Pensions - no wonder there are strikes

[danielf]

Originally Posted by Pierre

The "employer" is the tax payer

True, funds may be invested, however the full amount is underwritten by the taxpayer, if the investments fail you don't lose out as the taxpayer would pick up the slack.

That doesn't matter one bit. People in the private sector receive employer contributions as well. To simply disregard them (and arrive at a shortfall of a factor 5 picked up by the tax payer) is disingenuous in the extreme.

[Pierre]

Originally Posted by danielf

That doesn't matter one bit. People in the private sector receive employer contributions as well.

Of course it matters.

The police, and most other public bodies, don't generate profits they are 100% paid for by the taxpayer.

When you pay your Council Tax, and please check..... I'm pretty sure there isn't a line item on your bill that says Virgin Media, therefore you are not funding my employers contributions to my pension.

If you subscribe to Virgin Media services, then you are....cheers. But you have a choice and your continued contribution is not guaranteed.

To simply disregard them (and arrive at a shortfall of a factor 5 picked up by the tax payer) is disingenuous in the extreme.

Not at all, that is a potential liability to the taxpayer..............that's a fact.

I agree it may be less if the police have invested well, however the way the stockmarket has performed over the past 4 years I doubt they have done that well.

[danielf]

Originally Posted by Pierre

Of course it matters.

The police, and most other public bodies, don't generate profits they are 100% paid for by the taxpayer.

When you pay your Council Tax, and please check..... I'm pretty sure there isn't a line item on your bill that says Virgin Media, therefore you are not funding my employers contributions to my pension.

If you subscribe to Virgin Media services, then you are....cheers. But you have a choice and your continued contribution is not guaranteed.



Not at all, that is a potential liability to the taxpayer..............that's a fact.

I agree it may be less if the police have invested well, however the way the stockmarket has performed over the past 4 years I doubt they have done that well.

Completely disingenuous. The fact of the matter is that you made a calculation showing that the hypothetical policeman has a shortfall of a factor 5 whilst disregarding the employer's contributions, when private sector workers receive employer's contributions as well. So, your number is wrong (actually it is (I suspect willfully) misleading), and it can't be compared with private sector numbers.

The point about choice is moot as well. With every product or service I buy I contribute to wages, bonuses, pensions and other benefits of employees for the companies involved.

At the end of the day, the only meaningful comparison is between pay packages as a whole, not just the selective bits that you think you can quote because they support your argument.

[Traduk]

Originally Posted by Pierre

Of course it matters.

The police, and most other public bodies, don't generate profits they are 100% paid for by the taxpayer.

When you pay your Council Tax, and please check..... I'm pretty sure there isn't a line item on your bill that says Virgin Media, therefore you are not funding my employers contributions to my pension.

If you subscribe to Virgin Media services, then you are....cheers. But you have a choice and your continued contribution is not guaranteed.



Not at all, that is a potential liability to the taxpayer..............that's a fact.

I agree it may be less if the police have invested well, however the way the stockmarket has performed over the past 4 years I doubt they have done that well.

Your last paragraph appears to clearly demonstrate that you have not grasped the concept at all.

To simplify the concept and to put it into a Virgin Media employee's viewpoint..... if your employer was legally able to retain your contribution and retain theirs and use both for day to day expenses on a promise that you will get a good pension at the end (maybe) would you be happy if they realised that their model was deeply flawed and tried to give you three parts of not a lot. That is what the various governments over the past few decades have done and thus the problems ahead.

Quoting stock market performance over the past four years is ludicrous. Pensions are built up over a working lifetime and any performance has to be measured over that duration. Looking back is not much of an assurance in looking forward but one thing is a certainty.

That certainty is that inflation, interest rates and investment performance is dynamic. 30+ years ago when interest rates were hitting 20% nobody would have predicted today's rates but 30+ years before that nobody would have predicted 20%.

