With another 'day of action' approaching two articles have today caught my attention:

www.bbc.co.uk/news/business-15722791

www.google.com/hostednews/ukpres ... 271814444A


What is it with public sector workers at the moment? Their pay and pensions are, generally, far superior to their private sector counterparts yet they are complaining about paying slightly more towards their pensions, or working for a couple more years. Outside of the small protected bubble that they live in their strikes have very little public support.

Then we have tube drivers, demanding a whopping quadruple pay for working boxing day. That is a whopping £700 for one day work!

Public sector pay and pensions is unsustainable in its current format. The previous Government realised this, but was too afraid to do anything about it for fear of losing key voters.

With another 'day of action' approaching two articles have today caught my attention:

www.bbc.co.uk/news/business-15722791

www.google.com/hostednews/ukpres ... 271814444A


What is it with public sector workers at the moment? Their pay and pensions are, generally, far superior to their private sector counterparts yet they are complaining about paying slightly more towards their pensions, or working for a couple more years. Outside of the small protected bubble that they live in their strikes have very little public support.

Then we have tube drivers, demanding a whopping quadruple pay for working boxing day. That is a whopping £700 for one day work!

Public sector pay and pensions is unsustainable in its current format. The previous Government realised this, but was too afraid to do anything about it for fear of losing key voters.

With all due respects: b*llocks.

Public sector pay has been frozen for two years, following decades of below inflation rise.

Even the Hutton report accepted that public sector pensions are sustainable.

Before the 2007 reforms to the schemes, the costs of pensions were expected to peak at just below 2% of GDP around 2020, and then fall again (the Baby boom generation is a bulge, not a permanent increase).

After the 2007 reforms - which were negotiated, unlike the current attempt at diktat - that peak has already happened (the cost peaked iin 2009 at around 1.8%, iirc, and is already falling). The 2007 reforms cut the future costs of pensions by 10% (Hutton's figures) - and the Chancellor's unilaterial decision to base future increases on CPI rather than RPI* inflation has cut future costs by another 15%)

Incidentally, some figures on the two largest schemes:

The NHSPS is a 'pay as you go' scheme where pensions are funded by current contributions - over the past 10 years or more, contributions have exceeded payouts by £2bn a year, money that goes straight to the Treasury.

The LGPS is a 'funded' scheme - contributions are invested and pensions paid out of the investment funds: the scheme invests about £4bn a year in the UK economy - the various invesment funds are currently responsible for a total investment in the UK economy of £140bn. The scheme has enough funds to pay out its commitments for the next 20 years, even even if it received not another penny from either contributions or investment income.

Both schemees are 'cash rich'.

What Hutton refused to answer was whether public sector pensions were 'affordable' -saying that was a political question.

And a point to note about the proposal to increase employees' contributions by an average of 3.2% wages (an average 50% or so increase in the amount people will be required to pay): not a penny of that will go into the actual pensions schemes.

In the pay-as-you-go schemes it will go straight tot he Treasury. Ind the funded LGPS, it will fund the £900m reduction in councils' block grant.

The proposal is nothing more than a 3% tax levied for being in a pension scheme and used to pay for reducing a deficit which is the direct result of the banks and financial services industry screwing the economy in 2008 (a tax, incidentally, is being levied at the same time that the government keeps floating the idea of a 10% tax cut for high earners).

But the big danger is that if you increase contributions by that amount, you discourage people to join the pensions scheme and make provision for their old age, so they will rely more on taxpayer** funded benefits, increasing future costs to government, and at the same time risk making the schemes themselves unsustainable if not enough people are paying in.

* There's a particular irony in the Euro-sceptic Tories opting for CPI. RPI is an index designed to measure UK inflation as it affects people who buy things. The CPI index was invented purely as a measure to make like-for-like comparisons across the EU (which is why it doesn't include, eg, housing costs - housing 'markets' being different and therefore not comparable across the EU).

Still, [url=http://www.bbc.co.uk/news/uk-politics-13972855here's Freancis Maude being roundly shown to be talking through his posterior on the 'unaffordability' issue back in the summer[/url.

** Taking both active members and deferred members into account, the pensions schemes in question cover about 20% of the workforce, in both the public and private sectors, who are - of course - taxpayers themselves.

On and some mythbusting:



Though I'm sure you'll ignore the arguments and facts, and simply dismiss the source.



www.unison.org.uk/pensions/mythbuster.asp

With all due respects: b*llocks.

Public sector pay has been frozen for two years, following decades of below inflation rise.

Even the Hutton report accepted that public sector pensions are sustainable.

Before the 2007 reforms to the schemes, the costs of pensions were expected to peak at just below 2% of GDP around 2020, and then fall again (the Baby boom generation is a bulge, not a permanent increase).

