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Sorting Out Public Sector Pensions

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Apparently we have a 2-4 trillion pound pension black hole in the public sector because governments have been taking employees' pension contributions but not funding the schemes.

We're all familiar with the phenomenon of a public sector employee getting a massive pay rise in their last year so their final salary-linked pension will be massive. The military routinely promote by one rank on their last day of service.

We're about to see strikes on the scale of the 1926 General Strike as unions defend pension rights.

Solution: leave everything the same but for schemes underwater apply a cap to the pa pension payout, eg civil servants get a £25K max per year. Most people won't strike because the cap is more than they were going to get anyway (average pension is 9K/pa), and it's a real poke in the eye for the fat cats who have spent their entire careers angling for a bigger pension.

Your entitlement is X, what you get is Y! Suck on it!

PS: I am not a socialist, honest!

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I'd agree with that, but instead of an arbitrary amount, I'd cap it at the UK median wage. Then there's no worries with messing with indexing and such like, and it's more soundbite friendly for the media, as you can put the argument in terms of is it fair for the taxpayer to fund pensions higher than the average wage.

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I suggest we start listening to a lot of spurious moral arguments from those on the gravy train, do some mass strikes and then elect Ed Balls. After that he can print enough money to cover the surface of the moon 4 times over.

End result - pensions don't get paid in real terms, but in such a way that the entitled have to stfu about it.

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Being paid a pension based on the job you did anything up to a day before you left is just daft. It should be based on what you've paid in. Not average earnings, not final salary.

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I suggest we start listening to a lot of spurious moral arguments from those on the gravy train, do some mass strikes and then elect Ed Balls. After that he can print enough money to cover the surface of the moon 4 times over.

End result - pensions don't get paid in real terms, but in such a way that the entitled have to stfu about it.

Public sector pensions are index-linked. There's no way of inflating away this debt.

The link to median wage is a good idea, save that these people also get the state pension which should be subtracted off.

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Public sector pensions are index-linked. There's no way of inflating away this debt.

The link to median wage is a good idea, save that these people also get the state pension which should be subtracted off.

Index linked?

Do behave.

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Just as well Merv has inflation under control then.. Ermm..

I doubt Merv sees any problem with run away inflation, he is protected by his own massive index-linked pension plus low interest rates are essential to protect the equity on his Oast house and s*****y London pad. Most of the MPC have a big VI in their present hyper-inflation policy and giviong up on the 2% target.

Edited by crashmonitor

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<br />Public sector pensions are index-linked. There's no way of inflating away this debt.<br /><br />.<br />
<br /><br /><br />

This has just made me think. The risk of high inflation in this scenario would be severe. It would effectively polarise the oldies and the young ones into very comfortably well off and destitute.

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<br /><br /><br />

This has just made me think. The risk of high inflation in this scenario would be severe. It would effectively polarise the oldies and the young ones into very comfortably well off and destitute.

If index linking stopped inflation, yes.

As they will be printing even more money to bridge the gap and be relying on the time lag with the index, not so much.

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Public sector pensions are index-linked. There's no way of inflating away this debt.

The link to median wage is a good idea, save that these people also get the state pension which should be subtracted off.

The indexes lie!

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Nationalist I like your plan, would be a good one if the sums added up. I suspect the bar would have to be massively lower than 25k though.

Wee random fact....average Nurse retires age 63 on a pension of around £110 pw

The NHS pension fund is in surplus and gives the Treasury 2 billion a year. Big cream off that.

Edited by bricor mortis

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<br /><br /><br />

This has just made me think. The risk of high inflation in this scenario would be severe. It would effectively polarise the oldies and the young ones into very comfortably well off and destitute.

Precisely why there is an inflationary bias by boomer policy makers, public sector workers (especially) not only have gold plated schemes but their living standards are armoured plated.

Edited by crashmonitor

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Wee random fact....average Nurse retires age 63 on a pension of around £110 pw

Source?

Does that average include all the nurses who worked for 5-10 years only before moving on to children/another carreer?

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If index linking stopped inflation, yes.

As they will be printing even more money to bridge the gap and be relying on the time lag with the index, not so much.

Exactly.

If inflation is 100% and the index adjustments are carried out annually, there is a 50% drop in standard of living.

If the index increases by 50% annually and actual inflation for household spending is 100%, there is an even bigger drop in the standard of living.

Indexation works during bouts of moderate inflation. During extreme bouts of inflation and material slippage between the index and actual household costs, it is a pretty blunt instrument at best.

I don't know how virulent inflation will eventually become. So far, the signs aren't good.

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There is enough in this country for everyones need, but scant, enough, for everyones greed.

Edited by Dan1

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There is enough in this country for everyones need, but scant, enough, for everyones greed.

A lot of truth in that.Enough for everyone to have decent housing,food,warmth,transport. But then people want three foreign holidays a year,a second home,new cars each and all the paraphernalia involved in outdoing the neighbours/friends/colleagues.All things that fail to contribute to the quality of life.

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<br /><br /><br />

This has just made me think. The risk of high inflation in this scenario would be severe. It would effectively polarise the oldies and the young ones into very comfortably well off and destitute.

That is how it is. Younger people are having to bear a huge tax burden for the older generation.

They have power though, due to the shortage if them, that is why we have opened the door to immigrants. Even so, demand for labour will rise as more retire. Wages will have to go up. But that and the deficit will cause inflation.

Eventually the currency will be destroyed, which as I see ends the obligation of civil service pensions.

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