IMO people who allow their long term pension prospects to be diluted are allowing the government to respond to a short term flat line interest rates and will pay massively long after the current bunch of idiots have retired to their country mansions to enjoy the fruits of their inherited wealth no doubt bolstered by lucrative deals.

The problem we have is one of attitude workers in a way rightly expect what most workers they have known had which was to retire at 65 and be comfortable mostly. Trouble is we are all living longer and as we live longer we need more expensive medical treatment and care and paying for this is becoming and is going to become a masiive problem in the future. We have to sort this out and there has to be a way that both sides not like but can live with. As i see it right now neither side are right on this issue you have the government that wants to do it all in one go and the unions that want to spread it out to the next generation.

That next generation is already shafted as it is in paying for the past is it really fair to lumber them with another bill because we didn't sort out a problem that was well known for a long time. Reasonable and realistic people need to start getting involved in this and the mouths on both sides need to be put to the side. Is there a solution for this both sides can live with i honestly do not know but i know at the minute no one is even looking for it just convinced they are right and digging in deep to defend. Private sector pensions are getting hammered by what is going on in the financial sector and whilst some may be ok others will not even be close to ok and that is bound to cause discontent between public and private and it is valid for that discontent to exist.

This whole argument is a catalsyt for our society at the minute everyone is fighting for themselves and not fighting for each other though some on both sides claim to be doing just that. This is a problem that will directly or indirectly affect every single member of our society and we need to be tackling it as a united society to come up with an answer not as a fragmented society as we are now.

[Tim Deegan]

Originally Posted by Pierre

Why should you get a reduction? you should be paying more.

As I once demonstrated to you in another thread, I'll do the calculation again


A constables pay after 10years service is around £36,500 not including overtime or other allowances.

if we use that figure.

11% of that = £4015.

x 30 years = £120,450.

If you have 30 years service you are entitled to 2/3rd your final salary per annum which would be: £24,300 per annum.

Now if the constable joined aged 20, and retired at 50 and lived a healthy happy life to around say 80? not unreasonable.

His total pension payout would be: £730,000.

Minus his massive 11% contribution of £120,450 = tax payer liability of £609,550. approx 5x your contributions.

So don't come to me with the "hard done to" on the pension front.

I'm willing to cut the police and fire service a little slack for the reasons you point out.

But the bottom line is the taxpayer is underwriting public sector pensions and it's just not sustainable, while the rest of us rely on the stockmarket.

There needs to be reform.

You have to remember that the public sector provide a public service, of which many are essential, and in many cases dangerous. And for this they are paid a lower wage than the private sector equivalent, as an average over their career.

Now before anyone starts shouting, I know that in the present economic climate many private sector wages are closer (if not lower in some cases). But when the economy is in a better state, then it is the private sector that benefits with bigger pay rises, and bonuses, etc... This is not the case in the public sector. So I bet none those who will reap the benefits when we are out of the recession will be complaining then.

Now if you want to pay 14% of your pay into a pension, then go ahead and do it, and then you will get a far better return also. But police and firefighters didn't have any choice.

---------- Post added at 19:16 ---------- Previous post was at 19:12 ----------

Originally Posted by Traduk

Your last paragraph appears to clearly demonstrate that you have not grasped the concept at all.

To simplify the concept and to put it into a Virgin Media employee's viewpoint..... if your employer was legally able to retain your contribution and retain theirs and use both for day to day expenses on a promise that you will get a good pension at the end (maybe) would you be happy if they realised that their model was deeply flawed and tried to give you three parts of not a lot. That is what the various governments over the past few decades have done and thus the problems ahead.

Quoting stock market performance over the past four years is ludicrous. Pensions are built up over a working lifetime and any performance has to be measured over that duration. Looking back is not much of an assurance in looking forward but one thing is a certainty.

That certainty is that inflation, interest rates and investment performance is dynamic. 30+ years ago when interest rates were hitting 20% nobody would have predicted today's rates but 30+ years before that nobody would have predicted 20%.

