Jump to content
House Price Crash Forum
Sign in to follow this  
littlepuppi

The "avergae Public Sector Pension"

Recommended Posts

Ed Balls for one keeps telling us that poor old public sector workers average pension is 4 or 5k...

Right, as far as i can tell this is pension "pots" in the public sector, as such people can have:

1. More than 1.....

2. One in public and a private one

3. Some other pension as well....

When is someone going to start taking them to task on this and start pointing out the this is not a good measure of the "average public sector pension"

If Im wrong please tell me.....

Share this post


Link to post
Share on other sites

Ed Balls for one keeps telling us that poor old public sector workers average pension is 4 or 5k...

Right, as far as i can tell this is pension "pots" in the public sector, as such people can have:

1. More than 1.....

2. One in public and a private one

3. Some other pension as well....

When is someone going to start taking them to task on this and start pointing out the this is not a good measure of the "average public sector pension"

If Im wrong please tell me.....

What counts is how long they worked to accrue such a pension, and what salary they were on to accrue it.

If you have someone worked for six months and is due a pension of £100 a year or whatever, that will bring down the average.

And it isnt really a question of whether or not these pensions are deserved. The first question has to be, can they be afforded?

A quick bit of maths says no they cant. So something needs to be be done. I hope the pain will be shared equally amongst those still working and those retired. The latter are after all drawing too much of a pension, and should have their pensions cut too, after all, if this does not happen, it puts their portion of the burden onto everyone else.

Share this post


Link to post
Share on other sites

Ed Balls for one keeps telling us that poor old public sector workers average pension is 4 or 5k...

Right, as far as i can tell this is pension "pots" in the public sector, as such people can have:

1. More than 1.....

2. One in public and a private one

3. Some other pension as well....

When is someone going to start taking them to task on this and start pointing out the this is not a good measure of the "average public sector pension"

If Im wrong please tell me.....

Hmmm, I was just over two years in the Universities Superannuation Scheme, about 20 years ago. I guess that entitles me to a pension when my time comes. Maybe as much as £500/year if I'm really lucky.

Share this post


Link to post
Share on other sites

What counts is how long they worked to accrue such a pension, and what salary they were on to accrue it.

If you have someone worked for six months and is due a pension of £100 a year or whatever, that will bring down the average.

And it isnt really a question of whether or not these pensions are deserved. The first question has to be, can they be afforded?

A quick bit of maths says no they cant. So something needs to be be done. I hope the pain will be shared equally amongst those still working and those retired. The latter are after all drawing too much of a pension, and should have their pensions cut too, after all, if this does not happen, it puts their portion of the burden onto everyone else.

Ok free marketeers, ask yourself this question.

1. Mr A Boomer buys an annuity of say 250k returning 15k pa at 2007 rates.

2. Mr A Victim buys an annuity of 250k returning 10k pa at 2010 rates.

In your survival of the fittest free market paradise would the former be asked to subsidise the latter or would it be a case of wrong place/wrong time, tough sh1t? Why would you expect annuities bought through public sector pensions to be any different?

Share this post


Link to post
Share on other sites

Ok free marketeers, ask yourself this question.

1. Mr A Boomer buys an annuity of say 250k returning 15k pa at 2007 rates.

2. Mr A Victim buys an annuity of 250k returning 10k pa at 2010 rates.

In your survival of the fittest free market paradise would the former be asked to subsidise the latter or would it be a case of wrong place/wrong time, tough sh1t? Why would you expect annuities bought through public sector pensions to be any different?

the guy's got a point - the free market has its limits, as do benefits

Share this post


Link to post
Share on other sites

I cant remember the exact numbers, i'll ask him when i see him, but my dad covered for someone for a 6 month period in a FE Colleges finance dept for 6 months....got a larger pension 'pot' from that than working a similar job in the private sector for 6 years.

I'll cheque the periods involved, but its something absurd like that.

Share this post


Link to post
Share on other sites

I cant remember the exact numbers, i'll ask him when i see him, but my dad covered for someone for a 6 month period in a FE Colleges finance dept for 6 months....got a larger pension 'pot' from that than working a similar job in the private sector for 6 years.

I'll cheque the periods involved, but its something absurd like that.

the comparison might be tricky as you might be comparing the equivalent fund value before retirement for the FE pot against fund value before investment appreciation of several decades for the private sector. Private Sect pots are different as they require decades of returns to reach their proper value for a pension. And this does mean that public sect effective contributions sound more generous closer you are to retirement - that is what they are.

