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Hutton Report On Public Service Pensions

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Full final report available at the following link:

http://www.hm-treasury.gov.uk/indreview_johnhutton_pensions.htm

My main recommendation therefore is that Government should replace the existing final

salary pension schemes with a new career average scheme and, when everything is ready,

move existing members to the new scheme for future accruals. I am recommending this

course of action as I believe this is the fairest way of spreading the effect of change across the

generations, and represents the quickest way of ending the in-built bias against those public

service employees whose pay stays low over their career, inherent in final salary schemes.

Maintaining the link to final salary for the purposes of calculating the value of a person’s

accrued rights under the existing schemes will however ensure fair treatment for those who

have built up rights in these schemes and will mean that those closest to retirement, perhaps

in their 50s today, who have less time to adjust are least affected and all existing scheme

members retain the link to final salary for the years they have already accrued.

hutton_deal.gif

Edit: added graphic

Edited by FreeTrader

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Increased contributions for a lower payout, working longer and with final salary schemes scrapped. If that's not 'moving the goalposts', I don't know what is. I'm sure the public-sector bashers on here will be gloating, but maybe not for long. If the government can do this to the public sector, what's going to happen to private sector pension schemes?

I'm beginning to think that Robert Maxwell was a man before his time :lol:

Edited by Hyperduck Quack Quack

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Increased contributions for a lower payout

Lower payout ? With people living longer, the total payout is much greater, and that's the problem.

Even with increased contributions they're still far better pensions than the private sector.

It's time the public sector woke up to the real world.

As for moving goalposts, that's what governments do, just look how Gordon Brown raided private pensions to the tune of £100bn a few years ago.

Edited by exiges

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I work in the public sector and most of that sounds fair enough to me. I should mention that our pension fund is fully funded at the moment, but I never really expected final salary to last until my retirement.

However, the 'accrued rights protected' part does not sound like a fair 'way of spreading the effect of change across the generations'. Surely that means the older generation gets a better deal just for being older (in his terms they have built up rights). If they're going to move the goalposts, it should apply to everyone. This is just pulling up the ladder. :angry:

Q

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I work in the public sector and most of that sounds fair enough to me. I should mention that our pension fund is fully funded at the moment, but I never really expected final salary to last until my retirement.

However, the 'accrued rights protected' part does not sound like a fair 'way of spreading the effect of change across the generations'. Surely that means the older generation gets a better deal just for being older (in his terms they have built up rights). If they're going to move the goalposts, it should apply to everyone. This is just pulling up the ladder. :angry:

Q

I would agree with that. I have also heard similar stories of boomers taking lucrative early redundancy packages before the the doors shut on that.

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Be far easier just to cap the maximum scheme payout be £20k per annum.

You'd need about £350k in an annuity scheme to get this payout so if some high flyer accrues this amount by the time they are 50 then they can just not pay into the pot any more any take home a higher salary.

Likewise a 58 year old with £200k in the pot and 10 more years ahead of them in work on £30k could choose to pay in 50% of their salary to get the maximum payout.

However looking at the amount needed to get a £20k annual payout I can see why people turn to BTL for a regular retirement income....

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On BBC they had a pensions expert who pointed out PSE put in 8% and to actually pay for their pension would need to put in 25%

And she dispelled the myth about PSE being poorly paid. Said they're higher paid that private sector.

I like the idea of capping all pensions.

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Hutton's proposal, makes things better, but only a bit better.

The things he missed are,

1) Cut pensions that are already being paid. They are too high for the amount contributed.

2) For those working, end all public sector involvement with the pension, give them cash and tell them to invest it privately.

3) For new accruals, save for the pension yourself.

That would be fair and affordable. Given the monstrous size of the problem, this fiddling whilst Rome is burning helps no one.

A longer term goal would be to replace state pensions too with a citizens income.

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This is just the start.

