This Sums It Up

[Democorruptcy]

Say a teacher aged 47 earns £37,000 now (ignore future pay roses)

They pay 3.2% extra which is £1,100 a year say they retire at 67 that's £19,800 extra payment

Pension increases from £19,000 to £25,000 (ignore future rises for inflation)

They only need to live just over 3 years to get the extra payment back

It's a cracking deal. It is NOT a tax, it is an investment.

The private sector has just been told they have to work an extra year to pay for all the years that teachers (and others) live above the 3 years in this example.

[RentingForever]

The government has proposed that:

Teachers' monthly contributions to their pensions could go up by 50%, from 6.4% to 9.6%, by 2014

http://www.guardian.co.uk/society/2011/nov/29/why-are-teachers-striking

A teacher retiring on a salary of £37,000 would receive a pension of £25,000 - compared to £19,100 under the current final salary scheme, he told the Commons.

http://news.sky.com/home/politics/article/16101353

3% extra payment for £6k extra pension for life is NOT a tax. It is an investment in their future.

To get a pension of £25k on the open market you'd need a pot of around £500k, or 15 years of a £37k salary. Sounds like a generous outcome for 10% of your salary.

By contrast in the private sector: my salary is roughly the same, I put in 10% which the company matches. Pension projections are for about £16kpa, but that assumes 8% growth in the fund (yeah, right!). And that's the crucial difference - my pension depends on investment performance, public sector pensions don't.

Those striking genuinely don't seem to realise how good their pensions are, even with the changes.

[Dorkins]

after all the waffle about funded and unfunded, the USS scheme cant pay.

The pensioners will get what the fund can afford, which will be a lot less. There is no case for the government to top their scheme up....If they do, it is an unfunded pension.

End Of.

The USS scheme probably can't make good its final salary promises, true. But who will suffer as a result? Probably not future taxpayers. The level of taxation in this country is already high, and I doubt it can go much higher. The government will be dealing with a sh1tstorm from the totally unfunded teachers' and NHS pensions so will not have money to add to USS. So the ones who suffer (in the sense that they will not be paid what was in the contract) will probably be the USS pensioners themselves. Like I say though, better that than being a retired teacher with a piece of paper from the government backed by thin air.

Edited November 30, 2011 by Dorkins

[RentingForever]

Soo- Fred the Shred crashes his bank- it's bust. BUT- he has a contract that states his pension is set a certain amount so -OF COURSE- this contract has to be respected- right? So he gets his now publicly funded pension.

However- the guy that cleans the streets down which Fred walks also had a contract-BUT he's just some nobody who doesn't matter so -OF COURSE- his contract need not be respected.

Maybe these people were lied to, maybe they were conned but you can hardly blame them for being pissed off that the contract they agreed to has been tossed away.

They're still getting all the pension they've accrued so far at the terms in their contract.

What's being changed are the terms from now on. It is a contract change, which they're free to accept or, if they don't like it, quit and get a job with better terms (good luck with that).

Changes to terms and conditions. Happens all the time in the private sector.

[oracle]

It sums up the sense of entitlement and delusion the public sector have. They haven't paid for the pension they receive. They would have to pay in 37% of their salary to get that, and they don't.

I think they'd be frankly shocked if they got a pension related to their contributions, they should consider themselves lucky.

I don't deny anyone a decent pension, if they pay for it. I'm not paying for it for them.

so are you suggesting their contributions be raised to 37% of income?.....whose income is it really?...who pays for their wages in the first place?

I very much doubt that the private setor are going to enjoy that.

they need to get real,and quick.

ALL public sector employees,INCLUDING local government officials and politicians.

people's patience with these guys is really beginning to wear thin.....they would not like the corporate solution to their jollies one bit.(not that the solution is corporate,because frankly they are equally guilty of taking the piss out of people,and need a bit of a ticking off to learn some humility...both for being excessively greedy and self interested)

UK PLC may be making moves for a new board of directors quite soon,and the medicine they have to dish out probably won't taste too good(but is necessary and rather effective).

