Taxpayers To Cover Royal Mail's Pension Deficit: £10Bn

[Tired of Waiting]

Warning: Taxpayers with high blood pressure are advised NOT TO READ THIS THREAD.

And apologies to my fellow forum members for another disheartening news, but... this is a democracy after all (well, kind of), and the more people know about it, th... ... nah, it won't change a thing. It's too late, I guess. Oh well, see below, if you want to know stuff:

"The government has announced it will set up a new public Royal Mail pension scheme – the liabilities of which are to be met by the taxpayer."

http://www.professionalpensions.com/professional-pensions/news/1745761/royal-mail-scheme-liabilities-met-taxpayer#ixzz12QkD9ptK

More here:

http://www.ft.com/cms/s/0/5ad10460-d6fd-11df-aaab-00144feabdc0.html

http://www.telegraph.co.uk/news/uknews/royal-mail/7914926/Taxpayer-to-be-on-the-hook-for-400-each-as-Royal-Mail-pension-deficit-hits-10billion.html

http://www.google.co.uk/search?hl=&q=pension+royal+mail&sourceid=navclient-ff&rlz=1B3GGGL_enGB237GB238&ie=UTF-8#q=royal%20mail%20pension%20deficit%20taxpayers&num=10&hl=en&safe=off&rlz=1B3GGGL_enGB237GB238&tbs=nws:1,qdr:w&source=lnt&sa=X&ei=zE24TJ-wJYPCswaVuLDMDQ&ved=0CBAQpwU&fp=5f54f0d130de57af

And despite this offer of a £10bn gift, the unions are still against the privatisation, and Vince Cable is trying to "sweeten" them by giving 10% of Royal Mail to its employees, for free, as yet another "gift".

.

Edited October 15, 2010 by Tired of Waiting

[Djini]

Warning: Taxpayers with high blood pressure are advised NOT TO READ THIS THREAD.

And apologies to my fellow forum members for another disheartening news, but... this is a democracy after all (well, kind of), and the more people know about it, th... ... nah, it won't change a thing. It's too late, I guess. Oh well, see below, if you want to know stuff:

Despite that, the unions are still against the privatisation, and Vince Cable is trying to "sweeten" them by giving 10% of Royal Mail to its employees, for free, as a "gift".

http://www.ft.com/cms/s/0/5ad10460-d6fd-11df-aaab-00144feabdc0.html

http://www.telegraph.co.uk/news/uknews/royal-mail/7914926/Taxpayer-to-be-on-the-hook-for-400-each-as-Royal-Mail-pension-deficit-hits-10billion.html

http://www.google.co.uk/search?hl=&q=pension+royal+mail&sourceid=navclient-ff&rlz=1B3GGGL_enGB237GB238&ie=UTF-8#q=royal%20mail%20pension%20deficit%20taxpayers&num=10&hl=en&safe=off&rlz=1B3GGGL_enGB237GB238&tbs=nws:1,qdr:w&source=lnt&sa=X&ei=zE24TJ-wJYPCswaVuLDMDQ&ved=0CBAQpwU&fp=5f54f0d130de57af

.

If they MUST sell Royal Mail, sell it with the cripling debts too... Then we'll see how much interest it gets from investors.

Why do they only sell the valuable bit, and lumber us with the shitty end of the stick?

[Tired of Waiting]

If they MUST sell Royal Mail, sell it with the cripling debts too... Then we'll see how much interest it gets from investors.

Why do they only sell the valuable bit, and lumber us with the shitty end of the stick?

Exactly. They can't sell it with the debt because it is worth much less than the debt.

Actually, if they tried to auction it with the pension fund deficit, it would have to be a different kind of auction, where bidders would compete by how much money they would accept from the government to take on the company. They winner being the one accepting less subsidy.

I guess in this case we could have a weird problem like the winner getting the money and declaring bankruptcy on the next day?

Sorry, I shouldn't laugh. And I am not any more.

It is all too surreal. Public finances are worst than a joke, they are daylight-robbery.

.

Edited October 15, 2010 by Tired of Waiting

[crash2006]

Exactly. They can't sell it with the debt because it is worth much less than the debt.

Actually, if they tried to auction it with the pension fund deficit, it would have to be a different kind of auction, where bidders would compete by how much money they would accept from the government to take on the company. They winner being the one accepting less subsidy.

I guess in this case we could have a weird problem like the winner getting the money and declaring bankruptcy on the next day?

