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newbonic

More Civil Servants Drawing Pension Than Working. Cost Up 30% In 4 Years

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There was an interesting article in today's Sunday Times that illuminates the public sector pensions debate. Apparently, in 2010 the civil service passed the milestone of having more ex staff drawing a pension that working, for the first time ever. The numbers given are:

  • 517,000 working and paying in
  • 591,000 retired

The cost to the taxpayer has risen from £5.6bn in 2006 to £7.4bn in 2010. I make that an average pension of about £12.5 k per retiree.

Reasons given for the increase 30% rise in cost to taxpayer are:

  • generous final salary scheme
  • retirees living longer
  • widespread early retirement among civil servants

The article also stated that civil servants pay 3.5% of their into their pension with the taxpayer paying a further 18.9% to provide those levels of benefits.

The number of retired teachers on their pension scheme increased from 445,000 in 2004 to 567,000 in 2010. They are projected to have more retirees that workers within 3 years. It said teachers pensions cost £8bn in 2006 and 10.5bn in 2010 - a pretty nice £18.5k a year pension on average.

A PCS union spokesman said these numbers were irrelevant because the total bill will fall as a % of GDP in the future. Although this assumes that

  • we can afford it now
  • the UK will have economic growth for the foreseeable future.
  • it's a fair situation at present from the taxpayers PoV

(edit for typo in title)

Edited by newbonic

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There was an interesting article in today's Sunday Times that illuminates the public sector pensions debate. Apparently, in 2010 the civil service passed the milestone of having more ex staff drawing a pension that working, for the first time ever. The numbers given are:

  • 517,000 working and paying in
  • 591,000 retired

The cost to the taxpayer has risen from £5.6bn in 2006 to £7.4bn in 2010. I make that an average pension of about £12.5 k per retiree.

Reasons given for the increase 30% rise in cost to taxpayer are:

  • generous final salary scheme
  • retirees living longer
  • widespread early retirement among civil servants

The article also stated that civil servants pay 3.5% of their into their pension with the taxpayer paying a further 18.9% to provide those levels of benefits.

The number of retired teachers on their pension scheme increased from 445,000 in 2004 to 567,000 in 2010. They are projected to have more retirees that workers within 3 years. It said teachers pensions cost £8bn in 2006 and 10.5bn in 2010 - a pretty nice £18.5k a year pension on average.

A PCS union spokesman said these numbers were irrelevant because the total bill will fall as a % of GDP in the future. Although this assumes that

  • we can afford it now
  • the UK will have economic growth for the foreseeable future.
  • it's a fair situation at present from the taxpayers PoV

Meh.

If this was about reformation of the tax and regulatory systems and reducing the burden on the taxpayer in general it might matter but ofc, it isn't.

This is about raising the tax take but instead of paying for public sector pensions and public services, giving her money to city spivs to cover old losses and continue their risk free betting in future.

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Hmmm. Guess we'll have to let more people in to make sure the base of the pyramid is broad enough.

Let's just borrow more

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Okay. That's a plan.

Some people make such a big deal out of these things.

We'll worry about this next year/term/decade/generation

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Strangely this supposedly damning statistic is partly a reflection of declining civil service numbers. When HMRC was created by the merger of the Inland Revenue and Customs and Excise it had over 100,000 employees. That number is now just under 70,000. By 2015 the figure will be about 58,000 a reduction of over 40% in the head count. All academic with regard to their pension scheme since employee contributions don't go into a pension fund but go to the Treasury who pay the pension out of current taxation.

Edited by stormymonday_2011

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Does this money not get recycled into the economy providing a customer base for the private sector?

Velocity of money / Multiplier effect?

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Reasons given for the increase 30% rise in cost to taxpayer are:

  • generous final salary scheme
  • retirees living longer
  • widespread early retirement among civil servants

The article also stated that civil servants pay 3.5% of their into their pension with the taxpayer paying a further 18.9% to provide those levels of benefits.