Post-democratic age it WILL NOT be.but there will be a changing of the guard to a rather more disciplined and streamlined outfit

[Dorkins]

What's being changed are the terms from now on.

True, but I think people are beginning to realise that the past terms are not going to be honoured, and this is what's coming next. The past promises of final salary etc are simply not affordable. Imagine if 100% of your pension was in the form of Gilts due to be repaid on your 65th birthday. Would you sleep soundly at night? This is the situation teachers and NHS staff are in.

[Democorruptcy]

A better investment is not to pay the 3.2% and still get the same pension, they are entitled after all. Look at how today the whole country ground to a halt when they went on strike.

The outcome of this strike should be the government reduces the £25k pension to £23k and explains to them what a good deal it was and that even at £23k it's good. Then tell them at £21k after the next strike it won't be quite as good or the £19k after the strike after that....

[South Lorne]

What does it sum up? Your feeling that nobody should have a decent pension, especially people who paid for one?

...no ...a fair pension... without promises which can never be met ....ask Gordo...he promised the world ...but it was either not his to give....or it was never there in the first place.....

[easy2012]

So 3% is what they pay for the pension ? My Mrs pays 10% for her teacher's pension.

Heard from a teacher that the strike is more about working conditions ( lots of paperwork, having to face the risk of false accusation from the chav etc) than the pension

(being the last straw).

I am wondering what is your Mrs view on this?

[_w_]

Why can't they just create the money out of thin air to pay for it all ? I mean really ? Seriously create it out of thin air. Like they do for bank bailouts ? Money doesn't exist after all.

Because all that new money is destined to end up in the pockets of connected people.

In the meantime the poor people fight each other to death over the few crumbs left to them.

Nice.

[Dorkins]

The outcome of this strike should be the government reduces the £25k pension to £23k and explains to them what a good deal it was and that even at £23k it's good. Then tell them at £21k after the next strike it won't be quite as good or the £19k after the strike after that....

Frankly, things would be better if all occupational pensions in both the private and public sectors were abolished. If people want to pay into pension funds it's up to them. It's not an employer's job to plan for his employees' retirement. I think quite a shrewd move would be to start handing the monthly pension contributions to employees as salary and permanently close the public sector pension schemes. Then if it's necessary (and possible) to start cutting salaries, get on with it.

[exiges]

so are you suggesting their contributions be raised to 37% of income?.....whose income is it really?...who pays for their wages in the first place?

No my comment was in response to "whatsisname" who was referring to public sector staff who had "paid for their pension. My point being that to make that claim they would have to contribute 37% of their salary .

I think all new public sector workers should pay into plans like the private sector do, they get out what they put in.

[scottbeard]

Soo- Fred the Shred crashes his bank- it's bust. BUT- he has a contract that states his pension is set a certain amount so -OF COURSE- this contract has to be respected- right? So he gets his now publicly funded pension.

However- the guy that cleans the streets down which Fred walks also had a contract-BUT he's just some nobody who doesn't matter so -OF COURSE- his contract need not be respected.

Maybe these people were lied to, maybe they were conned but you can hardly blame them for being pissed off that the contract they agreed to has been tossed away.

Now Fred Goodwin doesn't DESERVE a pension, but in fairness he only got what he had ALREADY ACCRUED.

No-one is trying to take away what the public sector workers have ALREADY ACCRUED*, they're just changing what they accrue - and what they pay for it - going forwards. Quite different.

(* actually the change to CPI pension increases DOES ultimately reduce the future increases to the accrued portion, but then that affects a lot of the private sector too).

[Sir Harold m]

Because all that new money is destined to end up in the pockets of connected people.

In the meantime the poor people fight each other to death over the few crumbs left to them.

Nice.

How about this solution?