Sorry, I shouldn't laugh. And I am not any more.

It is all too surreal. Public finances are worst than a joke, they are daylight-robbery.

.

you lot havent caught on have you, they de monopolise state run companies, run them down to crap, sell them off on the cheap, always the case.

[Lone_Twin]

you lot havent caught on have you, they de monopolise state run companies, run them down to crap, sell them off on the cheap, always the case.

Any company that requires state backed monopoly to survive is a pile of sh1te and deserves to hit the wall.

[Tired of Waiting]

you lot havent caught on have you, they de monopolise state run companies, run them down to crap, sell them off on the cheap, always the case.

Apparently so.

Problem is, emigration will be such a hassle...

[papag]

10 billion 5 minutes printing

job done, all our problems will be solved in this way is the way forward dont you know, the experts says so

[tomandlu]

Any company that requires state backed monopoly to survive is a pile of sh1te and deserves to hit the wall.

It's not always about survival (which is not to say that the PO isn't a pile of sh1te). If you're committed to the idea of a fixed cost for a letter, then not having a monopoly just means that you get undercut in the few profitable areas.

[R K]

So, perhaps £400 per household over what, 40 years?

£1 a month per household maybe?

More than happy to contribute that to my postie - he's ace.

Shame they didn't signifantly increase their prices years ago though instead of giving this cost subsidy to private business users for so long. I've never grasped the rational behind that one, but then if most businesses in this country had to pay the true cost to operate they'd probably also go bust.

[Tired of Waiting]

So, perhaps £400 per household over what, 40 years?

£1 a month per household maybe?

More than happy to contribute that to my postie - he's ace.

Shame they didn't signifantly increase their prices years ago though instead of giving this cost subsidy to private business users for so long. I've never grasped the rational behind that one, but then if most businesses in this country had to pay the true cost to operate they'd probably also go bust.

It is not per "household", but per taxpayer. Quite different.

And who said 40 years?

And who said that this will be the only bailout?

What about the £170bn deficit per year?

And the total government debt of £980bn?

And the projected debt in 4 years time, of... £1.4trilliion?

How much will that be per taxpayer?

[Lone_Twin]

It's not always about survival (which is not to say that the PO isn't a pile of sh1te). If you're committed to the idea of a fixed cost for a letter, then not having a monopoly just means that you get undercut in the few profitable areas.

Indeed, the whole business model is shot and would never have survived this long without it's monopoly status.

In the modern world of email/low cost telephony/voip/social networking there is no market to support fixed cost mail.

The market would have sorted this for us except we have tried to bend reality and have been left with a £10bn bill to pay for it.

Utter stupidity.

[Tired of Waiting]

Indeed, the whole business model is shot and would never have survived this long without it's monopoly status.

In the modern world of email/low cost telephony/voip/social networking there is no market to support fixed cost mail.

The market would have sorted this for us except we have tried to bend reality and have been left with a £10bn bill to pay for it.

Utter stupidity.

Excellent post.

[babesagainstmachines]

There are plenty of private sector companies with equally huge pension deficits. Wonder if the taxpayer will end up with the crap for all of them.

[Lone_Twin]

There are plenty of private sector companies with equally huge pension deficits. Wonder if the taxpayer will end up with the crap for all of them.

One way or another.

[R K]

It is not per "household", but per taxpayer. Quite different.

And who said 40 years?

And who said that this will be the only bailout?

What about the £170bn deficit per year?

And the total government debt of £980bn?

And the projected debt in 4 years time, of... £1.4trilliion?

How much will that be per taxpayer?

£10.3billion, which - divided by the 26million households in the UK -works out at £400 each.

I took that from tha articles you posted.

40 years? Well how long will it take to discharge the £400 pension liability per household? I'd imagine 40 years will be reasonably close. But you could substitute it with 30-35 and I wouldn't complain. You're the economystic. Pick a number.

What about the deficit and the debt? Do you want to widen this thread to include the bankers and the billionaires who have had their wealth protected by dumping it on the taxpayer too? It's going to get awfully confusing but I'm happy to widen the discussion..............

[Authoritarian]

This is going to be another rail privatisation disaster, where "private" companies continue to milk the taxpayer for subsidies but still overcharge for the poor service on offer.

As usual they're privatising the profits and socialising the losses. It's par for the course these days.

[Authoritarian]

I took that from tha articles you posted.

40 years? Well how long will it take to discharge the £400 pension liability per household? I'd imagine 40 years will be reasonably close. But you could substitute it with 30-35 and I wouldn't complain. You're the economystic. Pick a number.