After the 2007 reforms - which were negotiated, unlike the current attempt at diktat - that peak has already happened (the cost peaked iin 2009 at around 1.8%, iirc, and is already falling). The 2007 reforms cut the future costs of pensions by 10% (Hutton's figures) - and the Chancellor's unilaterial decision to base future increases on CPI rather than RPI* inflation has cut future costs by another 15%)

Incidentally, some figures on the two largest schemes:

The NHSPS is a 'pay as you go' scheme where pensions are funded by current contributions - over the past 10 years or more, contributions have exceeded payouts by £2bn a year, money that goes straight to the Treasury.

The LGPS is a 'funded' scheme - contributions are invested and pensions paid out of the investment funds: the scheme invests about £4bn a year in the UK economy - the various invesment funds are currently responsible for a total investment in the UK economy of £140bn. The scheme has enough funds to pay out its commitments for the next 20 years, even even if it received not another penny from either contributions or investment income.

Both schemees are 'cash rich'.

What Hutton refused to answer was whether public sector pensions were 'affordable' -saying that was a political question.

And a point to note about the proposal to increase employees' contributions by an average of 3.2% wages (an average 50% or so increase in the amount people will be required to pay): not a penny of that will go into the actual pensions schemes.

In the pay-as-you-go schemes it will go straight tot he Treasury. Ind the funded LGPS, it will fund the £900m reduction in councils' block grant.

The proposal is nothing more than a 3% tax levied for being in a pension scheme and used to pay for reducing a deficit which is the direct result of the banks and financial services industry screwing the economy in 2008 (a tax, incidentally, is being levied at the same time that the government keeps floating the idea of a 10% tax cut for high earners).

But the big danger is that if you increase contributions by that amount, you discourage people to join the pensions scheme and make provision for their old age, so they will rely more on taxpayer** funded benefits, increasing future costs to government, and at the same time risk making the schemes themselves unsustainable if not enough people are paying in.

* There's a particular irony in the Euro-sceptic Tories opting for CPI. RPI is an index designed to measure UK inflation as it affects people who buy things. The CPI index was invented purely as a measure to make like-for-like comparisons across the EU (which is why it doesn't include, eg, housing costs - housing 'markets' being different and therefore not comparable across the EU).

Still, [url=http://www.bbc.co.uk/news/uk-politics-13972855here's Freancis Maude being roundly shown to be talking through his posterior on the 'unaffordability' issue back in the summer[/url.

** Taking both active members and deferred members into account, the pensions schemes in question cover about 20% of the workforce, in both the public and private sectors, who are - of course - taxpayers themselves.

On and some mythbusting:



Though I'm sure you'll ignore the arguments and facts, and simply dismiss the source.



www.unison.org.uk/pensions/mythbuster.asp

Or maybe they just don't want to work it and this is the way of saying no. I was once asked to go on a rota to check out a newly commissioned boiler house over Xmas, the gaffer asked how much I would want to do the Xmas day stint, I said £10,000 (back then 10k was a lot of money for a days work

), he said I was mad if I thought he would pay that, so i said 'do it yourself then'

Some muppet did it for double + day off. You never get those days back.

Or maybe they just don't want to work it and this is the way of saying no. I was once asked to go on a rota to check out a newly commissioned boiler house over Xmas, the gaffer asked how much I would want to do the Xmas day stint, I said £10,000 (back then 10k was a lot of money for a days work

), he said I was mad if I thought he would pay that, so i said 'do it yourself then'

Some muppet did it for double + day off. You never get those days back.

An alternative view - the quality of the scheme depends on the element supported by the employer i.e. tax payers, the majority of which is derived outside of the public sector. The issue for most in the private sector is their schemes are unsustainable without contributing more themselves so why should the public sector be exempt - again the scheme's main funding is coming from these tax payers.

The balance between the employee/employer contribution is out of kilter hence the need to re-balance - can't really see what the issue is? This is happening in virtually every private pension scheme.

All pension schemes are cash rich, Maxwell apart!! - it is their ability to meet the potential long term liabilities that is the issue!! All the actuary calculations used by Hutton assumed employer contributions at a given value. The government can no longer afford to support the levels of contribution in the current climate. Like most companies didn't have the profitability to support cushy final salary schemes so they simply curtailed them.

An alternative view - the quality of the scheme depends on the element supported by the employer i.e. tax payers, the majority of which is derived outside of the public sector. The issue for most in the private sector is their schemes are unsustainable without contributing more themselves so why should the public sector be exempt - again the scheme's main funding is coming from these tax payers.

The balance between the employee/employer contribution is out of kilter hence the need to re-balance - can't really see what the issue is? This is happening in virtually every private pension scheme.

All pension schemes are cash rich, Maxwell apart!! - it is their ability to meet the potential long term liabilities that is the issue!! All the actuary calculations used by Hutton assumed employer contributions at a given value. The government can no longer afford to support the levels of contribution in the current climate. Like most companies didn't have the profitability to support cushy final salary schemes so they simply curtailed them.