Public sector pension bill £2.4 Trn

[kzb]

3 hours ago, Warlord said:

What are you talking about @scottbeard.  Everything is fine and dandy according to you but a quick google shows state pension liabilities to be over 6 trillion+ and it's geting worse every year:

 

Government-managed pension schemes (see Glossary) had liabilities of £6.4 trillion in 2018, of which state pension liabilities were the largest component: £4.8 trillion. State pensions are unfunded, mandatory and contributory. ... Non-government-managed workplace pension liabilities were £2.6 trillion in 2018.

How on earth can we afford this. Answers on a postcard

All bank accounts up to £85k are guaranteed by the state.  What is the "liability" total there?

Workplace pensions in the private sector (annuities) also have state guarantees.  What's the total liability there?

Actually, the total "liability" when you include everything is infinity.  Or at least integrated until the Earth becomes uninhabitable in about a billion years.

[scottbeard]

2 hours ago, Tiger131 said:

I've lost the original point of all this but you've just validated the point all along that it's the taxpayer or "government" that is funding these DB pensions.

Of course - who else would pay public sector pensions?!

31 minutes ago, kzb said:

Actually, the total "liability" when you include everything is infinity.  

The total liability for PAST WORK is not infinity, as I have said about an infinity of times already.  And you have replied infinity +1 that you don't think that's a distinction that matters, and I think it does...etc....etc....etc...etc...etc.....

[spyguy]

13 hours ago, kzb said:

No you are nitpicking, because you work in pensions and this is how you are used to seeing things.   The calculation of the £2.4 trillion is factually correct, no argument, but I still say there is no real difference to the taxpayer whether that money is called "pension" or "salary".  So then I wonder about the motivations of those who calculate it and publicise it.

It's perfectly valid, for comparison purposes, to calculate the future cost of NHS nurses to be almost infinite, because we are going to have NHS nurses for the foreseeable future.

OK,

Lets say you spent 20 years spending £100/w in Tescos.

Then, 20 years later, Tesco knock on your door and say they priced the and asked for extra 50/w theyd forgot to charge.

Putting a cost on  service sets a hurdle on whether its cost effective, bit like The Simpson where Homer pays for people to take the rubbish out of the house to the kerb.

Equally these days theres a lot of services that would be better and cheaper being automated. If the pension cost was billed correctly then even the most luddite org would automate the services.

 

 

 

 

[winkie]

Is that why we are seeing so many agency staff, contract workers, locum doctors and a cap on training doctors and nurses?

[kzb]

4 hours ago, spyguy said:

OK,

Lets say you spent 20 years spending £100/w in Tescos.

Then, 20 years later, Tesco knock on your door and say they priced the and asked for extra 50/w theyd forgot to charge.

Putting a cost on  service sets a hurdle on whether its cost effective, bit like The Simpson where Homer pays for people to take the rubbish out of the house to the kerb.

Equally these days theres a lot of services that would be better and cheaper being automated. If the pension cost was billed correctly then even the most luddite org would automate the services.

That's a different argument.  You are saying the figure was wrongly estimated, well so are lots of costs.  That does not affect my point.  50% of infinity is still infinity.

[kzb]

13 hours ago, scottbeard said:

The total liability for PAST WORK is not infinity, as I have said about an infinity of times already.  And you have replied infinity +1 that you don't think that's a distinction that matters, and I think it does...etc....etc....etc...etc...etc.....

But I am saying that's an academic distinction.  It makes no financial difference to the taxpayer.  There is a future budget for teachers' pensions and there is a future budget for teachers' salaries.  BOTH of these are only estimates and subject to change.  For all we know the endemic Covid infection will cut life expectancy back to 68 and the pension estimate will turn out far too high.

[scottbeard]

9 minutes ago, kzb said:

But I am saying that's an academic distinction.  It makes no financial difference to the taxpayer. 

But it DOES make a difference to what they get for their money.

A taxpayer in 2030 is not getting any benefit from paying for pensions for firemen who retired in 1995.

A taxpayer in 2030 is  getting benefit from paying for salaries for firemen who are putting out fires in 2030.

[kzb]

2 minutes ago, scottbeard said:

But it DOES make a difference to what they get for their money.

A taxpayer in 2030 is not getting any benefit from paying for pensions for firemen who retired in 1995.

A taxpayer in 2030 is  getting benefit from paying for salaries for firemen who are putting out fires in 2030.