What about the deficit and the debt? Do you want to widen this thread to include the bankers and the billionaires who have had their wealth protected by dumping it on the taxpayer too? It's going to get awfully confusing but I'm happy to widen the discussion..............

Don't you think the unfunded public sector pension bill is high enough without adding even more to the pile? Asking those that can't even fund their own pensions to cough up for someone else's seems a tad unfair to me.

[CrashConnoisseur]

Could we not just tell newly retired posties 'the cheque's in the post'?

[singlemalt]

afaic the government should do whatever it takes to get this white elephant away from the public purse. From what I've seen these institutions are dominated by old school union types who live in some kind of parallel universe. The quicker they're in the private sector the better. Welcome to the real world!

[R K]

Don't you think the unfunded public sector pension bill is high enough without adding even more to the pile? Asking those that can't even fund their own pensions to cough up for someone else's seems a tad unfair to me.

There seems to be a great deal of smoke and mirrors around funded and unfunded public sector pension liabilities which fail to address the subsidies that have been taken by the private sector along the way. I'm afraid I'm as much in the dark as everyone else.

In this specific case I was simply pointing out that a household is different to a taxpayer and a £400 liability over the life of the liability isn't as horrendous as the 'headline' number would suggest.

But I agree with you in general that it is a great pity that private subsidies (in this case undercharging for the postal service over a prolonged period) aren't better accounted for on an ongoing basis. I'd argue that a public sector deficit in broad terms means a private sector surplus somewhere, so it's the private sector who have been benefitting. Focusing on the 'recipient' of a payment is only a tiny part of the much broader story, even though it might provide a more sensationist headline for the Daily Mail types to latch onto.

[Guest spp]

Just put it on our Tab!

We love nothing more than financing a ponzi!

[57percent]

It's not surprising.

The posties (like them and their unions or not) have been promised a pension that the company can't afford. The taxpayer was always going to foot this bill whatever happened to the company.

[Paul77]

Who is going to cover taxpayers pension deficit?

[Tired of Waiting]

I took that from tha articles you posted.

40 years? Well how long will it take to discharge the £400 pension liability per household? I'd imagine 40 years will be reasonably close. But you could substitute it with 30-35 and I wouldn't complain. You're the economystic. Pick a number.

What about the deficit and the debt? Do you want to widen this thread to include the bankers and the billionaires who have had their wealth protected by dumping it on the taxpayer too? It's going to get awfully confusing but I'm happy to widen the discussion..............

Yes, the Telegraph article first said: “Taxpayer to be on the hook for £400 each as Royal Mail pension deficit hits £10billion”, in its headline, and then they made the same mistake as you did, by saying “The news means that every household in the country will be saddled with a £400 liability”.

That was silly. In Britain taxes are paid by taxpayers, and not by “households”. RK, the fact that the Telegraph made the mistake first may explain and even dilute your mistake a little, but not completely.

About “bankers”: Banks’ owners lost virtually everything. Se data (facts) here: http://uk.finance.yahoo.com/q/bc?s=LLOY.L&t=my&l=off&z=m&q=l&c=

( Note the log scale on this one )

About bonuses: traders do have them, but Northern Rock didn’t have a hedge fund. These are different people, working in different industries. Of course there are spivs in the city. And of course you should be angry at them. But you should first identify them.

One of the worst sectors is Pension Funds. By the way, they were major (main?) shareholders in many banks. And it was mainly these “institutional shareholders” that didn’t took proper care of their long term investments. The pension funds managers were on bonuses as well. They screwed the real “bankers” = shareholders = millions of pension policy holders. Pensioners are (well, were) the bankers.

See a little more here: http://www.housepricecrash.co.uk/forum/index.php?showtopic=152149&view=findpost&p=2732261

Reality is just a little more complex than over-simplified models based on class.

And the main failure was of system governance, broad coordination, by the Treasury, FSA and BoE, during the growing phase of the credit bubble, over almost 10 years.

.

Edited October 15, 2010 by Tired of Waiting

[bricor mortis]

I worked for the post office 1980 to 1988, I paid pension contributions. But they never went into the pension fund. They were Maxwelled by the Govt of the time, all my contributions went to the govt's coffers as the pension fund was adjudged to be in surplus and not in need of my contributions.

The government stole my contributions..

So taxpayers were benefiting by Government directives to raid the pension funds in the 1980's