Wage increases under Labour, as the wages have gone up so will the final salary pensions.

It should be "widespread early retirement" on enhanced pensions

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Does this money not get recycled into the economy providing a customer base for the private sector?

Velocity of money / Multiplier effect?

Yes absolutely ... I mean why do we even have people unemployed .. give every one a job in the public sector and while we are at it lets jack up the salaries for everyone there .. its all money multiplier stuff , innit ... heck .. double all salaries in public sector right now .. or we go on strike..

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Does this money not get recycled into the economy providing a customer base for the private sector?

Velocity of money / Multiplier effect?

it had to come from the economy in the first place so any multiplier effect that money would have had has been foregone when it was taxed.

the best you can achieve is getting back to zero.

borrowing for current expenditure is even worse as you have to pay back more than you borrowed.

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Love the fact that so many are so happy to believe the last load of overlords were liars,but this present bunch and their media mates tell the truth.

Something to think about.

Two major changes have been made to public sector pensions – one by negotiation and one imposed by the Government. Together they reduced the value of public service pensions by around 25% even before the current negotiations started.

Negotiations with the previous Labour government led to changes to the public service pension schemes that reduced the value of pensions to members by around 10 per cent, according to the interim Hutton report (page 9), and the future costs by around 14% according to the National Audit Office (p.5).

In June 2010 the Chancellor announced without warning that public service pensions would be uprated according to the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). The switch to linking the indexation of pensions in payment to the CPI measure reduces the value of pensions by a further 15%. A number of unions are currently taking legal action to challenge the decision to cut the value of pensions in this way.

The Government argues that according to their proposals only those earning over £18,000 will bear the full brunt of the increase and those earning under £15,000 won’t pay any of the increase. But it is clear that these figures were based on ‘full time equivalent’ salaries.

The ‘full time equivalent’ point is important because many low-paid staff in the public sector would earn over the £15,000 threshold if they worked full time, but they have low take home pay because they work part-time. So someone who works in a job which if full-time meant they would earn £16,000 a year, but actually works half-time and thus earns £8,000 will not be protected from the increase

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How about this for a suggestion. We know now that civil servants' pay is equal to or greater than private sector pay now, so the old argument is out of the window. They say that the private sector should be concerned with the lack of our pension rather than attacking theirs. Well, since we're equal on pay terms now, how about we just redistribute it so that every tax payer in the UK gets a slice of that public-sector pension goodness? Why not! We stay here and pay taxes, our salaries are the same, and SURELY THIS IS A SOCIALIST'S DREAM! Redistribute so that all are better off?

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....

The Government argues that according to their proposals only those earning over £18,000 will bear the full brunt of the increase and those earning under £15,000 won't pay any of the increase. But it is clear that these figures were based on 'full time equivalent' salaries.

The 'full time equivalent' point is important because many low-paid staff in the public sector would earn over the £15,000 threshold if they worked full time, but they have low take home pay because they work part-time. So someone who works in a job which if full-time meant they would earn £16,000 a year, but actually works half-time and thus earns £8,000 will not be protected from the increase

What's wrong with that? If two people opt to jobshare or go part time then the taxpayer should't get stuck with 2 lots of increased costs compared to a full timer, certainly no more than they would if they were private sector workers.

In any case, how many of those are there? From the ST figures the average pension of a civil servant is £12.5k, and for teachers it's £18.5k.

Do they also get the basic state pension at 65 to top up their civil service/teachers pension?

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Not according to many who work in the public sector who believe they have paid for their pension and genuinely think there is a pot of money like a 'money purchase scheme'.

You mean there are people in the private sector who have paid into their 'money purchase scheme' pension and think there is an actual 'pot of money' with their name on it?

:lol::ph34r:

Edit: p.s. If you really wanted to wipe that smug look of their visogs suggest they ask for it to be handed back to them so they can show it to you as proof.

