Public sector pension contribs - reactions?

[CogitoErgoSometimes]

Not a public sector employee myself but wondered what anyone thinks of today's announcement regarding extra contribs. Seems to hit the top earners disproportionately harder.... fair?

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.

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!

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.

were

I've no stats or clever links to back this up but isn't the problem not so much today's pension valuations, public sector workers and retirees but the predictions for the future? The people in the early years of their public sector careers today and who won't retire for another 20 or 30 years? With the population shifting from a large body of young people paying tax and financing a relatively small number of pensioners.... to the exact opposite.... the tax burden not today but in 20 or 30 years' time will be far too high. When you factor in that many of those pensioners will also need additional facilities on top of the pension they draw... special accommodation, extra care, medical help... all (as it stands at the moment) paid for by the state, then there's going to be some serious problems if we do nothing.

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?

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?

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?

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.

"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.