[dovercat]

Saying if the unfunded public sector pension schemes were funded private sector schemes then they would need 35% of salary contributions to build up the lump sum needed to be invested to generate the pension, shows how they compare to the private sector schemes. It does not prove the true cost and show the schemes are unaffordable, because they are not funded private sector schemes.

Let me put it this way if I want a income of say £5,000 a year. I either need savings of say £250,000 invested at 5% return with inflation at 3% so that is 2% income £5000, the lump sum needed being highly dependent on interest rates and inflation. Alternatively I need to be producing a income of £5,000 a year through work, etc.. so affordability being dependent on future earnings.

The government has a national income GDP that it can tax, it does not make sense for it to fund things by putting by huge cash sums and living off the interest as the country will continue to work producing GDP forever it does not retire on mass to live off investment income.

The government is not saying they are going to make all public sector pensions funded schemes, and so need to raise contributions and cut entitlements so they can put by sufficiently large cash sums needed to invest to generate the income paid out in pensions. It is saying pensions are going to continue to be unfunded paid out of current member contributions and tax but are unaffordable because they are worth the equivalent of the huge cash lump sums that would be needed if they were paid by the interest being paid out by those lump sums. That does not make sense.

The cash lump sums are imaginary they will never be needed as the government will never cease getting a income, the government has no intention of ever putting by these lump sums, the schemes will remain unfunded paid out of current membership contributions and tax.
They are just using them to claim the schemes are facing financial Armageddon as if they suddenly became funded schemes that have put by no money to pay their liabilities. But you would expect these schemes to have huge future liabilities and no funds saved to meet those liabilities the clue is in the name they are unfunded schemes. These imaginary lump sums are simply being used to justify lowering entitlements and increasing contributions by branding the current schemes unaffordable because they would be unaffordable if they suddenly became funded schemes which they are not and are not going to be.

Comparing the public sector pensions to funded private sector pensions and so using bond rates and inflation rates to calculate how large a cash lump sum would need to be invested to payout the liabilities does not make sense to me. As the government has no intention of ever coming up with this lump sum investment what does it have to do with the schemes affordability.

Since they are going to be paid out of income, then future affordability I think should be calculated as a percentage of income GDP. Just like any other government expenditure. The government does not look at the population and base the affordability of future healthcare, education, welfare, policing, etc... on the size of imaginary lump sums of money it would need to invest to generate the interest to pay for them, lump sums of money it never intends to put by. That makes no sense it pays for current expenditure out of current income and so calculates future expediture affordability as a percentage of future GDP.

[la gran siete]

Originally Posted by sidicks

Anyone who reads this thread can see who is right on this issue - I've proved my point, you believe whatever you want to believe regardless of all the evidence to the contrary!

Sidicks

No you havent because at the end of the day all i am interested is the principle that if someone has worked hard for the b est part of 40 years for an employer he DESERVES a decent pension.The fact that a)the private sector workers largely dont merely reflects that the pension industry is a shambles and that employers are neglecting their responsibilities whilst b) they themselves ensure they receive very handsome pensions.People need to be shown the inadequacy of their pension provisions and what their employers are doing amnd realise the public sector is simply being scapegoated

Originally Posted by sidicks

As I said, demonstrably arrogant and ignorant.

Sidicks

Nope ,being right does not make me arrogant or ignorant I simply not interested in a pile of figures .Its the principle I go by.If Scandinavian countries can provide decent pensions then so can we.Nothing will change my mind on that

[GrahamC]

The news this morning that 14m people will have less income in retirement than their parents... so lets cut more.

[sidicks]

Originally Posted by la gran siete

No you havent because at the end of the day all i am interested is the principle that if someone has worked hard for the b est part of 40 years for an employer he DESERVES a decent pension.

Rubbish!!

I've frequently quoted that these schemes cost around 35% per annum (and linked to an article regarding the PWC assessment which suggest 37%), and with contributions made by employees of just 10% or less, this suggest to me that the huge taxpayer subsidy required to maintain these schemes is unaffordable and unfair.

You've repeatedly claimed that many figures are rubbish and that you know better beacsie a friend of your wife's brother's dog told you it was 14%.

I've explained what thay 14% relates to and BISHI provided the offiicial report on the teacher's pension fund which refers to a cost of 32.8% (2009-2010) and confirms my comments regarding the 14% employer contribution rate, yet still you maintain that you were correct!

