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Si1

Public Sector Pensions

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Honest opinions welcome, given the new political situation, how will these long term costs be handled?

My money is on 2 scenarios:

(1) the govt will work on the basis that long term growth in the economy combined with a fair degree fo inflation-erosion will ameliorate the costs as a proportion of GDP

or

(2) in the event of insufficient long term growth in the economy they won't get paid, or inflation-erosion will be massive, same thing really...

will new public sector pension entrants face a revolutionised system?

Edited by Si1

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Guest absolutezero

Honest opinions welcome, given the new political situation, how will these long term costs be handled?

My money is on 2 scenarios:

(1) the govt will work on the basis that long term growth in the economy combined with a fair degree fo inflation-erosion will ameliorate the costs as a proportion of GDP

(2) failing growth in the economy they won't get paid, or inflation-erosion will be massive, same thing really...

The answer is for existing members: Absolutely nothing.

will new public sector pension entrants face a revolutionised system?

Yes. It was changed a few years ago but not by the amount you would like.

Edited by absolutezero

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Final average salary of years worked....max say 2% pa or salary increase whatever is smaller existing....new money purchase or similar scheme new entrants. ;)

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Guest absolutezero

Final average salary of years worked....max say 2% pa or salary increase whatever is smaller existing

That's not a million miles from what we have now. The salaries of the last 10 years are averaged and then for inflation. The pension calculation is based on that.

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Final salary schemes in the public sector will, in all probability, be scrapped. New entrants will be the first to to be affected and existing employees to be affected at some date shortly after. There will probably be some safeguards for older employees.

The new schemes will probably be of the money purchase whereby the final risk is borne by the employee and not by the state as at present.

The introduction of these new schemes will be politically explosive and the public sector unions will resist with all their might...but the final outcome is inevitable.

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will new public sector pension entrants face a revolutionised system?

We'll pay them out in vouchers instead.

Vouchers that can be redeemed to retire any residual overhang on borrowing against property in the Riviera (or Provence for the manager grade, or Spain for the tango'd set), and can be used to fund unlimited trips in the sun across the Mediterranean.

We'll call these tokens Drachmarks.

Seem workable?

Edited by ParticleMan

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We'll pay them out in vouchers instead.

Vouchers that can be redeemed to retire any residual overhang on borrowing against property in the Riviera (or Provence for the manager grade, or Spain for the tango'd set), and can be used to fund unlimited trips in the sun across the Mediterranean.

We'll call these tokens Drachmarks.

Seem workable?

:lol:

I think those that see how well waiting to get paid in dotage works out are going to want paying today. If not before they ever get out of bed.

Pushmepullyou.

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Final salary schemes in the public sector will, in all probability, be scrapped. New entrants will be the first to to be affected and existing employees to be affected at some date shortly after. There will probably be some safeguards for older employees.

sounds fair if so - better pension benefits used to compensate for poorer public sector pay, don't see why this should be punished for people who worked in public sector prior to about 2003ish

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I think those that see how well waiting to get paid in dotage works out are going to want paying today. If not before they ever get out of bed.

"It's very good jam," said the Queen.

:lol:

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Guest absolutezero

sounds fair if so - better pension benefits used to compensate for poorer public sector pay,

Still are.

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Still are.

No...AZ I think you should try it for a few months out there in civvy street, it would open your eyes....when you are self employed you get no sick pay, no holiday pay, no pension, no life cover...you are out there on your own. ;)

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No...AZ I think you should try it for a few months out there in civvy street, it would open your eyes....when you are self employed you get no sick pay, no holiday pay, no pension, no life cover...you are out there on your own. ;)

Agree.In general the public sector pension commitment we have is unfinanceable.It is also entirely unjust as it is financed by pte sector who can barely afford any provision for themselves.Size of the shortfall means that new entrants are likely to get next to nothing.Where do you think they are going to find upwards of £1 trillion from?Which budget would you like that to come out of?

