Jump to content
House Price Crash Forum
exiges

Public Sector Pensions - The Facts

Recommended Posts

Before you feel too sorry for those downtrodden Public Sector workers, here are some interesting facts..

Unions claim that the average Public Sector pension is just £4200.

What the unions don't tell you is that this figure excludes the highest earners.. but includes people who have worked for in a Public position for just a few months.

Private sector employees would need to build up a pension pot of £189,151 - equivalent to £6,300 each year for 30 years, to receive the average annual pension paid to civil servants.

Private sector workers would need to contribute 37% of their salary to their pension pot of their working lifetime to match the retirement income paid to a public sector on an equivalent wage.

And they're striking because they have to make 3% greater contributions.. diddums.

Source: http://www.bbc.co.uk/news/uk-politics-13775278

Share this post


Link to post
Share on other sites

Before you feel too sorry for those downtrodden Public Sector workers, here are some interesting facts..

Unions claim that the average Public Sector pension is just £4200.

What the unions don't tell you is that this figure excludes the highest earners.. but includes people who have worked for in a Public position for just a few months.

Private sector employees would need to build up a pension pot of £189,151 - equivalent to £6,300 each year for 30 years, to receive the average annual pension paid to civil servants.

Private sector workers would need to contribute 37% of their salary to their pension pot of their working lifetime to match the retirement income paid to a public sector on an equivalent wage.

And they're striking because they have to make 3% greater contributions.. diddums.

Source: http://www.bbc.co.uk...litics-13775278

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

Banking is a state run monopoly.

:)

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

I think 'we' are by asking the public sector proletariat to sort it out.

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

Bulls***

The current problems are due to Brown's insane spending spree to guarantee his appointment as prime minister.

Share this post


Link to post
Share on other sites

When I retire at 65 my public sector pension, on my current salary will be £18,000 pa. I will get a lump sum of around 2k. I wouldn't mind having to pay slightly more in contributions to guarantee that amount.

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

that's not what the piggies were saying during the New Labour Public Sector Party

children

tut

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

...is Gordon Brown the private sector...?.....when you get real think again pal....and get rid of these councils with their over paid executives delivering negatives.... :rolleyes:

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

something I am glad to see the back of with the loss of the last government - woolly minded simpleton thinking masquarading as expertise and getting overpaid to do it in the public sector

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

No problem. We will sort it out by reducing the amount we waste on public sector pay and salaries.

Share this post


Link to post
Share on other sites

I can't speak for civil servants but I can demo why schemes like the the LG pension scheme are fully funded. Any recent deficits are probably attributable to Broons raid and thus affecting all funds private and public.

Take the example of a middle ranking LG officer (say planner, EHO, Building Control) Pensionable Salary scale 25K - 35K. Career average 30K

Now under the old scheme (ended March 2008) to recieve the maximum pension of 50% final salary plus 1.5 times annual salary lump sum the worker would have to put in 40 years service with contributions as follows;

Employee - 6%

Employer 8.4%

So over a life time this guy contributes £72,000 to the pension pot with the employer putting in £101,000

Lets say the fund grows above inflation at a rate of 3.5% PA gives a final fund of £346K

£346K - 53K lump sum

= 293K to finance an annual pension of £17500 PA for a guy or gal in their early sixties.

Given average life spans I would suggest that is quite doable.If not then the employee needs to pony up a bit more as has been the case since 2008.

Share this post


Link to post
Share on other sites

Before you feel too sorry for those downtrodden Public Sector workers, here are some interesting facts..

Unions claim that the average Public Sector pension is just £4200.

What the unions don't tell you is that this figure excludes the highest earners.. but includes people who have worked for in a Public position for just a few months.

Private sector employees would need to build up a pension pot of £189,151 - equivalent to £6,300 each year for 30 years, to receive the average annual pension paid to civil servants.

Private sector workers would need to contribute 37% of their salary to their pension pot of their working lifetime to match the retirement income paid to a public sector on an equivalent wage.

And they're striking because they have to make 3% greater contributions.. diddums.

Source: http://www.bbc.co.uk/news/uk-politics-13775278

And thus the arguements between private and public sector employees ensues. These subsections of our economy are just potential or actual employers to most people and due to the relatively free labour market it is possible to work for either and a lot of people will work for both, either at the same time or during part of their career. Still, you can choose to work for neither and still get up to £26,000 per year post tax income!

Share this post


Link to post
Share on other sites

When I retire at 65 my public sector pension, on my current salary will be £18,000 pa. I will get a lump sum of around 2k. I wouldn't mind having to pay slightly more in contributions to guarantee that amount.

See my calculation above - its almost written with you in mind! :)

Edit - BTW - why no lump sum? When I last checked my LGPS statement its guesstimate was £7000 annual and about £18K LS

Edited by Kurt Barlow

Share this post


Link to post
Share on other sites

I can't speak for civil servants but I can demo why schemes like the the LG pension scheme are fully funded. Any recent deficits are probably attributable to Broons raid and thus affecting all funds private and public.

Take the example of a middle ranking LG officer (say planner, EHO, Building Control) Pensionable Salary scale 25K - 35K. Career average 30K

Now under the old scheme (ended March 2008) to recieve the maximum pension of 50% final salary plus 1.5 times annual salary lump sum the worker would have to put in 40 years service with contributions as follows;

Employee - 6%

Employer 8.4%

So over a life time this guy contributes £72,000 to the pension pot with the employer putting in £101,000

Lets say the fund grows above inflation at a rate of 3.5% PA gives a final fund of £346K

£346K - 53K lump sum

= 293K to finance an annual pension of £17500 PA for a guy or gal in their early sixties.