The taxpayer honours all the public sector expectations by putting aside the 37pc of salaries required each year into the scheme.

Instead of taxing us to pay for it, they print the money. At the end of each public employees career they are given their pot but they must immediately emigrate so their liabilities are denominated in a foreign currency whilst their receivables remain in Gbp

That way they may realise the cost to ukplc of the unfunded liability that these schemes cost.

The alternative suggestion would be to continue to run the scheme but to ringfence it as a fund. Like rest of us if the scheme is insufficient when they retire they get the appropriate haircut.

Effectively they are put on money purchase but we can blame the fund for not taking the requisite payments over the life.

Edited November 30, 2011 by Sir Harold m

[Confusion of VIs]

Say a teacher aged 47 earns £37,000 now (ignore future pay roses)

They pay 3.2% extra which is £1,100 a year say they retire at 67 that's £19,800 extra payment

Pension increases from £19,000 to £25,000 (ignore future rises for inflation)

They only need to live just over 3 years to get the extra payment back

It's a cracking deal. It is NOT a tax, it is an investment.

The private sector has just been told they have to work an extra year to pay for all the years that teachers (and others) live above the 3 years in this example.

[oracle]

Now Fred Goodwin doesn't DESERVE a pension, but in fairness he only got what he had ALREADY ACCRUED.

No-one is trying to take away what the public sector workers have ALREADY ACCRUED*, they're just changing what they accrue - and what they pay for it - going forwards. Quite different.

(* actually the change to CPI pension increases DOES ultimately reduce the future increases to the accrued portion, but then that affects a lot of the private sector too).

true,he most certainly does not deserve a golden handshake courtesy of the taxpayer.

I think that these corporations should be legally obliged to hold in reserve contingency funds...and if the CEO screws up,then THAT will be the insurance policy.....that will certainly sharpen the minds of the shareholders to malpractice.

..knowing they have a very (too) comfortable safety net is part of the problem.

[hedgefunded]

Good luck to them, they have a right to receive what they agreed to once accepting the job, simple as this.

No they don't.

Life isn't fair. Never has been and never will be. If they don't like it then tough, they should quit their jobs.

Do you think all of the people suffering because of that cunt Gordon Brown's theft are any less deserving?

[bomberbrown]

Pensions are glorified investment portfolios. Investments can go up and down. People need to accept this and act accordingly.

Every now and then on HPC, you get a great enlightening succinct eye opening comment, something that really makes you think about the topic from a completely different perspective. This was one of those moments and probably one of the reasons I'm still here on HPC after 5 years.*

* No MSE or Mumsnet {{{{{{{{{{{{{{{{{{{{{{HUGS}}}}}}}}}}}}}}}}}}}}}}!!!!!!!!!

[bomberbrown]

<br />Sorry to bring actual information into this <strike>rant</strike> thread, but why not. Not all public sector pensions are in the same scheme. Some are funded, some are unfunded. For example, many academics belong to <a href='http://www.uss.co.uk/UssInvestments/InvestmentsTypes/Pages/default.aspx' class='bbc_url' title='' rel='nofollow'>USS</a>, which is a funded scheme with around £30bn in various assets such as equities, bonds, property etc. Employees contribute 7% of their gross pay, and employers typically contribute another 12% on top of this. This money all comes out of the wage bill each month and is not a promise that future taxpayers will pay. It is, essentially, salary.<br /><br />So far, so sustainable. The problem is that the USS scheme is also a final salary scheme. Employees earn a pension starting at 65 of 1/80th of their gross annual final salary for each year worked. So if you pay into USS for 40 years, you will get half of your final salary upon retirement. Assuming you live for 20 years after 65, you will collect ten years of final salary having paid in maybe eight years of salary during your working life (and not all at final salary). A small number of people (e.g. senior management) will do very well out of this by hitting high salaries late on in their careers, but most people's incomes will plateau fairly early on in the academic career structure.<br /><br />I have no idea how the government will resolve the fact that the USS fund may not be able to pay out at the promised final salary level. Probably they will have to drop the final salary aspect of it and just pay whatever the fund can afford proportionate to a pensioner's lifetime contributions. At least there's something behind it though. Teachers and NHS employees in unfunded schemes should be very worried. All they have is an IOU from the government.<br />

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

Another comment/post worthy of note and one that I touched on in another pension related thread.

