Thursday, 4 March 2010

Public Sector Pensions

The above Unison poster may be sincere but, given a TPA report issued today, public service pensions in their present form are unrealistic and placing an unsustainable burden on taxpayers and on council budgets.

New research shows a £53 billion black hole in council pensions with 15 councils having a deficit of more than £500 million.

It states against a background of dire problems in the public finances, the overly generous Local Government Pension Scheme (LGPS) is in crisis. The full report features specific data for each local authority in England, Wales and Scotland and warns of the severe costs which will be incurred if the Scheme continues unreformed.

In 2009 the TPA revealed that LGPS employer pension contributions alone were costing the equivalent of £1 in every £5 council tax. One year on, this new report demonstrates that on top of that huge cost now, the Scheme is storing up large costs for the future too.

The key findings:

* Councils across the UK had a combined pension deficit of £53 billion in 2008-09. This is up from nearly £42 billion in 2007-08 - an increase of 27%.

* According to council's own actuarial estimates, the value of council pension assets fell by ore that £21 billion during 2008-09 - a loss of 20% on the previous year.

* Birmingham City Council had the largest deficit with Fife coming second.

If you do work in the public sector you will realise that serious reform is required for public sector pensions. Local authorities are running unsustainable final salary schemes that are now all but extinct in the private sector and government has to realise they can't continue.

With local taxpayers already paying a fortune for these pensions, it would be grossly unfair for local authorities to try and plug this gap with yet more tax rises. When reform is enacted, public service employees may be able to empathise with those of us who had our private pension pots raided by Gordon Brown.


Uncle Marvo said...

I assume that Unison is funded by its members.

I think its members are state employees.

I deduce therefore that I have paid for this poster.

I insist, therefore, that Mr GOT has a pop at it and then I can print it out and put it in the pub window.

[gets over to GOT with a link]

William said...

Wow, the Taxpayers Alliance don't approve. Who would have thought a bunch of Tories would be against the public sector? No-one could ever have imagined that and I'm sure their research was conducted in an impeccably fair manner.

FACT - The Taxpayers Alliance want to destroy EVERYTHING in which they do not personally benefit.

Pensions? Get rid. NHS? Get rid. BBC? Get rid. Schools? Get rid.

Everything is a cost to these right-wing lunatics and there is no benefits, at least not for them, so they will seek its destruction.

You do not want to live in a society run by the Taxpayers Alliance. You seriously don't.

Brownedov said...

Whatever happened to your "Leaders Debates" thread?

The Blogger dashboard is showing you posted it about four hours after your "Non-Doms. Are We Interested?" thread, but shows it now as "missing".

Oldrightie said...

Public service pensions in their present form are unrealistic .

Not correct, Subrosa, unfundable!

subrosa said...

I was going to do that Marvo but was distracted. Gotty will enjoy it and thanks for telling him.

subrosa said...

What's your solution William>

subrosa said...

Brownedov, it's coming shortly. Something went wrong with the font and spacing and I couldn't correct it so I removed it and have just finished retyping it.

My apologies. That happens now and again if I use cut and paste and I've no idea why.

subrosa said...

You're right OR, unfundable and unrealistic in today's economic climate.

Andrew said...

I am the recipient of a public sector pension (which was index-liked by Ted heath in the early 70's).
The deal at the time was that I contributed part of my salary to pay for my pension and my employer did likewise. That is a contract.
Now you can argue (and I won't disagree) that subsequent events like Brown destroying private pensions and the huge rise in public sector workers (Brown again)has produced an unsatisfactory situation which needs to be addressed, but advice from the TPA is like advice from Herod on child-care.
One last point---in the columns of my pension slip there is one headed "Income Tax" and the amount of deduction, so I am still paying for my pension. TPA never acknowledges that recipients and taxpayers can be the same.

Andrew_S said...

I think most sane people can see the writing on the wall. There are however two problems
(1) No politician dares to talk about this before the election
(2) The percentage of the population who think they are "sheltered" from pension age poverty is now so high that it effectively prevents any serious discussions about it. see point (1).

I'm concerned that a great many people in the public sector just don't get how serious and completely unsustainable the position is. If they understood just how badly labour has wrecked the economy, then maybe they'd realise that although they can huff and puff all they like - go on strike if they want to - the cupboard is bare.

How we get out of this mess isn't clear at all. It's almost a Catch 22 situation. Back to my first point - any politician who picks this up risks upsetting a substantial percentage of their voters, therefore effectively closing down any worthwhile discussions. IMF to sort it out anyone?

William said...

I don't believe a problem does exist. It is scaremongering by people who resent anything that's of the public good and denies them their private profit.

It was okay for them to make huge sums gambling other people's money but now that they've felt the pain of loss, everyone must feel it. Their profits are private, their losses are public.

It's the same Tory logic that says the public sector must be cut to pay for excesses in the private sector.

Crinkly & Ragged Arsed Philosophers said...

The fundamental fact related to all state, public or private pension schemes is that they were capitalist scams based on the myth of capitalism following logic instead of chaos; which were subsequently made into legalised Ponzi schemes by governments.

subrosa said...

Andrew, the TPA have done their research and come up with figures. Westminster won't do that because they know full well there is a serious problem, augmented as you say by a massive increase in public service workers.

All pensioners who have pensioners over the basic personal allowance pay tax all over again.

The point which I was attempting to highlight was the final salary payout. Sadly it's the least well off who suffer there too.

subrosa said...

I don't know how it can be sorted out Andrew because, as you say, it's a definite vote loser.

None of the public sector had any sympathy with those who spent years carefully planning their pension (without using taxpayer/government money), only to have lost up to 60% of it.

High pay-offs and enhanced pensions should be a thing of the past.

subrosa said...

Tell that to those around this area William.

You obviously have never worked in the private sector. I'd be interested in what excesses you're talking about - the banking fiasco excluded.

I lost a big chunk of my pension, stolen by Gordon Brown. If I was a vindictive person I would suggest that Gordon has a go at stealing chunks of the public sector's pensions. But, as I'm not the vindictive type, I won't.

subrosa said...

That's exactly how it's turned out RA. We were all fooled and lied to. Nothing changes.

Delphius1 said...

The main reason generous pensions are provided for the public sector is they do a public service, usually for a lower wage.

Now we've heard for years how public sector workers (especially senior menegers) should be paid in line with the private sector in order to attract the best candidates.

Well, if they get paid the same as the private sector, they should get equivalent benefits as well, such as equivalent pension entitlements.

subrosa said...

Del I can't agree. Public service workers have always been paid more than the private sector - the lower paid I mean.

I worked in the private sector for years and plotted my pension carefully. Now in my retirement I have lost so much of it through the stealth of Gordon Brown. If I had worked in the public sector I was have paid far less into it over the years yet have gained far more, so really you can't compare both. The public sector has far better pension security than the private sector.

Good luck to them I say, especially if they were in the low paid group.

You'll have seen the figures for senior management in the public sector. I very much doubt that these salaries are available anywhere other than finance.

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