Listened to a NIPSA union woman on last week screaming blue murder about a potential ps 2yr wage freeze.Everyone in my co

has had a 10% pay reduction since early 2009.Sooner they get them all onto real world time the better imho.Pension apartheid has to end and it will.

Edited by redprince

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Guest absolutezero

no they're not

We've been through basic statistics before. But to recap...

The lower paying jobs have been outsourced to private companies such as Capita (for admin), various private tenders (for dustbins, cleaners and canteens).

The removal of lower paying jobs to the private sector skews the average public sector wage upwards.

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No...AZ I think you should try it for a few months out there in civvy street, it would open your eyes....when you are self employed you get no sick pay, no holiday pay, no pension, no life cover...you are out there on your own. ;)

And I love it. At the moment anyway. I couldn't enjoy much self-respect being bailed out every time I so much as take a dump.

I dont intend to buy a pension. I'm just trying to price my old age into my spending, and I'm not sure how someone else is going to do that for me any better, tax issues aside. The various pension disasters around the world are evidence of what foolish promises are made. Believing you can leave anyone in charge of a big pot of your money for such a long time without getting ******ed over is, in my opinion, akin to believing in fairies. And yes, I deeply resent diamond-encrusted promises being given to public sector employees. Its coming out of my pocket.

I'm sick of the "fully insured" culture. Guaranteed this! Guaranteed that! Agh! :angry: I'll offer a guarantee. I guarantee its a bunch of shite. So There!

Edited by Fraccy

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We've been through basic statistics before. But to recap...

The lower paying jobs have been outsourced to private companies such as Capita (for admin), various private tenders (for dustbins, cleaners and canteens).

The removal of lower paying jobs to the private sector skews the average public sector wage upwards.

Yawn, I used to like apples but now like oranges. I know eat oranges and not apples.

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Guest absolutezero

Yawn, I used to like apples but now like oranges. I know eat oranges and not apples.

Thank you for your illuminating, relevant post.

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There is no way out.

There is no solution.

Young people just have to accept lives of poverty to pay for the lives their parent enjoyed, or overthrow the system of government.

If you don't pay the pensions, you have millions of pensioners, living in penury, for 5 years until they vote in a government hat will return them to luxury.

or

If you do pay them, you have the force the young, the poor, to pay for it.

As long as the young have hope that there situation will improve, that they can rebuild, they will be prepared to suffer, as they have been told all their life it should be. The old have no time to rebuild. They are too old to start again. they will not be prepared to suffer and do not see why they should as they have told themselves all their life they are entitled to riches.

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Taxabuseroftheweek is right there is no real way out. I'd add the corporate pensions are just as bad, and have already brought some companies down, which is sad considering the real pain doesn't start for another 5-10 years.

There is one way out.. its cause an inflation of like 6% a year, and just lie and say it is 2% inflation. By doing that you reduce the burden by 4% a year.. it only needs to be done until the burden is sustainable.

The people would grumble that 'in their opinion' inflation seems higher than the official numbers.. but they won't do anything. Otoh if a government came out and cut pensions by 4% they would insta lose the next election.

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Taxabuseroftheweek is right there is no real way out. I'd add the corporate pensions are just as bad, and have already brought some companies down, which is sad considering the real pain doesn't start for another 5-10 years.

There is one way out.. its cause an inflation of like 6% a year, and just lie and say it is 2% inflation. By doing that you reduce the burden by 4% a year.. it only needs to be done until the burden is sustainable.

The people would grumble that 'in their opinion' inflation seems higher than the official numbers.. but they won't do anything. Otoh if a government came out and cut pensions by 4% they would insta lose the next election.

That is what 'they' did last time my dad started paying into his pension in the 70s he was guarenteed a couple hundred a month, which was a hella lot of money then, he still gets a couple hundred a month, it doesnt have the purchasing power though.

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There's a very easy way to solve the 'problem'.

When people talk about public sector pensions creating a problem, what they actually mean are those public sector pensions that are non-contributory.