I keep telling you rabid loons that the so called 'cushy' public sector pensions was just a big ponzi which will get gradually wound down as the decades pass. Those that can, are cashing in whilst the option is still there, whilst most I know under 40 have or plan to opt out of the scheme altogether.

After making people pay more for effectively less, the next step will be to tax the hell out of participants for the privilege. For those with high earnings, the tax may prove too much to swallow, whilst those who end up averaging < £25k a year would probably be better off not bothering.

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http://www.telegraph.co.uk/finance/personalfinance/pensions/8372704/Pensions-reforms-could-light-the-blue-touch-paper-for-strikes-GMB-leader-warns.html

Labour peer Lord Hutton sparked anger after recommending to ministers that public sector workers should be stripped of their final salary pensions and instead have schemes linked to average earnings, while paying more and working longer.

Unions representing council workers, NHS staff, civil servants and other public sector employees reacted with fury to the report and warned of co-ordinated industrial action.

Brian Strutton, national officer of the GMB, said: "Lord Hutton had a real chance to make sure low paid public sector workers have good quality, affordable pension schemes, but in failing to address the key issue of affordability to members, that chance has been wasted.

"Many of his conclusions are questionable and will infuriate public sector workers. It's not cogent enough to be a blueprint for reform but it might well light the blue touch paper for industrial action."

Dave Prentis, general secretary of Unison, called on the Government to convene urgent talks to discuss the report, rather than "rushing" to make cuts and face industrial action.

He said: "This will be just one more attack on innocent public sector workers who are being expected to pay the price of the deficit, while the bankers who caused it continue to enjoy bumper pay and bonuses.

"On top of a pay freeze, and the threat of redundancy, they now face a pensions raid. This brings the threat of industrial action closer."

Bob Crow, RMT union leader, said: "It is clear from all the signals that from nurses to transport staff, the Government intend to make staff work longer, pay more and get less.

"There is no question that this is the issue where coordinated strike action is on the cards as we fight to stop the ConDem pensions robbery."

Hundreds of thousands of doctors, civil servants and other public sector workers will be denied early retirement to cut the cost of their pensions to the taxpayer, Lord Hutton's report recommends.

more garbled english at the link

There is no reason at all for denying these people their full final salary pensions.

Printy printy!!

Edited by Injin

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Hutton's proposal, makes things better, but only a bit better.

The things he missed are,

1) Cut pensions that are already being paid. They are too high for the amount contributed.

2) For those working, end all public sector involvement with the pension, give them cash and tell them to invest it privately.

3) For new accruals, save for the pension yourself.

That would be fair and affordable. Given the monstrous size of the problem, this fiddling whilst Rome is burning helps no one.

A longer term goal would be to replace state pensions too with a citizens income.

But fiddle they will. Any serious reform that is needed will bring such fierce opposition, that no democratically elected government would dare implement it, for fear of voter retribution So, get prepared to leave the sinking ship. Don't dilly-dally though, soon the cost of getting in the life raft is going to rocket even higher than it already has.

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But fiddle they will. Any serious reform that is needed will bring such fierce opposition, that no democratically elected government would dare implement it, for fear of voter retribution So, get prepared to leave the sinking ship. Don't dilly-dally though, soon the cost of getting in the life raft is going to rocket even higher than it already has.

Life rafts don't last long in a sea of sulphuric acid.

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Hutton's proposal, makes things better, but only a bit better.

The things he missed are,

1) Cut pensions that are already being paid. They are too high for the amount contributed.

2) For those working, end all public sector involvement with the pension, give them cash and tell them to invest it privately.

3) For new accruals, save for the pension yourself.

That would be fair and affordable. Given the monstrous size of the problem, this fiddling whilst Rome is burning helps no one.

A longer term goal would be to replace state pensions too with a citizens income.

1) Cut pensions that are already being paid. They are too high for the amount contributed.

Yes, I wonder how that's been missed? :rolleyes:

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Hang on, when did early retirement become a right? Did I miss the memo?

I imagine it became a right when the contracts were signed. Or so the argument will go.