Now, all of a sudden you are trying to change your tune and gop for the subjective / emotive argument about 'what someone deserves'....

Originally Posted by la gran siete

The fact that a)the private sector workers largely dont merely reflects that the pension industry is a shambles and that employers are neglecting their responsibilities whilst b) they themselves ensure they receive very handsome pensions.People need to be shown the inadequacy of their pension provisions and what their employers are doing amnd realise the public sector is simply being scapegoated

Pure opinion and totally subjective (I guess that given you have lost the objective argument that is all you are left with...).

Originally Posted by la gran siete

Nope ,being right does not make me arrogant or ignorant I simply not interested in a pile of figures .Its the principle I go by.If Scandinavian countries can provide decent pensions then so can we.Nothing will change my mind on that

Of course you are only interested in figures when they appear to support your case. Any other figures that show a different picture are immediately discounted as 'mumbo jumbo'...

Sidicks

[sidicks]

Originally Posted by GrahamC

The news this morning that 14m people will have less income in retirement than their parents... so lets cut more.

Also in the news - people are living much longer than their parents in retirement and have a much better quality of life at older ages.

Therefore in order to fund income in retirement they need to save more.

Seems fairly straightforward to me - which part of that is difficult for you to understand??


Sidicks

[sidicks]

You have raised some interesting points which I will attempt to answer:

Originally Posted by dovercat

The government has a national income GDP that it can tax, it does not make sense for it to fund things by putting by huge cash sums and living off the interest as the country will continue to work producing GDP forever it does not retire on mass to live off investment income.

Agreed - there is no desire (or ability) for the governemnt to suddenly find £1.5 trillion pounds to place into a fund to support these pension promises.

Of course there will be future tax revenues but these are available to be allocated to a variety of different sources and any sensible government needs to ensure that future promises being made are sustainable and affordable alongside other priorities such as education, NHS, welfare, defence etc.

Originally Posted by dovercat

The government is not saying they are going to make all public sector pensions funded schemes, and so need to raise contributions and cut entitlements so they can put by sufficiently large cash sums needed to invest to generate the income paid out in pensions. It is saying pensions are going to continue to be unfunded paid out of current member contributions and tax but are unaffordable because they are worth the equivalent of the huge cash lump sums that would be needed if they were paid by the interest being paid out by those lump sums. That does not make sense.

It is easy to put a value on the future cashflows that will be paid out under these pension promises, based on current market expectations for longevity, interest rates and inflation.

The government has a choice of whether to fund that now (and raise debt) or to continue the current approach of using contribution income to fund benefit outgo.

The main argument for not funding these pensions is the difficulty in managing the £1-2 trillion fund that would be required, and based on government inefficiency the argument that by not setting aside the money now means that it can produce higher returns is tenuous to say the least.

Given that any payments in the future will affect the aggregate surplus /deficit in future years and hence the amount the government needs to borrow (or can afford to repay), the implict cost of these pensions is linked to government borrowing costs.

Originally Posted by dovercat

The cash lump sums are imaginary they will never be needed as the government will never cease getting a income, the government has no intention of ever putting by these lump sums, the schemes will remain unfunded paid out of current membership contributions and tax.

Yes and no - these are uncertain promises and there is no guarantee that sufficient money will be available in the future given other priorities.

Originally Posted by dovercat

They are just using them to claim the schemes are facing financial Armageddon as if they suddenly became funded schemes that have put by no money to pay their liabilities. But you would expect these schemes to have huge future liabilities and no funds saved to meet those liabilities the clue is in the name they are unfunded schemes.

You can argue as to what the true cost of these schemes is, but it should be blatantly obvious to anyone that the contributions are nowhere near sufficient to meet the benefits being promised, hence requiring increasing amounts of taxpayer subsidy - whether this is affordable or not is only part of the issue - is it fair for a minority of people to have such huge subsidies from the general taxpaying population?

Originally Posted by dovercat

These imaginary lump sums are simply being used to justify lowering entitlements and increasing contributions by branding the current schemes unaffordable because they would be unaffordable if they suddenly became funded schemes which they are not and are not going to be.

It depends on your definition of affordability - How you fund the scheme is broadly irrelevant to the cost of those promises - it is clear that member contributions in are only a quarter or so of what benefits are taken out from the scheme.

