Monday, November 5, 2012

It’s not just the boomers shafting the younger generation!

Households face £1,230 bill to plug public sector pension black hole

“Why should future generations pick up the bill for the pensions of public sector workers, people who on average are likely to be far better off in their retirement than their wealth-creating private sector peers?”

Posted by mr g @ 09:18 AM (3717 views)
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33 thoughts on “It’s not just the boomers shafting the younger generation!

  • And should anyone feel like feel like putting forward the old chestnut that public sector pay is lower than the private, try these from the Guardian which must be correct:

    http://www.guardian.co.uk/news/datablog/2012/mar/27/public-private-sector-pay

    http://www.guardian.co.uk/public-leaders-network/2012/oct/01/public-sector-pay-private-sector

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  • How about the private sector employees asking to be better paid.

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  • @Will

    Yes, the solution is to spend somebody else’s money. Every time.

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  • Thecountofnowhere says:

    And the rest of us with no pensions….what are we going to do ?

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  • How about the private sector employees asking to be better paid.

    Perhaps they live in the real world?

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  • mr g splutters over his cornflakes, the Telegraph propped up against the cereal packet, tea spilt into the saucer.

    Actually mr g, I presume you haven’t studied the Guardian pieces in much detail, or you would see that the pay differences are not as clear cut as you think. Even the ONS point out factors not taken into account – big bonus payments, health insurance, etc, etc – and I can add a comment on the problems with the regression fitting they do.

    The Telegraph article is reporting the latest rabid spoutings from the CPS, a Thatcherite “think tank” (ha ha) that would happily see everyone but the wealthy screwed into the ground, which is what is pretty much happening at present. What amazes me is how they can draw on the support of many of those who are disadvantaged by these kinds of policies, which, unless you are loaded, may well include you mr g.

    Someone recently remarked on how this site is dwindling. Not surprising when this kind of tripe is posted.

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  • mark wadsworth says:

    I strongly suspect that public sector people are better paid than private sector, esp. if you take pensions into account, although there is an argument to say that on average they are better qualified so that explains it.

    Be that as it may, the people who will retire on the generous pensions are, by and large, Baby Boomers, so the post title is badly chosen at best, and the fact is that the Baby Boomers don’t just do over the next generations via the housing market, they do it by promising themselves generous pensions (while pulling up the drawbridge for everybody else). So there.

    Vote YPP, we’ll sort all this out 🙂

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  • Because they love New Labour and are prepared to pay, god bless them.

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  • IMO if you get a job with a good pension and do your job then you should get paid it. It’s not the employee’s fault the employer/ government/politicians can’t add up and has promised them a pension it can’t afford.

    However, what really winds me up is that they know these pensions are unafforable but still if you join the public sector today you will be given one! It’s insane. Football is a similar sector to UK GOV in that they regularly pay people more than they can afford, but when clubs realise they are in the sh’t they start bringing in cheaper players and let the Michael Owens go when their contracts end – he still gets paid for sitting in the physio’s room for the term agreed but they don’t replace him with someone else of £100k a week. The clubs who don’t learn this lesson end up like portsmouth, leeds et al.

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  • letthemfall said…(Monday, November 5, 2012 02:46PM) “Someone recently remarked on how this site is dwindling” – yep that was me following my return from holiday. Not sure if the forums (somewhere I’ve never visited) are still busy but on here there is a definite decline in the number of articles posted and corresponding contributors.

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  • @ jack c – Seems to be all quiet on the western front at the moment..maybe the calm before the storm or everything is “back to normal”

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  • Hi Jack C… I still check in to see what’s happening but haven’t had much to say for a while. Problem is I don’t think there will be a HPC any more – Politicians won’t let it happen. Prices will just drift for decades. Hence all the articles on here about Europe falling apart etc. in the faint hope that maybe complete financial meltdown will mean house prices crash.

