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Original poster

Public Sector Pensions

31 replies

PigletJohn · 20/07/2012 10:56

But what about those trough-snouting MPs?

epetitions.direct.gov.uk/petitions/22456

Much good it may do....

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fluffyhands · 27/07/2012 20:26

We should do the sensible thing and get rid of all defined benefit pensions whether final salary, average salary.

When are we going to relaize that it is about time that people took responsibility for their own pensions rather than expecting the next generation to pay for them.

Most final salary pensions still have implied annuity rates of 8-9%, indexed, when actual annuity rates, indexed, are closer to 2-3%. It is impossible to replicate the cashflows required by these final salary pensions now government bond yields are 1.5%.

The only sustainable way forward is for everyone to be moved to defined contribution pensions, so there is no unhedgeable liability is created for the next generation. Our children will have enough to deal with with ridiculously high house prices, expensive education and competition from 8 million Chinese graduates/year without being expected to pay for the prior generations overly generous and unsustainable pensions. The National debt is now £1 trillion; but that is a drop in the ocean compared to the pension liability at £4 trillion.

Original poster
PigletJohn · 27/07/2012 17:58

until April weren't they contributing just 12% to get a 1/40th pension accrual?

I don't know what tax rate a typical MP is on, but for an example, a person earning £65,000 and paying 40% tax, who has a 12% deduction from salary into his pension scheme, actally loses (£65,000 x 12/100 *0.6=) £4,680 out of his pocket. Tax breaks into pensions are especially valuable to higher earners.

Ignoring inflation for simplicity, this person after 20 years would receive half-pay (£65,000 x 0.5=) £32,500 from retirement until he pegs out. If he lives for, say, 25 years, he would receive £812,500 ignoring inflation and index-linking.

In his 20 years of work, he would have contributed (20 x £4,680=) £93,600 net

OOI, at current annuity rates, to receive an index-linked pension of £32,500 with a 50% widows pension, you would need a pension pot of about a million.

So the MP is given a fund worth ten times what he pays in. Note that I have ignored both growth and the increase due to inflation causing final salary at time of retirement being far greater than the salary on which the contributions were based.

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genug · 27/07/2012 17:32

Thunder - you really mustn't tell porkies. Unlike you, some of us do know what we're talking about.

Firefighters and police have a 1/60th accrual rate. Nobody has a 1/40th rate for 13.75% before tax.

Enjoy your little Walter Mitty world while it lasts.

ThunderboltKid · 27/07/2012 15:53

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genug · 27/07/2012 15:43

When a deal looks too good to be true, in such matters, it is definitely too good to be true. Nobody in the market will offer you anywhere near that rate.

No fireman, policeman, etc gets anywhere near 1/40th for 13.75%. Nobody.

You are either totally naive or completely disingenuous. Thunder, you've most probably absorbed the ways of those you work for...

Original poster
PigletJohn · 27/07/2012 15:35

there is absolutley no correlation at all between people who work very hard, and people who get a lot of money.

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ThunderboltKid · 27/07/2012 15:33

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genug · 27/07/2012 15:14

Basically we agree, thunder, that MPs' pension scheme is unsustainable but for the massive underpinning by we little people.

Nobody is asking you to do anything for private pensions. The fact is all pension schemes operate in the same market, so the only reason why MPs' is so nakedly lavish is it's heavily massively subsidized.

So pardon us if we're not impressed at your feeble attempts to portray them as hard-pressed and modestly remunerated.

ThunderboltKid · 27/07/2012 14:39

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genug · 27/07/2012 14:09

Thunder, yes, we are both talking about MPs, not the 'servants'. Yes I am of the view that the same deal, since it is so 'modest and deserving and sustainable', should be available to every person in this land, but let's be reasonable, so only as long as they earn up to our hard-pressed MPs' meagre £65k. To avoid all those better heeled folk getting the 1/40th for 13.75%, or half salary after 20 years' work.

Surely even you can see that that's not viable. Which means someone else is footing the bill. As for your trying to separate private from public pensions, clearly you don't realize that all pension funds engage in the same market. So if it works for MPs, it should work for all. The point is that it does not work and it is a massive massive PERK. Paid for by little people like us.

niceguy2 · 27/07/2012 13:47

@Thunder

To some, being an MP automatically means you must be some rich ladedah barsteward who cares about nothing but filling your own snouts from the public trough.

The only acceptable policies to these types are to tax the rich ever more to pay for the benefits of the poor. Facts like the rich already pay the vast majority of the tax revenues are irrelevant and a rather inconvenient truth.

ThunderboltKid · 27/07/2012 09:51

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ssd · 27/07/2012 09:36

go back thunder???

have you seen the present cabinet?

ThunderboltKid · 27/07/2012 09:20

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genug · 27/07/2012 09:09

1/40th for 13.75%? Pay a mere 13.75% before tax and after 20 years get half your salary for the remainder of your life?

If that's OK for our MPs, that's OK for every single person in the UK. To be fair, let's cap the salary at an MPs, as well. So why don't the pension providers offer this? Eek that doesn't work unless it's heavily subsidised!

ssd · 27/07/2012 09:03

denise earlier "At least MPs have to justify themselves to the public every 5 years. Most public sector workers are set for life unless they fuck up REALLY badly."

what a loadof utter bollocks and exactly the sort of thinking the government wants so everyone thinks public sector workers are loaded and on a bloody good whack

dh works in public sector and earns less than 20k, his pension wont set us up for life

and before you say "oh thats why I said most public sector workers, get you facts straight, most public sector workers are in low paid jobs similiar to dh

ThunderboltKid · 27/07/2012 08:58

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ThunderboltKid · 27/07/2012 08:57

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ThunderboltKid · 27/07/2012 08:07

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Original poster
PigletJohn · 27/07/2012 08:04

Avoiding the accrual rate facts, I see.

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ThunderboltKid · 27/07/2012 06:40

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Original poster
PigletJohn · 26/07/2012 23:09

Feel free to educate me, thunderbolt.

Would you start please by telling me the date when consultation on overgenerous MPs pensions will start; what the accrual rate is for MPs; and when it started accruing at that rate.

As I obviously know nothing, it will be best if I don't try to answer those questions, but I take it that you are in full possesson of the facts.

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frillyflower · 26/07/2012 20:53

Thunderbolt sounds like you are an MP!

ThunderboltKid · 26/07/2012 16:24

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Denise34 · 26/07/2012 16:22

At least MPs have to justify themselves to the public every 5 years. Most public sector workers are set for life unless they fuck up REALLY badly.