Me personally, I'd just be happy with a pension relative to the amount that I had put in if the worst come to the worst. Trouble is though, I also see this scheme becoming unsustainable. It's already had employees contributions increased this year.

Truth be known, the whole thing is a bloody gamble at the end of the day.

[GordonisaMoron]

The private sector has just been told they have to work an extra year to pay for all the years that teachers (and others) live above the 3 years in this example.

Private sector should strike next week to demand parity with the pubic sector.

[wonderpup]

Now Fred Goodwin doesn't DESERVE a pension, but in fairness he only got what he had ALREADY ACCRUED.

No-one is trying to take away what the public sector workers have ALREADY ACCRUED*, they're just changing what they accrue - and what they pay for it - going forwards. Quite different.

You overlook the fact that RBS was broke- that ACCRUED obligation was history, it died when the bank died. But it was argued that as the bank was brought back as a zombie by the state Fred's contract should be honored- even though it was already defunct.

So we see the see the state bending over backwards to maintain a defunct contractual obligation to the guy who inflicted more damage on this country than any other single individual- while the contractual rights of ordinary people are tossed aside like trash.

However you slice it this stinks of double standard elitist corruption.

[robo1968]

They should but they will not do it. In fact Camoron will back down ... he always does. He threatened to withdraw the existing offer, he will not do this, he is all talk and no action.

Are you forgetting that the pension changes were actually suggested by the independant report by Lord Hutton of Labour land?

[the-wife's-knickers]

Heard from a teacher that the strike is more about working conditions ( lots of paperwork, having to face the risk of false accusation from the chav etc) than the pension

(being the last straw).

I am wondering what is your Mrs view on this?

My Mrs is a teacher in a really sh*t Glasgow secondary school. She is 25 and has accepted that she will get no pension when she gets to retire. She loves the job as there are lots of good kids.

But when a teenage boy drops his trousers, walks to the front of the class and invites you to "suck my c**k" and escapes with a referral to some toothless panel, you realise it is a job that you probably dont want to be doing when you are well into your 60s. It may not be physically hard work but it does seem to drain them mentally and they do work long hours. (i can never get a 'cuddle' as she sits up doing coursework and preparation) I put this mental draining down to the behaviour of the ipod generation.

[John The Pessimist]

There has been much talk about the " implied contract" between the govt and the public sector, and that we the taxpayers must honour this by paying out index linked pensions as some form of compensation for "poor" salaries.

Surely the prevailing life expectancy at the time the contract was agreed was also implicit in the contract. If the life expectancy of a man was 71 when you joined the scheme, I'm happy to pay you your pension for 6 years post retirement ( assumed retirement age of 65). However, after that you provide for you own old age like the rest of us!!!

[scottbeard]

You overlook the fact that RBS was broke- that ACCRUED obligation was history, it died when the bank died. But it was argued that as the bank was brought back as a zombie by the state Fred's contract should be honored- even though it was already defunct.

So we see the see the state bending over backwards to maintain a defunct contractual obligation to the guy who inflicted more damage on this country than any other single individual- while the contractual rights of ordinary people are tossed aside like trash.

However you slice it this stinks of double standard elitist corruption.

You're right - instead of millions, Fred would have got £27k pa pension from the Pension Protection Fund if the State hadn't saved RBS.

However, the State didn't bend over backwards to save HIM, it bent over backwards to save the deposits of the millions of RBS customers that he had squandered. He was just a lucky f***er.