Originally Posted by dovercat

Comparing the public sector pensions to funded private sector pensions and so using bond rates and inflation rates to calculate how large a cash lump sum would need to be invested to payout the liabilities does not make sense to me. As the government has no intention of ever coming up with this lump sum investment what does it have to do with the schemes affordability.

(Ignoring QE and it's negative consequences!!) the government cannot create money out of thin air - all payments out have top come from contributions along with a huge taxpayer subsidy.

Calculations of this type show how excessive that taxpayer subsidy is.

A cashflow analsysis of benefits income versus outgo doesn't show the true cost of how the value of these liabilities accrues over time.

Originally Posted by dovercat

Since they are going to be paid out of income, then future affordability I think should be calculated as a percentage of income GDP. Just like any other government expenditure.

The fact that we have been running a significant deficit for the last 5+ years and are likley to do so for the next 5years+ as a minimum shows that the country is spending more than it can afford, and has been for some time.

Originally Posted by dovercat

The government does not look at the population and base the affordability of future healthcare, education, welfare, policing, etc... on the size of imaginary lump sums of money it would need to invest to generate the interest to pay for them, lump sums of money it never intends to put by. That makes no sense it pays for current expenditure out of current income and so calculates future expediture affordability as a percentage of future GDP.

The current approach involves hiding the true cost of these pensions and deferring payment to future generations of taxpayers, which cannot be considered fair.

Your argument comapring these pensions with healthcare / welfare / policing etc is flawed - these social costs are paid at the same time they are received, so the situation is very different.

Sidicks

[domtheone]

Originally Posted by GrahamC

The news this morning that 14m people will have less income in retirement than their parents... so lets cut more.

Yep. More cuts needed. Got to cut down the excess and waste. Then we can be taxed less and save more for our pensions

[travid]

Originally Posted by domtheone

Yep. More cuts needed. Got to cut down the excess and waste. Then we can be taxed less and save more for our pensions

You obviously have no idea of the cuts already made and those already agreed for the next fiscal year. These include a 2 year pay freeze and for the last 10 years, below inflation pay rises and before you ask, there have been no incremental rises in this time.

I do agree that more cuts could be made, but they may not involve more staff losses. Centralised purchasing i.e. No local budgets for even small things e.g. A bag of nails (example from last week) were ordered, came from Scotland, at quadruple the price and £30 del charge, so a £10 bag of nails, £10 in B&Q, £70 via CP! This pales in insignificance compared to the IT costs. They overspend nationally well into the millions and thats a conservative figure.

As for lower taxes, being the little sister of the USA's global policeman role may lead to higher taxes! More illegal wars funded by us.

[sidicks]

Originally Posted by travid

You obviously have no idea of the cuts already made and those already agreed for the next fiscal year. These include a 2 year pay freeze and for the last 10 years, below inflation pay rises and before you ask, there have been no incremental rises in this time.

I think we all agree that there is huge scope to save millions (billions?) by cutting out waste and inefficiencies of the sort you describe.

I think the point being made is that in terms of public spending, we are actually spending more this year than last year - I.e. the cuts are only cuts in 'real' terms.

Sidicks

[la gran siete]

Originally Posted by sidicks

Rubbish!!

I've frequently quoted that these schemes cost around 35% per annum (and linked to an article regarding the PWC assessment which suggest 37%), and with contributions made by employees of just 10% or less, this suggest to me that the huge taxpayer subsidy required to maintain these schemes is unaffordable and unfair.

You've repeatedly claimed that many figures are rubbish and that you know better beacsie a friend of your wife's brother's dog told you it was 14%.

I've explained what thay 14% relates to and BISHI provided the offiicial report on the teacher's pension fund which refers to a cost of 32.8% (2009-2010) and confirms my comments regarding the 14% employer contribution rate, yet still you maintain that you were correct!

Now, all of a sudden you are trying to change your tune and gop for the subjective / emotive argument about 'what someone deserves'....

Pure opinion and totally subjective (I guess that given you have lost the objective argument that is all you are left with...).

Of course you are only interested in figures when they appear to support your case. Any other figures that show a different picture are immediately discounted as 'mumbo jumbo'...

Sidicks

I quote figures just to attempt to fit into your world ,one which is quite alien to me, so I shall continue to argue as i have done before., that is from principle

[sidicks]

Originally Posted by la gran siete

I quote figures just to attempt to fit into your world ,one which is quite alien to me, so I shall continue to argue as i have done before., that is from principle

The figures you have been quoting have been shown to be totally wrong!

