Public sector pension contribs - reactions?

"other things to think about" - I think you're exactly right there. The "other things" being, of course, how can we get out of being the ones who have to deal with this.

I promise to eat my hat if the next valuation shows anything other than major deficits over approximately the next decade. The last valuation - 2007 - was already deficit, and actual data (where known) since then has fallen adrift of the 2007 assumptions. The "surplus sayers" (who make this assertion frequently and loudly) have not shown on what basis they make this claim. But I can see the attraction of it to the audience: to mix metaphors a little - no-one wants to believe they're still in the Ponzi when it teeters.

Maybe the previous government had other things to think about, and the coalition think that the results of such a valuation may not suit their position.

I don't know. Why wasn't in done, when expected, in time for the start of 2010?

The general demographic information is pretty grim for the next decade or so, and I think it is unrealistic to expect anything other than high contributions for the next 10-15 years.

Or the abolition of the unlimited liability on the shortfall. Cheaper, quicker. If the "there is no deficit" proponents really believed their position, why do they not champion the obvious option?

That's right, 2010 - teachers agreed to increase contributions if the actuarial valuation in 2010 showed they were needed. So why won't the government do it before announcing the increase of contributions, I wonder?

Feenie - the changes to address that included provision for actuarial increase to contributions. That is what is on the table now - nothing actually new.

I think, but stand to be corrected, that the valuation was due at the start of 2010. Clearly it was ducked then. Did the incoming administration announce a new timetable?

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The official actuarial valuation of TPS (in 2007 - cannot locate a more recent one) had the scheme already in deficit.

Yes - and the changes made as a result of that valuation where meant to address that.

Another valuation was due in 2010 - the government have so far refused to carry it out.

Viva if only it were the case that nhs staff paid more in contributions every year than is paid out in pensions! It is the other way round by a big margin and the money for the pensions comes from government.

From what you say your old private sector pension would have been a final salary scheme. There are very few of those types of pension schemes left in the private sector as they are just too expensive. The type of pension that the majority of private sector employees are offered by their employers is not nearly so generous and employees will need a pension 'pot' of about £100K for each £5K of pension.

I used to have a private sector pension scheme too which is projected to give me about £5K a year - and I only worked for the company for 5 years. Wish I was still in the pension scheme but so glad I don't work for the company any more - I hated that job!

Piebaldpony: there are various actuarial black arts to work out the "health" of unfunded schemes. It was interesting to see the head of ATS on the eve (or even the morning of) the teachers' strike admit on a BBC interview that she had no idea whether the TPS was actually affordable (ie will contributions meet pensions to be paid out), either now or in the difficult "hump" years ahead (certainly the years up to 2020, pessimists put it a bit longer than that - depends on your view on longevity)

The official actuarial valuation of TPS (in 2007 - cannot locate a more recent one) had the scheme already in deficit.

I am not sure where the claims of being in surplus originate (in terms of any form of actuarial analysis). But they are certainly vociferously promulgated. This indicates an easy solution based on certainty of surplus - remove the Governmental unlimited liability in perpetuity to make good any shortfall (as the argument is that there isn't one), and pay all future pensions from that healthy level of contributions.

Why us no-one from the "healthy surplus" side proposing this? Because it's far too damn risky in the long term and especially right now as no-one can demonstrate that the underlying assumption (that there is a contributions surplus) is true.

Edam: just pointing out oddities in previous posts.

That's interesting piebald and i didn't know that. So do the unions mean that current nhs staff pay more in pension contributions a year than is paid out in nhs pensions? Because if that's the case, even if it's an unfunded scheme surely it's a good argument that it is a viable scheme?

As for private pensions. I used to be in the private sector and had a better pension than my nhs ones so it's not all private pension schemes where you need 100k to get a 5k pension. My private pension is currently valued at just over 1k a year and I only paid into it for 5 years so nothing like 100k went into it. I kind of wish I'd stayed there now.

From reading some of the posts it is clear that some of you don't realise that NHS/Teachers/Civil Service schemes are unfunded schemes. There is no pension fund as such - contributions are paid to the government, not put into a pension fund (the exception is the LGPS which is funded). Although it should be possible to value the liabilities in each public sector scheme it is not possible to then compare those liabilites to the assets in the schemes as the schemes don't have any assets. I find it incredibly disingenuous of the Unions to say that the NHS pension fund can afford to pay all pensions when the scheme doesn't have any money to pay pensions from.

I appreciate that anyone like Viva who is expecting a pension of around £7K per annum isn't going to be living the high life but as those of us in the private sector need about £100K to buy each £5K of pension it seems to me that public sector workers get a very good deal on pensions.

EvieS. I understand why you may feel "sick of the private sector bleating..." but at the same time I get tired of many public sector workers simply not understanding mathematics. With the teachers pensions, they simply have an unaffordable pension scheme. In other words they pay in way less than they take out. And who are they expecting to pay for that? Well the taxpayer. And who are the taxpayers? Ultimately the private sector. Yes yes, I know public sector staff pay tax too but guess who they get their money from to pay tax.....yes...the private sector.

I don't mean to "bleat", i really don't. But when you want more of my cash and my childrens cash to pay for something you can't otherwise afford, well guess what...I feel like I should have a say in that.