So what?  The taxpayer and the fireman agreed to defer part of the fireman's salary until after he retired.

BTW, and this does not affect the argument either way, the taxpayer DOES benefit from paying pensions to firemen.  It's taxable income and they are spending the money.  Most (all?) of the money will eventually cycle back to the government via taxes.

[kzb]

6 hours ago, winkie said:

Is that why we are seeing so many agency staff, contract workers, locum doctors and a cap on training doctors and nurses?

I am pretty sure it is part of it.  Employers would rather pay double salary to agencies than give people proper jobs.  To be fair, many employees would rather have the cash now and worry about the future later as well.

[Locke]

19 hours ago, byron78 said:

No idea.

10 of the 29 thwarted terrorist attempts in the last 5 years have apparently been "far right" though.

All a bit depressing.

I'd be interested to know how they defined that and what the circumstances were.

It's almost always this

[byron78]

2 minutes ago, Locke said:

I'd be interested to know how they defined that and what the circumstances were.

It's almost always this

Yes. We should absolutely blame government for racist simpletons who are being encouraged by rogue individuals, media, and foreign states online.

That'll definitely help.

[scottbeard]

6 hours ago, kzb said:

So what?  The taxpayer and the fireman agreed to defer part of the fireman's salary until after he retired.

BTW, and this does not affect the argument either way, the taxpayer DOES benefit from paying pensions to firemen.  It's taxable income and they are spending the money.  Most (all?) of the money will eventually cycle back to the government via taxes.

The 1995 taxpayers and the fireman agreed that the 2030 taxpayers would cover the pension.  It's like me "agreeing" that you will pay for my pint at the pub, without actually asking you.

The money would cycle back into the economy WHATEVER it is spent on, including both things that directly benefit people in 2030 (a new school, say) or 1995 retired fireman's pensions so that argument is bogus.  

(BTW this argument is pointless - you and I are no closer to finding common ground)

[kzb]

4 minutes ago, scottbeard said:

The 1995 taxpayers and the fireman agreed that the 2030 taxpayers would cover the pension.  It's like me "agreeing" that you will pay for my pint at the pub, without actually asking you.

The money would cycle back into the economy WHATEVER it is spent on, including both things that directly benefit people in 2030 (a new school, say) or 1995 retired fireman's pensions so that argument is bogus.  

(BTW this argument is pointless - you and I are no closer to finding common ground)

OK let's change tack.

ALL pensions are paid out of the productivity of the current workers.  That goes for defined contribution pensions as well.  It all comes from the same source ultimately.

[winkie]

19 hours ago, kzb said:

I am pretty sure it is part of it.  Employers would rather pay double salary to agencies than give people proper jobs.  To be fair, many employees would rather have the cash now and worry about the future later as well.

Yes they don't want the pension liability, sick pay, holiday pay and other in work benefits.......gone are the days when your job was your second family, where you were a valued member of the workforce.

[kzb]

17 minutes ago, winkie said:

Yes they don't want the pension liability, sick pay, holiday pay and other in work benefits.......gone are the days when your job was your second family, where you were a valued member of the workforce.

To be fair, there is no shortage of employees who actually choose to go agency either.  Often they will earn a lot more money up front.  Most people don't want to think about retirement, it's blanked from their mind.  Although, after earning six-figure salaries for some time, some of them notice that the public sector plodder on £30k all their life is going to get a better pension than they are.  They can't stand that thought, so they come on here complaining about public sector pensions.

[scottbeard]

19 hours ago, kzb said:

ALL pensions are paid out of the productivity of the current workers.  That goes for defined contribution pensions as well.  It all comes from the same source ultimately.

I nearly agree - the things that the pensioners buy must be goods and services made by the workers at the time the pension is drawn.  And yes, it doesn't matter whether it's a funded or unfunded pension, if a pensioner in 2030 wants his windows cleaned only a window cleaner working in 2030 can do it no matter where the money came from.

But it still matters hugely whether there already exists a big £2.4 Trillion pension fund full of assets to pay for it, or whether there doesn't.

If the public sector had DC pensions then when they get to retirement the employee could sell the assets in the pot and use that as their pension.  The taxpayer would not need to pay anything in 2030.

[Dorkins]

On 20/10/2021 at 12:06, kzb said:

The taxpayer and the fireman agreed to defer part of the fireman's salary until after he retired.

The 1995 government and 1995 fireman both agreed the fireman's pension would be some future taxpayer's problem and no pot would be set aside to help the future taxpayer make the pension payments when the time came. The future taxpayer was not consulted on this.