QED


Sidicks

[la gran siete]

Originally Posted by sidicks

The figures you have been quoting have been shown to be totally wrong!

QED


Sidicks

Nice cables. What about the figures of those prepared to come out on strike, geddit?

[sidicks]

Originally Posted by la gran siete

Nice cables. What about the figures of those prepared to come out on strike, geddit?

?????????????

[la gran siete]

Originally Posted by sidicks

?????????????

I'll leave you to ponder that one

[GrahamC]

Tax the rich to fill the gap, slap 5p on anybody above £30000, 10p above £50000 ... and sidekick.

[sidicks]

Originally Posted by GrahamC

Tax the rich to fill the gap, slap 5p on anybody above £30000, 10p above £50000 ... and sidekick.

I'm sure more money would be raised by taking some of the stupid and ill-informed comments on Internet forums...

Particularly those who can't even spell my name correctly...

Sidicks

[sidicks]

Originally Posted by la gran siete

I'll leave you to ponder that one

Nothing to ponder, your post makes no sense!

[la gran siete]

rather than keep blethering on about Public sector pensions this is what i consider to be truly untenable :BBC News - Fat cat pensions worth millions, says TUC

"The average annual pension now accrued by a top director is worth £227,726 a year."

whilst
"Employers often tell us that decent staff pension schemes are no longer affordable"

plenty of figures there for those that love them too, but i say let us not attack public sector pensions but instead focus on this appalling inequity and bring it into the public conscience.If we wish to call ourselves a fair society then surely this anomoly, indeed discrepancy, must be tackled first

[la gran siete]

Originally Posted by sidicks

Nothing to ponder, your post makes no sense!

believe me it does to me , perfect sense

[BISHI]

Originally Posted by sidicks

Nothing to ponder, your post makes no sense!

QED - makers of very expensive, high end cables...

[Ed Selley]

Originally Posted by GrahamC

Tax the rich to fill the gap, slap 5p on anybody above £30000, 10p above £50000 ... and sidekick.

Excellent- I do love it when talking about "the working man" the blithe, bitter arrogance that assumes those above a certain level are ready to be milked a bit more.

To sum up, you want to be kept in the style to which you've become accustomed. You want other people to pay for it and behind the thin veneer of "solidarity" and "fairness" you couldn't give a monkeys what effect it has on my own ability to retire or even if I can retire at all. If you're only interested in yourself, at least have the courage to admit it rather than hiding behind the language of a political movement to which you partially subscribe.

[NewMan]

Originally Posted by GrahamC

Tax the rich to fill the gap, slap 5p on anybody above £30000, 10p above £50000 ... and sidekick.

So basically rape the middle classes - nothing new there from the militant socialist envy soapbox.

If you think someone who earns £30k is rich, then you're either deluded or just have no aspirations in life...

So tell me, in your little socialist paradise, where's the incentive to succeed if all that will happen is you get smacked down by the jealous masses? Should we all just be good little proles content with our daily gruel and state propaganda like they have in the "Democratic" "People's" Republic of Korea? I wonder where your precious public sector pensions will come from then?

Oh I forgot, socialists believe money grows on trees that the middle classes hide in the orchards of their vast "mansions"...

[BISHI]

Originally Posted by la gran siete

rather than keep blethering on about Public sector pensions this is what i consider to be truly untenable :BBC News - Fat cat pensions worth millions, says TUC

"The average annual pension now accrued by a top director is worth £227,726 a year."

whilst
"Employers often tell us that decent staff pension schemes are no longer affordable"

plenty of figures there for those that love them too, but i say let us not attack public sector pensions but instead focus on this appalling inequity and bring it into the public conscience.If we wish to call ourselves a fair society then surely this anomoly, indeed discrepancy, must be tackled first

He does have a point here Sidicks, why should I not compare my pension pot to the people LGS has highlighted here. It would seem some private pension schemes are solid platinum, not gold plated. I have every right to be angry when the super rich are getting a quarter of a million every year of their retirement. I would also like to see the 'legal' tax evasion loopholes closed that the super rich use. It is well known that the amount of revenue lost to this knocks the benefits bill into a cocked hat. If we are supposed to 'all be in this together' how come those who are best off are let off most..?