IMO people who allow their long term pension prospects to be diluted are allowing the government to respond to a short term flat line interest rates and will pay massively long after the current bunch of idiots have retired to their country mansions to enjoy the fruits of their inherited wealth no doubt bolstered by lucrative deals.

[Pierre]

Originally Posted by Traduk

Your last paragraph appears to clearly demonstrate that you have not grasped the concept at all.

To simplify the concept and to put it into a Virgin Media employee's viewpoint..... if your employer was legally able to retain your contribution and retain theirs and use both for day to day expenses on a promise that you will get a good pension at the end (maybe) would you be happy if they realised that their model was deeply flawed and tried to give you three parts of not a lot. That is what the various governments over the past few decades have done and thus the problems ahead.

Quoting stock market performance over the past four years is ludicrous. Pensions are built up over a working lifetime and any performance has to be measured over that duration. Looking back is not much of an assurance in looking forward but one thing is a certainty.

That certainty is that inflation, interest rates and investment performance is dynamic. 30+ years ago when interest rates were hitting 20% nobody would have predicted today's rates but 30+ years before that nobody would have predicted 20%.

IMO people who allow their long term pension prospects to be diluted are allowing the government to respond to a short term flat line interest rates and will pay massively long after the current bunch of idiots have retired to their country mansions to enjoy the fruits of their inherited wealth no doubt bolstered by lucrative deals.

I understand the concept just fine thanks, that last paragraph was just to make a point that if the employee's and taxpayers (employers) contributions are invested on the stockmarket that they are subject to falls as well as rises.

Yes a pension fund is accumulated over time but it's ridiculous to say that falls in the stock Market over short periods don't affect the overall value of your fund.

The recent stockmarket performance has taken billions of the value of pension funds, the recent BP crisis in the gulf only lasted a few months but also reduced pension funds by millions.

I, in certain years where we have experienced a bust, have had the pleasure of paying into my fund for the year along with my employers contributions, only to see the value of the fund fall overall. In short I lost a whole years contributions, and paid my fund managers for the privilege.

So I'm not so sure you get the concept?

The difference between my pension and a policemans pension in that currently the final value of my fund is not guaranteed, whereas a policemans is, regardless of stockmarket performance, and it is guaranteed by the tax payer.

[Cobbydaler]

Originally Posted by Tim Deegan

And for this they are paid a lower wage than the private sector equivalent, as an average over their career.

£36,500? Lower wage? Average doesn't matter if the pension is paid on final salary...

[Pierre]

Originally Posted by danielf

Completely disingenuous.

is that your new favourite word?

The fact of the matter is that you made a calculation showing that the hypothetical policeman has a shortfall of a factor 5 whilst disregarding the employer's contributions,

No, I showed a liability to the tax payer, I didn't disregard the employer contributions because the employer and taxpayer are one in the same.

So, your number is wrong

no it isn't, how is it wrong? The police contribution come direct from the tax payer, they don't generate their own income.

The point about choice is moot as well. With every product or service I buy I contribute to wages, bonuses, pensions and other benefits of employees for the companies
involved.

yes, and as long as you do that's great but should you stop buying a product and service then that hits their income and ability to contribute to the employee whereas you have to pay your tax no matter what so the police will always have an income. The issue then becomes when the government can't collect as much tax as they'd like because e.g. We're in a recession or the previous govt spent it all, then suddenly the cash isn't there to underwrite the pension liability.

At the end of the day, the only meaningful comparison is between pay packages as a whole, not just the selective bits that you think you can quote because they support your argument.

at the end of the day, I've come to the conclusion you don't know what you're talking about or you just don't understand

---------- Post added at 22:32 ---------- Previous post was at 22:24 ----------

Originally Posted by Tim Deegan

You have to remember that the public sector provide a public service, of which many are essential, and in many cases dangerous. And for this they are paid a lower wage than the private sector equivalent, as an average over their career.

