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cashinmattress

Think Tank Claims Public Sector Liabilities Top £1trn

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Think tank claims public sector liabilities top £1trn

The accumulated liability of unfunded public sector pension schemes is greater than the national debt, a Policy Exchange report claims.

Public Sector Pensions: The UK's Second National Debt, said using the government's own calculations, public sector pension liabilities stand at £1.1trn, or equivalent to 78% of GDP.

It added the cost of servicing the debt each year to pay for these unfunded schemes is now £45.2bn.

The think tank claimed the government had been using "financially indefensible methods" to work out its liabilities and how much workers need to contribute to the schemes.

It said the Treasury has been subsidising pensions promises. The report revealed that someone who has been in the public sector for their whole career can now leave with a pension higher than the average they received when working.

When added to the known subsidy, this means each of the 5 million employees in unfunded schemes receives a pension payment of £5700 per year.

Author Neil Record said: "The government has allowed public sector pension liabilities to run out of control, with the Treasury spending contributions received for the next generation's pensions to the pay the current generation of pensioners. The government's accounting for these pensions has been arbitrary and opaque, making it all but impossible to understand."

Record said public sector workers did deserve security in retirement but the government is creating an "apartheid" when compared to those of the private sector.

He explained: "This could lead to high quality public pensions being completely abandoned - I want to avoid that.

"The Bank of England has already moved to make its schemes 100% funded. If the government were to do the same, the changes would be costly - but the reality is this isn't money that would otherwise have been saved, and we urgently need to bring transparency to the cost of these schemes."

The report suggested changes including for annual cash pension contributions to be used to buy index-linked gilts of sufficient value to fully pay for all pension promises made in that year. The index-linked gilts should be purchased and issued at market prices.

It also called for a new body to be established - the Public Sector Pension Fund or similar - to receive contributions, to buy index-linked gilts, and to pay public sector pensions.

It added existing public sector pension liabilities should be ring-fenced by the Treasury and allowed to run off over their remaining life. All outstanding public sector pension obligations should be met in full.

I am sure this will be passed over by our resident ramping numpties. After all, who cares about tomorrow if you can live for today. Right?

Recovereh!

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They have taken the money and spent it.

They hope to be elsewhere when the state fails and probably will be.

Gordon Brown is quoted as saying, during his Chancellorship,

"The trick to being a good Chancellor of the Exchequer is to

get out at the right time."

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I don't know what all the fuss is about.

By the time a loaf of bread is £30 & petrol is a tenner/litre the few trillion spent on the vital public sector will be welcomed.

Not forgetting that property prices will at last have been stabilised.

NB:- this last point will be the only one in the 2010 NuLabour manifesto

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From the figures quoted it appears that the think tank are calculating the entire pension cost of all public sector employees retiring on the same day and all living for approximately 35 years after retirement.

Presenting a £1 trillion deficit garners headlines but doesn't actually represent the actual managable cost of public pensions as a rolling cost with the actual number of public sector retirees each year being approx 200,000 with a steadily declining number being in receipt from each cohort year on year.

The think tank seeks to represent public sector pensions as unafordable as they presumably represent private pension interests who seek billions of pounds in new funds should public sector pensions become a thing of the past.

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with a steadily declining number being in receipt from each cohort year on year.

I have my doubts abotu this assumption - people retiring at 60 are not seriously going to start popping their clogs for quite some decades - hardly a steady trend...

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