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  • bankster
    Frankly the calculations that are supposed to show that public pensions are in deficit depend on several assumptions. Even the Govt no longer claim this, now they have upped contributions for the second time in 5 years. The CPS would no doubt have supported the pensions mis-selling that went on in the 80s; its views are more driven by some nasty politics than economics.

    jack c and timmy t
    It is a lot quieter now; many of the more interesting contributors have left (I don’t blame them), relatively few remain, and tend to be occasional, apart from a few stalwarts. As for the HPC, we did have it, although an incomplete one. Maybe it will be a long-term decline from now on; we are in new territory (in our lifetimes anyway). There is therefore still scope for interesting economic discussion, though the political polarisation and the tabloid headlining that comprises many contributions, make that more difficult.

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  • Hi HM & Timmy T, there appears to be a stalemate in the market at present – sellers holding out for a certain price and buyers either not prepared to match the asking prices or can’t raise sufficient finance/deposit. If we strip out London and treat it effectively as a separate market then for the rest of the UK IMO it’s as you guys suggest a drift down over a long period of time.

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  • The site’s not like the olden days, that’s for sure.

    S2R1 could get 100+ comments on a thread. Isn’t the time about now for when he forecast the ultimate destruction; end of the Mayan calendar etc.

    Maybe something dramatic is about to happen…

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  • @11, timmy t, yeah i think you are right. HPC in nominal terms won’t happen. There are so many things which have happened over the last 5 years i thought would never happen. i.e. QE/Money printing in the western world, socialization of bad bank debts. The whole rotten system is so fragile now that if a HPC happened then the economy will come apart. House prices and the status quo will be defended at all costs, costs which will continue to be stuck to the middle classes, with parasites at both of the ends wailing for high taxation.

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  • December 21st 2012: end of time. There have to be better ways to spend ones last 8 weeks before armagedon than post comments on this site.

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  • Cornishman – yep S2R1 was talking about people staring into the abyss and December from memory is a key month. I’ve always thought that when contributors on here capitulated then that would be the most likely turning point for a correction to commence.

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  • @Timmy T

    “I still check in to see what’s happening but haven’t had much to say for a while. Problem is I don’t think there will be a HPC any more”

    @Jack C

    “there is a definite decline in the number of articles posted”

    I’ve noticed as well and somewhat agree. The proper HPC that we wanted a few years back has been dodged. They’re a slippery lot those bankers and politicians.

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  • [email protected],
    As you said, the whole edifice is fragile. Massive cheating of Libor, money laundering etc make mis-sold MEW schemes look insignificant.

    Low interest rates, cheating savers to support the feckless seems to be supported by all parties. Many people are unwilling to invest unless they use a sceme to pay little or no tax (like Starbucks, Apple, Amazon etc).

    Will the US deficit or behaviour of the Eurozone countries bring it down? Only time will tell. My guess is that Cameron doesn’t want a withdrawal from Europe right now, he would rather see the whole lot fall over and negotiate thereafter. Where house prices fit in has become a somewhat subsidiary issue, I think.

    Finally, I’m planning a celebratory drink on 22nd December to recognise the Mayan planners. They have a modern day equivalent in Van Rompuy – he’s having a larf too……. !

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  • @jack c, wouldn’t that be the ultimate kick in the goolies? Wait 7 years for a HPC – then the market crashes just after you’d capitulated and bought a house.

    @greenmind, LOL 🙂

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  • Cornishman – yes a big kick in the pods if people are caught out that way – but then again if S2R1’s predictions come anywhere close it will be the least of people’s worries !

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  • 21st December… that doesn’t leave much time for the arrival of gold from the ninth dimension. And what about the colloidal silver?

    I see no crash, been jaded for a while. What do I do now?

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  • My money’s on an Israeli strike on Iran triggering an end to things.

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  • @LTF

    If nothing else it shows that even the Guardian is waking up to the fact that even a Labour government will have to bite the bullet on public sector pensions rather than fudge things the way this government has.