Edited by Si1

Share this post


Link to post
Share on other sites

the comparison might be tricky as you might be comparing the equivalent fund value before retirement for the FE pot against fund value before investment appreciation of several decades for the private sector. Private Sect pots are different as they require decades of returns to reach their proper value for a pension. And this does mean that public sect effective contributions sound more generous closer you are to retirement - that is what they are.

OK,

So just to be clear this is not a "public sector bashing thread" but I want to know the facts, I personally do not believe that the average public sector pension is 5 - 6k.. I believe the "pot" maybe as per caluculations from unions and labour (as they are the ones that keep saying it).. But it does seem the case that you can have more than one pot or source... Therefore it doesnt appear to be (IMO) a valid argument, that public sector workers only get a pension of 5 - 6k (the alleged mean figure)....

Edited by littlepuppi

Share this post


Link to post
Share on other sites

OK,

So just to be clear this is not a "public sector bashing thread" but I want to know the facts, I personally do not believe that the average public sector pension is 5 - 6k.. I believe the "pot" maybe as per caluculations from unions and labour (as they are the ones that keep saying it).. But it does seem the case that you can have more than one pot or source... Therefore it doesnt appear to be (IMO) a valid argument, that public sector workers only get a pension of 5 - 6k (the alleged mean figure)....

I agree

Share this post


Link to post
Share on other sites

OK,

So just to be clear this is not a "public sector bashing thread" but I want to know the facts, I personally do not believe that the average public sector pension is 5 - 6k.. I believe the "pot" maybe as per caluculations from unions and labour (as they are the ones that keep saying it).. But it does seem the case that you can have more than one pot or source... Therefore it doesnt appear to be (IMO) a valid argument, that public sector workers only get a pension of 5 - 6k (the alleged mean figure)....

I am assuming this is the Mean average. If I understand what you are getting at wouldn't it be better to take the median which cuts out the extremities (ie: all those people that worked in the public sector for 1 year)?

Anyone got the Median figure?

Share this post


Link to post
Share on other sites

OK,

So just to be clear this is not a "public sector bashing thread"

Really? Guess I came to the wrong thread then. Nm.

Share this post


Link to post
Share on other sites
Guest absolutezero

What counts is how long they worked to accrue such a pension, and what salary they were on to accrue it.

If you have someone worked for six months and is due a pension of £100 a year or whatever, that will bring down the average.

And it isnt really a question of whether or not these pensions are deserved. The first question has to be, can they be afforded?

A quick bit of maths says no they cant.

2 percent of GDP says they can.

Share this post


Link to post
Share on other sites

Earlier this year the BBC reported some National Audit Office figures which put the average public sector pension at more than £9k.

http://news.bbc.co.uk/1/hi/business/8562321.stm

Last March the schemes covered 6.5 million people - 2.75 million staff, 1.59 million former employees who had not yet retired, and 2.13 million pensioners.

The report found that total payments to pensioners made by those schemes rose by 38%, from £14bn in 1999-2000 to £19.3bn in 2008-09.

£19.3bn between 2.13mn people = £9,061 each.

Share this post


Link to post
Share on other sites

2 percent of GDP says they can.

On the whole, public sector jobs are a job for life, unlike many other jobs...so accruing pensions and pay rises would I would have thought provide a very generous pension over time. ;)

Share this post


Link to post
Share on other sites

Ok free marketeers, ask yourself this question.

1. Mr A Boomer buys an annuity of say 250k returning 15k pa at 2007 rates.

2. Mr A Victim buys an annuity of 250k returning 10k pa at 2010 rates.

In your survival of the fittest free market paradise would the former be asked to subsidise the latter or would it be a case of wrong place/wrong time, tough sh1t? Why would you expect annuities bought through public sector pensions to be any different?

In a free market one group of people wouldn't be able to force their pension costs onto others, at gunpoint.

I hope this answers your question.

Share this post


Link to post
Share on other sites

Earlier this year the BBC reported some National Audit Office figures which put the average public sector pension at more than £9k.

http://news.bbc.co.uk/1/hi/business/8562321.stm

£19.3bn between 2.13mn people = £9,061 each.

So the PV of that assuming a 15 year remaining life span and a 5% return is approaching £ 200 bn for existing pensioners. Quite a bit less than I expected to be honest.