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Increased contributions for a lower payout, working longer and with final salary schemes scrapped. If that's not 'moving the goalposts', I don't know what is. I'm sure the public-sector bashers on here will be gloating, but maybe not for long. If the government can do this to the public sector, what's going to happen to private sector pension schemes?

I'm beginning to think that Robert Maxwell was a man before his time :lol:

"final salary schemes scrapped'.

OH DEARIE ME! Don't tell me that Public Sector workers soon won't be able to reward themselves £10,000s to £100,000 extra in pension payments by being promoted a couple months before they retire.

HOW CRUEL!! THEY SHOULD STRIKE IMMEDIATELY! :rolleyes:

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"final salary schemes scrapped'.

OH DEARIE ME! Don't tell me that Public Sector workers soon won't be able to reward themselves £10,000s to £100,000 extra in pension payments by being promoted a couple months before they retire.

HOW CRUEL!! THEY SHOULD STRIKE IMMEDIATELY! :rolleyes:

Sure they will.

Once Ed balls has won a landslide election and has his hands on the printing press.

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Life rafts don't last long in a sea of sulphuric acid.

Tthe type of lifeboat I'm thinking of seems to have lasted pretty well throughout over 4000 years of human history. Sure it'll do it's job pretty well this time too.

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I work in the public sector and most of that sounds fair enough to me. I should mention that our pension fund is fully funded at the moment, but I never really expected final salary to last until my retirement.

However, the 'accrued rights protected' part does not sound like a fair 'way of spreading the effect of change across the generations'. Surely that means the older generation gets a better deal just for being older (in his terms they have built up rights). If they're going to move the goalposts, it should apply to everyone. This is just pulling up the ladder. :angry:

Q

I am not sure what scheme you are in, but public sector pension schemes do not normally have assets behind them. Pensions are paid out of tax revenues at the time. If you have a funded scheme, I dont think that the Hutton proposal affects you.

You are totally right about 'accrued rights protected' being a problem. Think of it this way, if there are two of you, and you were both expecting £100 in pension. The pot actually has £120 in. A fair way is to get £60 each. Thanks to 'accrued rights protected', one will get £100, and the other £20. They do something similar with private pension schemes that have no solvent backer when they go bust, it is a totally unfair way of distributing the pain. Basically, the young'un gets lumbered with the loss.

This is all too real too. Young people will be paying excessive tax to keep to old'uns in the money, whilst they have no hope of such a pension themselves. If they understand this, they should take action, not to try and keep the existing arrangements, but to make sure the pain is spread equally.

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Tthe type of lifeboat I'm thinking of seems to have lasted pretty well throughout over 4000 years of human history. Sure it'll do it's job pretty well this time too.

Relative to the poor sods in the sea, maybe. They'll want to climb aboard though.

Relative to the vast luxury liner you were on with everyone else before TSHTF though, it's going to be shite.

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I imagine it became a right when the contracts were signed. Or so the argument will go.

I worked for the council briefly a very long time ago, if only I had known! However, I was put off by the notice in the staff only toilets requesting that people didn't smear feaces on the walls, I kid you not.

I get to throw sh!t at the wall and retire early?

Edited by Tonkers

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I imagine it became a right when the contracts were signed. Or so the argument will go.

That's right, but historic entitlements will likely be preserved, and there's no "contractual" argument for pension arrangements on future periods of employment.

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I worked for the council briefly a very long time ago, if only I had known! However, I was put off by the notice in the staff only toilets requesting that people didn't smear feaces on the walls, I kid you not.

I get to throw sh!t at the wall and retire early?

:lol::lol::lol:

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That's right, but historic entitlements will likely be preserved, and there's no "contractual" argument for pension arrangements on future periods of employment.

That's going to lead to some fantastic working environments, isn't it?

10 in a room, 2 of them on a fortune every month plus hefty pension, everyone else on NMW and no pension. Screams fairness.

Edited by Injin

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