Don't come the lower wage bull poo, public sector wages are no longer behind the private sector, many menial public sector jobs have been privatised.

Now before anyone starts shouting, I know that in the present economic climate many private sector wages are closer (if not lower in some cases). But when the economy is in a better state, then it is the private sector that benefits with bigger pay rises, and bonuses, etc... This is not the case in the public sector. So I bet none those who will reap the benefits when we are out of the recession will be complaining then.

just not true and too simplistic, in the last 12 years I have not had a pay rise higher than 3%, if I got one at all. Like this year zilch.

Now if you want to pay 14% of your pay into a pension, then go ahead and do it, and then you will get a far better return also. But police and firefighters didn't have any choice.

maybe not but your return is guaranteed

[Traduk]

[

QUOTE=Pierre;35426586]I understand the concept just fine thanks, that last paragraph was just to make a point that if the employee's and taxpayers (employers) contributions are invested on the stockmarket that they are subject to falls as well as rises.

I just love it when somebody insists they understand the concept and then clearly state that their insistence is misplaced. The unfunded public sector pensions are not and have not been invested anywhere as they have been spent on day to day running expenses for the country. There wouldn't be a problem if the public sector had a pension pot of hundreds of billions instead of IOU's which are now being portrayed as a liability on the tax payer.

Yes a pension fund is accumulated over time but it's ridiculous to say that falls in the stock Market over short periods don't affect the overall value of your fund.

Of course it is ridiculous which is perhaps why I didn't state as such. What I did state, albeit perhaps not obviously enough, was that compounding via investment is for pension purposes best considered over a working lifetime and not short term. 4 years is ten percent of what used to be the pension building lifetime of employment which is why I used the look back of 30+ years.

Investments take hits and stagnate for periods but over a working lifetime for pension funds they should average in at the lower market prices and be in a stronger position to gain when markets improve.

The recent stockmarket performance has taken billions of the value of pension funds, the recent BP crisis in the gulf only lasted a few months but also reduced pension funds by millions.

The biggest, longest and ongoing damage done to pension funds was by a certain Mr Brown when he withdrew tax concessions. I do not think that you have studied the performance of pension funds or why they claim to have lost ground. Your reference to stock markets is somewhat confusing as they are just one part of the mix. The pension fund that pays me has investments that range from stock markets globally with a mix of defensive, growth and income based stocks. They also have massive portfolios in property both domestic and retail plus a back drop of gilts and bonds.

Sure many of them plead poverty in the form of under-performance but careful reading of their annual reports shows that they are using the shortfall against insurance type actuarial liability commitments as opposed to actual performance. In many cases it is enshrined in law that the funds have to have certain levels of reserves and the liability for the shortfall lies with the employing company.

I, in certain years where we have experienced a bust, have had the pleasure of paying into my fund for the year along with my employers contributions, only to see the value of the fund fall overall. In short I lost a whole years contributions, and paid my fund managers for the privilege.

Are you saying that you personally paid a fund manager to lose you money?. If you have the choice of selection then perhaps you should have exercised your prerogative and moved to a fund with a decent track record. If you had no choice then maybe the company who made the choice of fund didn't make the wisest decision.

So I'm not so sure you get the concept?

I do not know why this was posted as a line on its own. I guess it was a Freudian slip

The difference between my pension and a policemans pension in that currently the final value of my fund is not guaranteed, whereas a policemans is, regardless of stockmarket performance, and it is guaranteed by the tax payer.

[/QUOTE]

I do not know the terms of your pension agreement but assuming that it is based on stock market performance as you state then I am sorry but IMO it is a rubbish scheme. I do not think that you are right but it looks to me like all you have is a scheme where you and your employer chuck a few grand per annum into a fund with the eventual proceeds to buy an annuity. It sounds like the perfect scheme to get fleeced year on year until the real fleecing comes with the annuity. You have to be wrong!!!!!

Policemen are paid extremely well and perhaps a lot better than the headline salary. However the feed back I get from a family friend who is a detective in a Northern city makes me think that they deserve every penny.