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  • Does the education system not contribute to ‘wealth’ by creating an educated and skilled workforce? Does the health system not contribute to ‘wealth’ by supporting a healthy and productive workforce? Do the roads and transport infrastructure not contribute to the functioning of the economy? Well all these things are needed and would likely be more expensive if privatised when profit is added on top of existing costs (see railways, see social care). Attacking the public sector is a red herring. The real problem is the destruction of private sector pensions partly as a result of excessive greed and profit taking and the too unequal distribution of wealth that contributed to the housing crisis in the first place.

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  • mr g

    I think you’ll find the Guardian understands these things more clearly. I repeat, study the references if you’re going to cite them.

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  • The elephant in the room is that 8 out of 10 private sector workers will retire with a pension pot of less than £30,000 .

    Inflation linked annuity rates are only 3% so a £30,000 pot would only provide a pension of £900/year inflation linked i.e. £75/month .

    Increase N.I. and hypothecate a large proportion for a fund investing in the UK which will pay a livable state pension ; eg the fund could kickstart social house building and thereby reduce price of living for future generations .

    It’s completely unreasonable that society as a whole should underwrite the investment performance of the pensions of the lucky few .

    If the civil servants lost their DB scheme you can bet they would come up with a fantastic DC scheme which could be opened up to everyone in no time at all .

    Who do public servants think the Govt is going to come looking for when they are the only ones left with any money ?

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  • LTF

    And I repeat, read my comment:

    “even the Guardian is waking up to the fact that even a Labour government will have to bite the bullet on public sector pensions rather than fudge things the way this government has.”

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  • I still don’t know what you mean, “waking up”. Nothing has been fudged; this govt has merely cut public sector pay yet further by raising pension contributions. The Guardian published a useful analysis, but this does not imply the paper agrees with your reactionary views.

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  • When the last bear turns bull… so roll on the day that this site closes down through lack of interest!

    I’ve been Bidin’matime for over 7 years now (since selling to rent) – and I’m in no hurry to buy. Prices are hanging by a thread and certainly not going up. When we sold in 2005 I said that prices would be no higher in 10 years than they were then – and that is still looking likely.

    Of course, what we didn’t anticipate was a global conspiracy of currency devaluation – by rights, with interest rates this low, we should have a Sterling crisis by now, but ‘globalisation’ has (yet more…) downsides. So now that it costs more to rent a house for the net interest on the capital value, the capital saved (from not owing a house that’s falling in value) is offset by the need to subsidise the rent from income.

    But not owning a house (after 27 years of owning one), has other benefits: it’s changed our perspective on life – we value what goes on in the home, instead of the home itself (as an ‘asset’). We’ve realised that we can be just as happy in a rented home as one we own, and this has followed into other aspects of life – we value things for what they add to our lives, not what they are in themselves. All a bit deep, I know, but in this world where everyone seems to want the best car, the latest phone, the ‘dream’ kitchen etc, it’s been refreshing.

    And as for buying? Me, I’m still Bidin’matime…

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  • Hi Bidin’

    I know what you mean about the perspective of renting – an escape from the dream home rubbish, no climbing ladders to paint the boards, no sense of being tied and worrying about someone putting up a wind farm nearby. The downside is a sense of limited financial security, but I did a calculation recently which, taking all into account, suggests I’m better off renting (in the SE) unless prices stay level or rise (a 1% fall turns in my favour). Since we can only make investment decisions based on guessed probabilities, I will probably remain better off renting for the time being.

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  • mark wadsworth says:

    Bidin’, yes, after a couple of years of renting I started to feel much freer than as an owner (despite I loved our old house, we’d done it up to a tee) and I personally couldn’t care less about ever owning ever again (ignoring the detailed financial bits and pieces).

    LTF, yes, I’m also working on the basis that annual price falls of 2% or more make us better off renting, 1% is a break even and price rises are annoying.

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