I think that all local authority pensions are fully contributory, and most of them are funded by well managed superannuation funds, just like any other pension. These essentially pay for themselves, so no tinkering is needed here. In fact, I think all new entrants to local authority schemes after a certain date are on career average pensions, with the existing final salary ones slowly disappearing. So this is sorted.

When it comes to the public sector pensions that are non-contributory, they simply need to make them operate in the same way as local authorities do i.e. fully contributory into a superannuation fund.

However, what I suspect will actually happen is that local authority pensions and the others will all get lumped together in the name of 'reform', the superannuation funds will be raided by local authorities because of a shortfall in funding from central government, and all existing members will be moved onto career average instead of final salary.

It'll be a shame to see local authority workers suffering because of the profligacy of the civil service, but that's the way it goes I suppose.

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There's a very easy way to solve the 'problem'.

When people talk about public sector pensions creating a problem, what they actually mean are those public sector pensions that are non-contributory.

I think that all local authority pensions are fully contributory, and most of them are funded by well managed superannuation funds, just like any other pension. These essentially pay for themselves, so no tinkering is needed here. In fact, I think all new entrants to local authority schemes after a certain date are on career average pensions, with the existing final salary ones slowly disappearing. So this is sorted.

When it comes to the public sector pensions that are non-contributory, they simply need to make them operate in the same way as local authorities do i.e. fully contributory into a superannuation fund.

However, what I suspect will actually happen is that local authority pensions and the others will all get lumped together in the name of 'reform', the superannuation funds will be raided by local authorities because of a shortfall in funding from central government, and all existing members will be moved onto career average instead of final salary.

It'll be a shame to see local authority workers suffering because of the profligacy of the civil service, but that's the way it goes I suppose.

The Civil service and NHS are unfunded schemes the Local government schemes are developing huge shortfalls which current stock market plunges will make all lot worse.

Just another Ponzi sheme depending on more entrants for a diminishing return.

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When people talk about public sector pensions creating a problem, what they actually mean are those public sector pensions that are non-contributory.

I think that all local authority pensions are fully contributory, and most of them are funded by well managed superannuation funds, just like any other pension. These essentially pay for themselves, so no tinkering is needed here. In fact, I think all new entrants to local authority schemes after a certain date are on career average pensions, with the existing final salary ones slowly disappearing. So this is sorted.

Many of the public sector pensions have contributions from the employee and employeer. The problem is the money went NO-WHERE. It was all just given back to the boomers in tax cuts.

This fact is also the kicker. Many civil servant contributed to their own pensions.

Most local authority pensions are unfunded. Only the recent ones are funded.

That is what 'they' did last time my dad started paying into his pension in the 70s he was guarenteed a couple hundred a month, which was a hella lot of money then, he still gets a couple hundred a month, it doesnt have the purchasing power though.

You can't inflate pensions away. They are "entitled" to a comfy retirement.

Even if you inflate, if you try to push the boomers into poverty they will just vote in a government that restores their "entitlement". This as the catch 22.

Edited by TaxAbuserOfTheWeek

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You cannot save, with money, for pensions when considering it at the level of society. There will be a fixed number of pensioners and a fixed number of young workers to provide labour. It is this ratio of pensioners to workers that matters. If every pensioner has a million pounds, they will engage in a bidding war for the limited supply of labour leading to rising wages for the workers. The value of a pension does not depend on the sum saved but the relative, to other pensioners, sum saved

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Many of the public sector pensions have contributions from the employee and employeer. The problem is the money went NO-WHERE. It was all just given back to the boomers in tax cuts.

This fact is also the kicker. Many civil servant contributed to their own pensions.

Most local authority pensions are unfunded. Only the recent ones are funded.

You can't inflate pensions away. They are "entitled" to a comfy retirement.

Even if you inflate, if you try to push the boomers into poverty they will just vote in a government that restores their "entitlement". This as the catch 22.

Explain this statement. What tax cuts? How were one generation singled out for these tax cuts (assuming you can back up your claim)?

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  • 153 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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