[la gran siete]

Our pensions are the worst in europe
In germany contributions amount to 19.5% of gross salary shared 50/50 between employer and employee .Upon retirement an employee can expect 70% of his average earned income

"The contribution rate is currently 19.5 percent of the gross salary (gross = total salary before tax). This contribution is shared equally between employee and employer. This means the employee pays 9.75% of their gross salary and the employer pays the same."

"The benefits paid out are about 70% of the average net income you earnt whilst working. The exact amount paid out depends on how much you put in and for how long. There are numerous other factors as well."

this is for their state pension. On top of that there are various company schemes, again employee and employer contributions are equal varying between 3 and 15 %.
The British people are being sold short, time for action.Our voices need to be heard loud and clear, albeit in an orderly fashion

[BISHI]

Originally Posted by GrahamC

Tax the rich to fill the gap, slap 5p on anybody above £30000, 10p above £50000 ... and sidekick.

5% rise VAT, pay freezes for the next few years, price hikes for petrol, electricity and gas - I think the middle classes are about as squeezed as they can be. I do , however, think the 50% income tax on incomes over 150K should be maintained in the short term.

[la gran siete]

Originally Posted by NewMan

So basically rape the middle classes - nothing new there from the militant socialist envy soapbox.

If you think someone who earns £30k is rich, then you're either deluded or just have no aspirations in life...

So tell me, in your little socialist paradise, where's the incentive to succeed if all that will happen is you get smacked down by the jealous masses? Should we all just be good little proles content with our daily gruel and state propaganda like they have in the "Democratic" "People's" Republic of Korea? I wonder where your precious public sector pensions will come from then?

Oh I forgot, socialists believe money grows on trees that the middle classes hide in the orchards of their vast "mansions"...

havent noticed much of that in Scandinavia, a European region with high taxes but excellent services and a decent pension

[Ed Selley]

Originally Posted by la gran siete

Our pensions are the worst in europe
In germany contributions amount to 19.5% of gross salary shared 50/50 between employer and employee .Upon retirement an employee can expect 70% of his average earned income

"The contribution rate is currently 19.5 percent of the gross salary (gross = total salary before tax). This contribution is shared equally between employee and employer. This means the employee pays 9.75% of their gross salary and the employer pays the same."

"The benefits paid out are about 70% of the average net income you earnt whilst working. The exact amount paid out depends on how much you put in and for how long. There are numerous other factors as well."

this is for their state pension. On top of that there are various company schemes, again employee and employer contributions are equal varying between 3 and 15 %.
The British people are being sold short, time for action.Our voices need to be heard loud and clear, albeit in an orderly fashion

I can assure you that Europe is also having to reorganise pensions as they have the same demographic issues that we do. They have some good ideas but to pretend that they aren't affected and that simply by copying them, everything will magically get better is wrong.

[Dave]

Controversial perhaps but imo tax rates would be much simpler and fairer if say everyone earning above 10 grand paid ~30% (figure plucked from the air by the way).

30% of 100 grand is still 10 times more than 30% of 10 grand. It's incredibly simple to administer and would greatly reduce tax avoidance by doing away with all the loopholes and get outs.

We are in a situation where the super rich can afford to get out of paying their share which is ludicrous.

I'm all for paying my taxes (I see directly where a large proportion of them go) but when we are talking about taxing the rich more than half of what they earn it's getting a bit daft.

[Ed Selley]

Originally Posted by Dave

Controversial perhaps but imo tax rates would be much simpler and fairer if say everyone earning above 10 grand paid ~30% (figure plucked from the air by the way).

30% of 100 grand is still 10 times more than 30% of 10 grand. It's incredibly simple to administer and would greatly reduce tax avoidance by doing away with all the loopholes and get outs.

We are in a situation where the super rich can afford to get out of paying their share which is ludicrous.

I'm all for paying my taxes (I see directly where a large proportion of them go) but when we are talking about taxing the rich more than half of what they earn it's getting a bit daft.

Flat taxes are a bit of an economic unicorn- the benefits are technically too good to pass up but the resistance to it is simply too high- usually from people who define "fairness" as hammering someone better off than them. As far as I know, only the Baltic states actually use them.

[Dave]

Originally Posted by Ed Selley

Flat taxes are a bit of an economic unicorn- the benefits are technically too good to pass up but the resistance to it is simply too high- usually from people who define "fairness" as hammering someone better off than them. As far as I know, only the Baltic states actually use them.

Yes unfortunately it would take a government with real balls to actually do it, sadly we don't nor probably will ever have one that sees past the next election.