by the Government on behalf of the private sector.

Seems a reasonable way forward to me.

Steve

I agree with what you say.

The Civil/Public sector pension arrangements continue to work, more or less, as originally intended despite idealogical, rather than economic, interference.

Many Private Sector pensions have been decimated for the reasons you state. As I said earlier the Government should ensure that the private sector provide appropriate pension provision for their employees. This is not for the Government to subsidise, but  it might be an issue where more direct intervention might be required.

This, of course has nothing to do with Civil/Public sector pensions except that they might be held up as an aspiration for private sector provision - a race to the top rather than to the bottom...

Don

I’d recommend you get hold of a book explaining pensions in some depth. You might then realise comparing a defined benefits pension with a money purchase pension over a short period close to retirement is totally bogus. Any conclusions drawn are meaningless.

I’ve just thrown some figures into a spreadsheet. A CARE pension with 40 years contributions, with a growth 2% higher than inflation will provide a 2/3 pension for more than 17 years.

I’d like to know who advised you invest £225,000 in a money purchase scheme, so close to retirement.

But how will you give it a try, you're at the end of your working life.

I did.

It meant that I could "save" that money without paying 40/45% tax on it and then withdraw it as part of the 25% cash allowance that can be taken from your "pension pot" on retirement.

I didn't buy an annuity with it, I used it to buy another house.

If you read my post carefully, you will notice that I said what "could" be bought as a anuity.

....and with a growth that simply matches inflation....?

oh, come on, you know I didn't mean "me, personally". In the context of my post it refers to future private sector pension schemes in general. My main concern is that it might push up the price of UK exports to an unattractive level and thus be unsustainable. But others here, seem to think it could be a way forward. I wouldn't be an objector if the Gov moved in this direction.

So, you object to the taxpayer, funding public sector pensions, but are quite happy for the taxpayer to fund your other house.

The main fact that I have been pointing out, is that the money that I and my employer paid into the CARE scheme was valued by HMRC at about 2.5 times as much when calculating the value of my pension pot.

Why would they do that ?

The money that was paid into AVCs was only valued net.

So, I take it you don't think pension funds grow more than inflation.

No. I object to the government using tax payer's money to top up public sector pensions, but not providing the same facility to the private sector.

Everybody has the opportunity to do what I did.

It's simply a means of calculating how much you would have to put into an annuity to obtain that amount of pension, it's just a figure used by the tax man. It bears no relation to the cost of funding your pension.