Edited by Red Karma

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In any case, how many of those are there? From the ST figures the average pension of a civil servant is £12.5k, and for teachers it's £18.5k.

I'd need to see the assumptions behind those figures.

My dad worked as a teacher for 39 years and retired as a head of department on £39k.

He therefore gets a pension of £19k per annum.

That is pretty much the maximum you can get (without being a head teacher) so I fail to see how it can be an average.

By the way when you add in his state pension, heating allowance etc he earns more in retirement than my wife does as Research Scientist with 10 years experience so I'm not saying it is sustainable!

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I'd need to see the assumptions behind those figures.

My dad worked as a teacher for 39 years and retired as a head of department on £39k.

He therefore gets a pension of £19k per annum.

That is pretty much the maximum you can get (without being a head teacher) so I fail to see how it can be an average.

By the way when you add in his state pension, heating allowance etc he earns more in retirement than my wife does as Research Scientist with 10 years experience so I'm not saying it is sustainable!

The nmbers were lifted from the ST article, so I assume they're true, but who knows?

I'd guess (correct me if I'm wrong) that anyone who's stuck it out at the chalkface for 39 years will be on a similar salary as your dad, i.e >£30k, or not too far off. So mid-high teens at 60ish would be common. Plus if they cop for the 5k basic state pension at 65 as well then it's a pretty comfortable retierement. Especially if they've been smart enough not to mew and have paid off their mortgage.

There are about 20,000 schools in the UK I think, so about 20,000 heads - that number of retireess must drag the average up.

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My dad worked as a teacher for 39 years and retired as a head of department on £39k.

He therefore gets a pension of £19k per annum.

That is pretty much the maximum you can get (without being a head teacher) so I fail to see how it can be an average.

How much of a lump sum did he get as well?

I know of someone who's retired on a pension of about £15,000 but walked away with £150,000 at the same time.

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How about this for a suggestion. We know now that civil servants' pay is equal to or greater than private sector pay now, so the old argument is out of the window. They say that the private sector should be concerned with the lack of our pension rather than attacking theirs. Well, since we're equal on pay terms now, how about we just redistribute it so that every tax payer in the UK gets a slice of that public-sector pension goodness? Why not! We stay here and pay taxes, our salaries are the same, and SURELY THIS IS A SOCIALIST'S DREAM! Redistribute so that all are better off?

I agree. But look at it from a different angle.

The government pays out x amount each year in pensions.

A large percentage of X is ringfenced and can only be paid to people who have worked in the public sector. The rest is distributed evenly, not amongst the rest of pensioners, but across all pensioners, including the ones who had a share of the ringfenced bit.

Why would a socialist think it is ok to rinfgence mony like this to the detriment of millions of vulnerable pensioners?

If pensions were to be reformed, if a system was suggested which would ringfence money for people aged 65-75, or pensioners with their own teeth and hair, would anyone consider these systems to be fair? The answer of course is a resounding no!

The only reason its acceptable the leftie idealists is because they gain!!!

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I'd need to see the assumptions behind those figures.

My dad worked as a teacher for 39 years and retired as a head of department on £39k.

He therefore gets a pension of £19k per annum.

That is pretty much the maximum you can get (without being a head teacher) so I fail to see how it can be an average.

By the way when you add in his state pension, heating allowance etc he earns more in retirement than my wife does as Research Scientist with 10 years experience so I'm not saying it is sustainable!

You forgot the 25% lump sum your dad took upon retirement.

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I agree. But look at it from a different angle.

The government pays out x amount each year in pensions.

A large percentage of X is ringfenced and can only be paid to people who have worked in the public sector. The rest is distributed evenly, not amongst the rest of pensioners, but across all pensioners, including the ones who had a share of the ringfenced bit.

Why would a socialist think it is ok to rinfgence mony like this to the detriment of millions of vulnerable pensioners?