Share this post


Link to post
Share on other sites

Hmmm, I was just over two years in the Universities Superannuation Scheme, about 20 years ago. I guess that entitles me to a pension when my time comes. Maybe as much as £500/year if I'm really lucky.

USS is a fully funded investment based scheme - and a very good one at that - so, I assume, is not one of the ones currently under discussion.

Share this post


Link to post
Share on other sites

Ok free marketeers, ask yourself this question.

1. Mr A Boomer buys an annuity of say 250k returning 15k pa at 2007 rates.

2. Mr A Victim buys an annuity of 250k returning 10k pa at 2010 rates.

In your survival of the fittest free market paradise would the former be asked to subsidise the latter or would it be a case of wrong place/wrong time, tough sh1t? Why would you expect annuities bought through public sector pensions to be any different?

why would you buy an annuity at all?

Share this post


Link to post
Share on other sites

Ok free marketeers, ask yourself this question.

1. Mr A Boomer buys an annuity of say 250k returning 15k pa at 2007 rates.

2. Mr A Victim buys an annuity of 250k returning 10k pa at 2010 rates.

In your survival of the fittest free market paradise would the former be asked to subsidise the latter or would it be a case of wrong place/wrong time, tough sh1t? Why would you expect annuities bought through public sector pensions to be any different?

Despite the somewhat prejudiced names, they each have the same pension pot upon retirement.

They each had different choices available to them. This element of the world is bit of the "tough sh1t" part.

If the annuity rates are not good enough, you don't have to buy one. If you think it is a good deal, then get one. Each person has to make their own choices. Govt interference usually makes things worse for everybody overall.

Nobody has a right to get a better return on their money just because someone else did a few years earlier. The same way I can't go into a shop and demand that they sell me things at 2007 prices, (or that a homeowner can't demand 2007 sale prices unless someone else wants to pay).

You pays your money, you makes your choice. Individual choice, that is what the free market is about.

Share this post


Link to post
Share on other sites

I've just written an article on exactly this for the fact-checking organisation Full Fact, and the way in which the average public sector pension is calculated is by no means cut-and-dry. Ed Balls might be resting on unsteady ground by claiming that it's between £5k and £6k.

http://www.fullfact.org/articles/?catid=65&id=99&sel=articlelist

The peak on the graph at 1k-2k per year strongly suggests that the 'average' relates to all public pension payouts, including those with just a year worth of contributions. It is done this way to lower the average, those pensioners are certainly not surviving on this small sum. It only becomes meaningful when they are excluded and the numbers relate to those on full pensions.

Share this post


Link to post
Share on other sites

Ok free marketeers, ask yourself this question.

1. Mr A Boomer buys an annuity of say 250k returning 15k pa at 2007 rates.

2. Mr A Victim buys an annuity of 250k returning 10k pa at 2010 rates.

In your survival of the fittest free market paradise would the former be asked to subsidise the latter or would it be a case of wrong place/wrong time, tough sh1t? Why would you expect annuities bought through public sector pensions to be any different?

The underlying fault is a system that forces such a big thing on you at a time not entirely of your choosing. And that that system should be so badly-managed as to be highly unstable. House price volatility has comparable effect.

It's inevitable from the boomer demographics that annuity rates are falling, and will continue a downward trend for 20+ years. It is NOT part of any free and fair market that the rules not only force you to buy an annuity at a particular age (range), but also make big and arbitrary changes to that range, like the one that handed a great opportunity to anyone born before April 5th 1960 while denying it to younger folks. Neither is actuarial incompetence, though I guess "bad money drives out good" is, in a world of unregulated credit and too-big-to-fail banks.

The boomers will not, as a whole, enjoy such a wealthy retirement as current pensioners, because there are simply too many.

Share this post


Link to post
Share on other sites

Average public sector pay is circa £22.5k per annum (ONS 2009 which incidentally reports private sector average in under 20k pa).

The average accrual rate is 1/60th p.a. of salary. Assuming retirees finish a 40 year career (20 to 60) on average salary (this is understating final salaries as obviously people tend to progress career salary over time not regress) their pension income would be £15k from the scheme, index linked & spousal pension included. Without actually checking I guess a 60 year old would need a private pension of at least £400,000 to provide similar benefits & of course all of the risk of under performance is on them rather than the taxpayer.

So the question is how many earning 22k pa can afford to accrue £400k over 40 years (this would entail paying in about £750 per month and increasing by inflation every year).

S**t I've just realised I should not be self employed but working in the council offices down the road ... if you cant beat them?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 140 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.