Given average life spans I would suggest that is quite doable.If not then the employee needs to pony up a bit more as has been the case since 2008.

at effective 6% required annuity rate that is underfunded at current rates, but current rates are exceptionally low of course

Edited by Si1

Share this post


Link to post
Share on other sites

at effective 6^ required annuity rate that is underfunded at current rates, but current rates are exceptionally low of course

Im out of LG now but I recall the employee contribution being lifted to 7 & 7.5% to reflect this. It was left at 6% for the lowest paid employees though.

The other thing is the LG scheme doesnt have to buy annuities for members so that excludes a whole host of snouts (annuity providers) from the trough.

Edited by Kurt Barlow

Share this post


Link to post
Share on other sites

I can't speak for civil servants but I can demo why schemes like the the LG pension scheme are fully funded. Any recent deficits are probably attributable to Broons raid and thus affecting all funds private and public.

Take the example of a middle ranking LG officer (say planner, EHO, Building Control) Pensionable Salary scale 25K - 35K. Career average 30K

Now under the old scheme (ended March 2008) to recieve the maximum pension of 50% final salary plus 1.5 times annual salary lump sum the worker would have to put in 40 years service with contributions as follows;

Employee - 6%

Employer 8.4%

So over a life time this guy contributes £72,000 to the pension pot with the employer putting in £101,000

Lets say the fund grows above inflation at a rate of 3.5% PA gives a final fund of £346K

£346K - 53K lump sum

= 293K to finance an annual pension of £17500 PA for a guy or gal in their early sixties.

Given average life spans I would suggest that is quite doable.If not then the employee needs to pony up a bit more as has been the case since 2008.

The employer here is the Government though. The affordability of this arrangement depends on the ability of tax revenues from the private sector to cover the £173k put in. If there are many people on these deals compared to those who are taxed to provide them, surely the affordability must be threatened?

Share this post


Link to post
Share on other sites

= 293K to finance an annual pension of £17500 PA for a guy or gal in their early sixties.

At a guess I'd make it over £400,000 pot needed for a £17,500 pension payable from early 60s onwards.

Share this post


Link to post
Share on other sites

The employer here is the Government though. The affordability of this arrangement depends on the ability of tax revenues from the private sector to cover the £173k put in. If there are many people on these deals compared to those who are taxed to provide them, surely the affordability must be threatened?

Thats another argument really about the size of the state and what the state should provide. The point I am making is that the current model to date in respect to LG is sustainable albeit with a moderate increase in contributions - as happened from 2008

Share this post


Link to post
Share on other sites

The current problems are due to the excesses of the private sector.....not the public.

You caused the mess...you sort it out.

You're either daft, a teacher or Gordon Brown, I just can't seem to work it out :)

Share this post


Link to post
Share on other sites

Thats another argument really about the size of the state and what the state should provide. The point I am making is that the current model to date in respect to LG is sustainable albeit with a moderate increase in contributions - as happened from 2008

Yeah, but it kinda assumes the underlying currency won't be printed into oblivion.

oops.

Share this post


Link to post
Share on other sites

At a guess I'd make it over £400,000 pot needed for a £17,500 pension payable from early 60s onwards.

That is because you are assuming the pension pot has to be used to purchase an annuity on the open market with all the financial services parasites to feed. This is not the case with the LG fund. Pensions are simply paid out of cash flows into the fund with surpluses being invested. Last time I looked Cambridge County & districts fund was worth over £1bn

With 293K assuming it keeps pace with inflation will last 16-17 years at £17.5K a year. Factor in some growth and that time span extends.

Not every one lives to 85. I know several LG officers who have pegged in their 60's and early 70's (infact a worrying number)

Edited by Kurt Barlow

Share this post


Link to post
Share on other sites

Yeah, but it kinda assumes the underlying currency won't be printed into oblivion.

oops.

Well yes - we could introduce an almost infinite number of variables into the equation. It is however a risk anyone holding sterling faces not specifically public sector workers

Anyway the funds are Index linked :P

Edited by Kurt Barlow

Share this post


Link to post
Share on other sites

Not every one lives to 85. I know several LG officers who have pegged in their 60's and early 70's (infact a worrying number)

And some reach 100.

Share this post


Link to post
Share on other sites

Private sector employees would need to build up a pension pot of £189,151 - equivalent to £6,300 each year for 30 years, to receive the average annual pension paid to civil servants.

Private sector workers would need to contribute 37% of their salary to their pension pot of their working lifetime to match the retirement income paid to a public sector on an equivalent wage.

And they're striking because they have to make 3% greater contributions.. diddums.

Source: http://www.bbc.co.uk/news/uk-politics-13775278

Hmm. As with anything it pays to check the facts. Even 'fact checked' facts.

PriceWaterhouse Coopers appear to have 'estimated' the 37% figure.

I can only assume they have done so by using the lowest figure they could find for 'average' private sector wage (17K ?? the mean including part time ?) and then divided the 180K figure by 30 to get something like 6K/17K.

Therefore they appear to have assumed 0% pension growth above inflation.

It's almost, just almost, as if they were attempting to fiddle the figures for a good headline.

Either that, or they are hopelessly incompetent.

Whichever, this ought to be a place where people examine such claims and figures. That's why we're here, right ? We have calculated that house prices are out of line with the fundamentals ?

Come on people !

Share this post


Link to post
Share on other sites

And some reach 100.

Pensions / annuities is a game of statistics. Just about balancing the contributions with what is paid out.

The point is that most the schemes are self sustaining at present without any additional input from the employers.

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...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 276 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.