The funding of police pensions appears odd but is a government Ponzi scheme. It looks like working police pay by deductions a contribution which goes back into police funds which is then added to from Council Tax and then again topped up from general taxation.

The deductions which look draconian and the eventual payout are part of the package for which policemen and women signed up for. It is a contractual agreement between the employer and employee and must be honoured as it is them not us or government ministers who may have to deal with a machete wielding mentally ill individual with the strength of an ox.

Your argument is derived from comparisons between your lot and a policeman's. We all have a value to whoever employs us and to me the government's politics of envy propaganda war appears to have gained ground with some when the argument point is based on envy between a rubbish private pension and a quality contractual obligation which the government wishes to renege upon. I suspect that you truly would like to see a race to the bottom. Parhaps you need the company of others?.

[Tim Deegan]

Originally Posted by Cobbydaler

£36,500? Lower wage? Average doesn't matter if the pension is paid on final salary...

Where do you get £36500 from??

Yes average does matter, as they are scrapping final salary pensions, and calculating them on an average.

---------- Post added at 18:29 ---------- Previous post was at 18:18 ----------

Originally Posted by Pierre

is that your new favourite word?



No, I showed a liability to the tax payer, I didn't disregard the employer contributions because the employer and taxpayer are one in the same.

no it isn't, how is it wrong? The police contribution come direct from the tax payer, they don't generate their own income.

yes, and as long as you do that's great but should you stop buying a product and service then that hits their income and ability to contribute to the employee whereas you have to pay your tax no matter what so the police will always have an income. The issue then becomes when the government can't collect as much tax as they'd like because e.g. We're in a recession or the previous govt spent it all, then suddenly the cash isn't there to underwrite the pension liability.


at the end of the day, I've come to the conclusion you don't know what you're talking about or you just don't understand

---------- Post added at 22:32 ---------- Previous post was at 22:24 ----------



Don't come the lower wage bull poo, public sector wages are no longer behind the private sector, many menial public sector jobs have been privatised.

just not true and too simplistic, in the last 12 years I have not had a pay rise higher than 3%, if I got one at all. Like this year zilch.

maybe not but your return is guaranteed

You really need to know your subject before you start spouting off

To start with, taxes run the country, and pay for many of the things that you benefit from. Would you rather finance your own police force, fire and ambulance service, roads, council services, military, health service, etc, etc, etc..... and not pay taxes??? Well otherwise stop complaining that public sector employees are financed by your taxes.

I suppose you are one of those people who would be happy to not have emergency services.......until you actually need them

And don't forget that public sector employees also pay taxes, just like you do. Employer contributions have to be taken into account regardless of who finances the employer.

You may not have had a pay rise of more than 3%, but that would be 3% more than the public sector have had for the last 3 years. And they are getting a pay cut this year.

---------- Post added at 18:31 ---------- Previous post was at 18:29 ----------

Originally Posted by Traduk

[I just love it when somebody insists they understand the concept and then clearly state that their insistence is misplaced. The unfunded public sector pensions are not and have not been invested anywhere as they have been spent on day to day running expenses for the country. There wouldn't be a problem if the public sector had a pension pot of hundreds of billions instead of IOU's which are now being portrayed as a liability on the tax payer.

Of course it is ridiculous which is perhaps why I didn't state as such. What I did state, albeit perhaps not obviously enough, was that compounding via investment is for pension purposes best considered over a working lifetime and not short term. 4 years is ten percent of what used to be the pension building lifetime of employment which is why I used the look back of 30+ years.

Investments take hits and stagnate for periods but over a working lifetime for pension funds they should average in at the lower market prices and be in a stronger position to gain when markets improve.