And as for sticking up for our private sector pensions? I don't recall the unions threatening to strike when Gordon Brown taxed dividends on private sector pension funds? Nor did I hear of any unions even calling a ballot in solidarity when all our final salary pensions were being closed down.

So forgive me if I don't like the idea of having overly generous public sector pension which the nation cannot afford, off the back of taxes we can ill afford to waste.

Edith - what on earth are you on about?

Governments can't force private companies to do anything, they'll just outsource the jobs.

I think some people have to wake up the fact that the kind of retirements the baby boombers will enjoy are not feasible in the long term. People retiring at 60 and living for 30 more years just doesn't add up.

Most of these workers will get a £5-£7k pension and are not on great salaries and are contributing their Tax, NI and a decent amount to their pensions.

I am proud to live in a country that has always provided a fair share towards pensions for the workers who dedicate their lives to the service of the people.

I work in the private sector and have no pension (but I certainly don't grudge my taxes being used towards pension provision for nurses, teachers, the police, the firemen, the street cleaners, the social workers that are the backbone of our country)

I want a government that will force the private companies to give the workers the same proportion of profits to workers pensions as company directors receive - to ensure my children don't have to give me extra state benefits to cover the gap in income in my pension years - just because company directors took all the money for themselves.

Boots paid their workers a final salary pension for years - then overseas investors took it over and robbed the workers of their pensions. As a result Boots have increased their profits (and the pension pots of the directors). Boots can still afford to pay the pensions but have just chosen not to which means my grandchildren and great grandchildren will have to provide for the Boots pensioners. Why should Boots not pay any more? It is wrong that only company directors get a pension and workers don't.

The "pensions holiday" was a response to the underpinning pensions funds being too big for the anticipated demands on them, as determined by the funds/companies. And that was in the days of final salary pensions! It was short term, and it meant that contributors got one or two years where they did not pay in.

It wasn't a Government decision or action - it was done by large companies with their own pensions schemes backed by private funds. And it occurred only briefly, during 80s, and funds were in good health before, during and after this (for a decade or so)

Then came this change in taxation. Most people didn't comment about it - a dividend tax sounded like something that would hit only fat cat shareholders. Those who did spot the huge detriment to the average private sector worker didn't get much airtime, and there was no realisation of the impact.

After this tax was implemented, came the plummeting in value to the underpinning funds, and we've all seen the result of this in terms of pensions becoming unaffordable, so less generous. This is one of the clearest cause-and-effects ever.

BTW - I shall treasure you comment about the 80s being a time of anti-banker Government, when they successfully cut any part of the City down to size.

The announcement today was the proposed new contributions to take effect from next April - so closer to Mowlem's (b) example. The figure may change after consultation but unlikely, so the media have reported it as "that's what it's going to be"

I have worked 8 years in central government. I am reasonably well paid but I am underworked. Therefore I feel embarrassingly overpaid. The pay is right for my grade IF my grade was given the same challenges and authority and autonomy as I would have had five years ago, however, some strange things have happened where we have micromanagers above us and all decisions are being made (sometimes badly) at much higher levels than before. If I was being employed to my full abilities I would be paid far less than I could by comparison to a private sector job, but it's difficult to identify a straight comparison with one of those - and of course the job security and pension security (which is another matter from the pension value) are unquantifiable.

Edith - Gordon Brown's merely a bit player in the great pension rip-off, though. The rot set in long before that, during the previous Tory administration, when financiers, actuaries and company directors dreamt up the 'pensions holiday' wheeze - encouraged by the then Chancellor (Lamont, IIRC, or possibly even earlier - maybe Lawson?). Because, they told us, pension funds had too much money. So much money that they were bigger than the very companies that funded them. So they HAD to be cut down to size. So it was jolly convenient for all concerned if the company stopped putting any money in. Except the poor bloody employees, who, it turns out, have been royally shafted.

Don't see anyone who made money out of that little wheeze saying 'sorry, we fucked up' or 'actually we owe you some compensation for our extremely crap advice and rubbish sums'. Oh no, it's all 'you, little person, you MUST pay more in order to retire on tuppence ha'penny'.

To announce publicly how much public sectors are going to have to pay for their pensions, when they haven't agreed yet with the unions how much they are going to have pay reveals one of two options...

either a) The govt is lying - the amount they declare is not the true amount

or b) (and more likely) the govt talks with the unions over the pensions are nothing but a farce, and the govt will do what they want to do.

I suspect its b and the talks are meaningless, and are there just for propaganda so the govt can look as though they are talking.

I'm in the teacher's pension and tbh, I can't see how they can determine whether or not our pension is affordable or not until they do a valuation of the scheme - which the current government refuses to do. When the Govt values my scheme, tells me it is running at a loss of £X and needs £X to make up the deficit, then I'll happily accept that we'll need to change the system, but until they actually know what the shortfall is (if indeed there is any), then how can they justify if we need to pay more money? Surely without a valuation, the govt are just plucking a figure out of thin air?

Also as negotiations are still going I think the whole thing stinks!

I am reasonably ok with paying more if its actually going towards supporting the scheme.

If its just going into a general pot of money to cover the deficit its an additional tax and that really really gets my goat