If pensions were to be reformed, if a system was suggested which would ringfence money for people aged 65-75, or pensioners with their own teeth and hair, would anyone consider these systems to be fair? The answer of course is a resounding no!

The only reason its acceptable the leftie idealists is because they gain!!!

Yep, exactly! I mean seriously... put this to a leftie and how can they counter it? Just look wounded and say it's not fair... just like they do... and they'll be unable to counter without looking a right mean old sod... that's their tactic!

I think this merits much more thought!

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Why are public sector wages if averaged out higher than the private sector,one simple fact is that the public sector has more employees with degree qualifications 30% compared to the private sectors 20%. Also the proportion of workers with no qualifications is 4% compared to the private sectors 9%

.

An ONS report i notes that the phenomenon of higher pensions in the public sector exists “predominately due to the larger proportion of employees who do not belong to employer pension schemes (with zero pension contributions) in the private sector. A comparison of total reward on a like-for-like basis, comparing full-time employees with pensions in both sectors, shows that total reward is higher in the private sector than the public sector.”

The truth is out there.

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Why are public sector wages if averaged out higher than the private sector,one simple fact is that the public sector has more employees with degree qualifications 30% compared to the private sectors 20%. Also the proportion of workers with no qualifications is 4% compared to the private sectors 9%

.

An ONS report i notes that the phenomenon of higher pensions in the public sector exists “predominately due to the larger proportion of employees who do not belong to employer pension schemes (with zero pension contributions) in the private sector. A comparison of total reward on a like-for-like basis, comparing full-time employees with pensions in both sectors, shows that total reward is higher in the private sector than the public sector.”

The truth is out there.

much like the PIIGS, if an economy is such that it draws the talent to the Public sector rather than private sector which it can only do via market fixing and barriers there is generally a cost, theres a good reason why all the PIIG economies joined the euro with lots of zeros in their currency.

its a bit of a wonky argument to complain about being made poorer on one hand and defending the position by highlighting why you have to be made poorer

Edited by georgia o'keeffe

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Why are public sector wages if averaged out higher than the private sector,one simple fact is that the public sector has more employees with degree qualifications 30% compared to the private sectors 20%. Also the proportion of workers with no qualifications is 4% compared to the private sectors 9%

.

An ONS report i notes that the phenomenon of higher pensions in the public sector exists “predominately due to the larger proportion of employees who do not belong to employer pension schemes (with zero pension contributions) in the private sector. A comparison of total reward on a like-for-like basis, comparing full-time employees with pensions in both sectors, shows that total reward is higher in the private sector than the public sector.”

The truth is out there.

Oooh, so that's where all those meeja studies grads go...

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Why are public sector wages if averaged out higher than the private sector,one simple fact is that the public sector has more employees with degree qualifications 30% compared to the private sectors 20%. Also the proportion of workers with no qualifications is 4% compared to the private sectors 9%

.

An ONS report i notes that the phenomenon of higher pensions in the public sector exists "predominately due to the larger proportion of employees who do not belong to employer pension schemes (with zero pension contributions) in the private sector. A comparison of total reward on a like-for-like basis, comparing full-time employees with pensions in both sectors, shows that total reward is higher in the private sector than the public sector."

The truth is out there.

another simple fact is that you need a degree to be a waste disposal operative now....

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Why are public sector wages if averaged out higher than the private sector,one simple fact is that the public sector has more employees with degree qualifications 30% compared to the private sectors 20%.

...the majority of which in the public sector will be b*llshit arts and humanities 'qualifications'. You think you're the first to come up with this stuff on here, don't you?

It is the work done that counts, not the number of BA(2.2)'s from Spunkbridge Poly.

Oh, f*ck it. None of this is sustainable anyway, you and your pals are not going to get your comfy retirements off the back of net taxpayers, who face reality alone.

It doesn't matter how you rationalise it - the money is not there, and never will be in real terms. Don't look to me for it.

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  • 312 Brexit, House prices and Summer 2020

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      • down 5% +
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