The biggest, longest and ongoing damage done to pension funds was by a certain Mr Brown when he withdrew tax concessions. I do not think that you have studied the performance of pension funds or why they claim to have lost ground. Your reference to stock markets is somewhat confusing as they are just one part of the mix. The pension fund that pays me has investments that range from stock markets globally with a mix of defensive, growth and income based stocks. They also have massive portfolios in property both domestic and retail plus a back drop of gilts and bonds.

Sure many of them plead poverty in the form of under-performance but careful reading of their annual reports shows that they are using the shortfall against insurance type actuarial liability commitments as opposed to actual performance. In many cases it is enshrined in law that the funds have to have certain levels of reserves and the liability for the shortfall lies with the employing company.

Are you saying that you personally paid a fund manager to lose you money?. If you have the choice of selection then perhaps you should have exercised your prerogative and moved to a fund with a decent track record. If you had no choice then maybe the company who made the choice of fund didn't make the wisest decision.

I do not know why this was posted as a line on its own. I guess it was a Freudian slip

I do not know the terms of your pension agreement but assuming that it is based on stock market performance as you state then I am sorry but IMO it is a rubbish scheme. I do not think that you are right but it looks to me like all you have is a scheme where you and your employer chuck a few grand per annum into a fund with the eventual proceeds to buy an annuity. It sounds like the perfect scheme to get fleeced year on year until the real fleecing comes with the annuity. You have to be wrong!!!!!

Policemen are paid extremely well and perhaps a lot better than the headline salary. However the feed back I get from a family friend who is a detective in a Northern city makes me think that they deserve every penny.

The funding of police pensions appears odd but is a government Ponzi scheme. It looks like working police pay by deductions a contribution which goes back into police funds which is then added to from Council Tax and then again topped up from general taxation.

The deductions which look draconian and the eventual payout are part of the package for which policemen and women signed up for. It is a contractual agreement between the employer and employee and must be honoured as it is them not us or government ministers who may have to deal with a machete wielding mentally ill individual with the strength of an ox.

Your argument is derived from comparisons between your lot and a policeman's. We all have a value to whoever employs us and to me the government's politics of envy propaganda war appears to have gained ground with some when the argument point is based on envy between a rubbish private pension and a quality contractual obligation which the government wishes to renege upon. I suspect that you truly would like to see a race to the bottom. Parhaps you need the company of others?.[/QUOTE]

What you have to remember, is that there are many people who are gullable enough to believe the government propoganda, that says that public sector pensions are not sustainable.

[Pierre]

So much boollox posted here, but I today started 2 week holiday so can't be bothered trawling through the detritous to correct it, if this thread is still live after the 26th I'll pick it back up.

Ps weather in Majorca is great!

[Ignitionnet]

Originally Posted by Tim Deegan

What you have to remember, is that there are many people who are gullable enough to believe the government propoganda, that says that public sector pensions are not sustainable.

Err some of them aren't. Doesn't mean that all of them aren't, the teachers' pension scheme for example is absolutely fine, but some of them are most definitely not sustainable.

[Tim Deegan]

Originally Posted by Ignitionnet

Err some of them aren't. Doesn't mean that all of them aren't, the teachers' pension scheme for example is absolutely fine, but some of them are most definitely not sustainable.

They would have been if they hadn't been raped by sucessive governments.

---------- Post added at 22:48 ---------- Previous post was at 22:47 ----------

Originally Posted by Pierre

So much boollox posted here, but I today started 2 week holiday so can't be bothered trawling through the detritous to correct it, if this thread is still live after the 26th I'll pick it back up.

Ps weather in Majorca is great!

Things must be really tough in the private sector then

[Ignitionnet]

Originally Posted by Tim Deegan

They would have been if they hadn't been raped by sucessive governments.

Ridiculous generalisation suggesting that all public sector pension schemes would be fully funded if not for government intervention. Absolutely ridiculous and a completely pointless post. I was actually on your side of this discussion but if we're dealing with stupid generalisations where public sector pension means fully funded and sustainable by default it's not doing you favours. Be interested in how you reconcile that point of view with say the local government, the national civil service or the MP pension schemes?