Edited October 21, 2021 by Dorkins

[Dorkins]

20 hours ago, kzb said:

ALL pensions are paid out of the productivity of the current workers.

Wrong, economic output is a function of both capital and labour. Future output can be increased by investing in productive capital now so that economic output will be higher in future even with the same labour force. With unfunded pensions there is zero attempt to create new productive capital to help meet that future expense.

[Drat]

On 20/10/2021 at 12:06, kzb said:

So what?  The taxpayer and the fireman agreed to defer part of the fireman's salary until after he retired.

Can I just have it recorded that, as a taxpayer, I do not agree to defer part of a fireman's current salary (or any civil service salaries) until after they retire.  Why are civil service pensions still DB, when private companies realised 20 years ago they were not affordable?  OK sure, no change has been made (even though it should have been) so pay what is owed, but why can we not, from this day forth, freeze all civil service DB pensions and switch them all to DC??  And please note, when private companies pensions were switched from DB to DC no one got a pay rise.

[Guillotine]

Apologies I don’t remember the numbers exactly.  But there are tens of not hundreds of thousands of public sector pensions that are protected from the lifetime allowance penalties by the fixed valuation of their fund at 20x their annuity at retirement.

If they used a transfer value (cetv) the true value would be more like 35x the annuity at Nrd.

With lta at say £1.3M that means all those with annuities in excess of £37k, and there are a lot, have a good part of their fund values shielded from the lta surtax.

DC LTA liabilities are of course based on actual fund values.  

I find it sickening everytime I imagine the huddle of giggling civil servants working out where to set that multiple.  There is absolutely no reason not to use the cetv.   

[Dorkins]

11 minutes ago, Drat said:

Can I just have it recorded that, as a taxpayer, I do not agree to defer part of a fireman's current salary (or any civil service salaries) until after they retire.  Why are civil service pensions still DB, when private companies realised 20 years ago they were not affordable?  OK sure, no change has been made (even though it should have been) so pay what is owed, but why can we not, from this day forth, freeze all civil service DB pensions and switch them all to DC??  And please note, when private companies pensions were switched from DB to DC no one got a pay rise.

Yes, 100% this. If the rest of us have to pile up large quantities of capital to fund our own retirements I don't see why public sector employees should be any different.

[winkie]

On 20/10/2021 at 14:36, kzb said:

I am pretty sure it is part of it.  Employers would rather pay double salary to agencies than give people proper jobs.  To be fair, many employees would rather have the cash now and worry about the future later as well.

Yes of course a short-term high uplift that will see them through......all a case of degree, many might have invested enough already to see them alright.....for most on lower wages they will be in a very insecure working environment not knowing what tomorrow will bring......short-term work contract with a long mortgage commitment...

What about all those that lost their jobs with excellent in work benefits, then re-employed on an inferior contract.....complete opposite to high skills high wages, when a large proportion of wages is made up of the benefits of doing that particular job.......no incentive to stay......works both ways........ loyalty no longer pays.

[kzb]

3 hours ago, scottbeard said:

I nearly agree - the things that the pensioners buy must be goods and services made by the workers at the time the pension is drawn.  And yes, it doesn't matter whether it's a funded or unfunded pension, if a pensioner in 2030 wants his windows cleaned only a window cleaner working in 2030 can do it no matter where the money came from.

But it still matters hugely whether there already exists a big £2.4 Trillion pension fund full of assets to pay for it, or whether there doesn't.

If the public sector had DC pensions then when they get to retirement the employee could sell the assets in the pot and use that as their pension.  The taxpayer would not need to pay anything in 2030.

The investment growth in the pension pot can only come from the workers.  The bulk of the money in my pension pot is investment growth.

[kzb]

2 hours ago, Dorkins said:

The 1995 government and 1995 fireman both agreed the fireman's pension would be some future taxpayer's problem and no pot would be set aside to help the future taxpayer make the pension payments when the time came. The future taxpayer was not consulted on this.

The future taxpayer is never consulted on anything.

[kzb]

2 hours ago, Dorkins said:

Wrong, economic output is a function of both capital and labour. Future output can be increased by investing in productive capital now so that economic output will be higher in future even with the same labour force. With unfunded pensions there is zero attempt to create new productive capital to help meet that future expense.

The DC pension contributions are taken out of the current economy though, so it is not all one-way.