[BBC News]Pension scheme faces £1bn deficit

[John Wright]

The new scheme will be 3.5%, Gpvernment will still put in 13.5%

 

Its a matter of choice do you fund or do you do it out of revenue

 

For ordinary pensions we do it by a fund, it has ben well invested, we have a surplus, government has not taken a contribution holiday, so our Pensioners, at least those who paid in for 10 full contribution yeras before retirement get an Isle of man suplement. The others don't because they didn't pay in. Its that simple. UK does it out of income so we are at least one up there.

 

It isn't finally salary thats no good, it how you invest in the meantime and how you fund that are really important.

 

So the more Poles etc here working and paying in via tax the better as they subsidiese the system!

[Theskeat]

I posted this topic about 6 months ago, some of you cried rubish

Trouble is and its a fact that Tynwald topped up their fund with £15million last year from the private/yaxpayers fund. Also the GPO union are trying to fight off a Government takeover of thier pension fund extimated to be worth £28 million

[sarahc]

If you close the final salary you won't get anyone working for the Government. It's the only incentive.

[Theskeat]

The new scheme will be 3.5%, Gpvernment will still put in 13.5%

 

Its a matter of choice do you fund or do you do it out of revenue

 

For ordinary pensions we do it by a fund, it has ben well invested, we have a surplus, government has not taken a contribution holiday, so our Pensioners, at least those who paid in for 10 full contribution yeras before retirement get an Isle of man suplement. The others don't because they didn't pay in. Its that simple. UK does it out of income so we are at least one up there.

 

It isn't finally salary thats no good, it how you invest in the meantime and how you fund that are really important.

 

So the more Poles etc here working and paying in via tax the better as they subsidiese the system!

 

I may be wrong but some how I dont think so but Government BORROWED £85 million out of the publics pension fund to build the new hospital and may have borrowed a further amount from the same fund. Todate this has not been paid back into the fund.

[thebees]

I think not Sarah, a civil service job is safe as, even with out the juicy pension, I imagine there are many people who would love a government job. Have you seen how little the civil servants have to do to earn their cash?

[sarahc]

I used to be one and I guess it's true that my workload was tiny compared to what I do now. But I was feeling my brain dissolve and fall out of my ear, and had severe lack of job satisfaction. I jumped because at the time I had no ties and could afford to. Some of these poor people have devoted their lives to the Service and even though they hate it it's just the pension that's keeping them there.

 

It really is the ONLY incentive for being there.

[Juan Kerr]

I may be wrong but some how I dont think so but Government BORROWED £85 million out of the pension fund to build the new hospital

 

You are wrong. They borrowed £85m from the NI Fund which is an entirely separate pot of money which invests long term to cover state pension obligations (ie. Gov invests the NI contributions it receives). It has nothing to do with the Civil Service scheme.

[Theskeat]

I may be wrong but some how I dont think so but Government BORROWED £85 million out of the public pension fund to build the new hospital

 

You are wrong. They borrowed £85m from the NI Fund which is an entirely separate pot of money which invests long term to cover state pension obligations (ie. Gov invests the NI contributions it receives). It has nothing to do with the Civil Service scheme.

 

Im Not, just checked

[Juan Kerr]

Im Not, just checked

 

You are. Post the link to where you checked.

 

The NI fund is NOT the Civil Service Pension Fund - the money came out of a fund built up out of NI contributions paid by everyone that is used to meet future state pension liabilities. The fund has several hundred million in it, but it is not the Civil Service Fund.

 

http://www.gov.im/lib/news/treasury/appointmentofinv.xml

 

Edited after PM received: He's wrong. Perhaps "he" should check his facts as to where the cash came from. Read the bottom of the link page. There are 6 funds:

 

National Insurance Investment Account £482.8m

Reserve Fund £342.7m

Public Service Employees Pension Reserve £95.4m

Hospital Estate Development Fund £67.1m

Manx Currency Account £55.4m

General Development Reserve £15.9m

 

None of them are the government pension fund.

[Theskeat]

http://www.iomtoday.co.im/ViewArticle2.asp...ticleID=1378493

 

Im not on about the fund that pays the civil servants pension Im refering to the public funds that pay out the pensions to the man/woman in the street

[Juan Kerr]

Im not on about the fund that pays the civil servants pension Im refering to the public funds that pay out the pensions to the man/woman in the street

 

I'm sorry Skeat but you WERE on about the Civil Service scheme. This is a thread about the civil service scheme and you claimed that they dipped into it to pay for the hospital and that this was part of the reason why its a billion in deficit.

 

I know sod all about the civil service pension scheme, but I used to work for a company that invested some of the money in the NI Fund and even I know they are two separate things. The Hospital money was paid back (I think) and at the time the scheme was said to be able to make the investment without having an impact on its ability to meet social security's demands in terms of needing money to pay out the basic state pension etc in the future. It was probably a better deal than the money they lost in 2002 when the markets went nasty on the fund and it lost millions!

 

Every month the gov gets a big NI cheque funded by wage deductions it makes. It invests that money in a variety of ways so that it has money to pay out the basic state pensions 25 year down the line. This has nothing to do with the pensions that government workers get or payments made by government workers as pension contributions.

[John Wright]

So Theskeat the Governmenmt want to have £108 million in its public pension reserve. There is already £97 million in it. hardly a £1billion balck hole.

 

As for the loan from the NI fund for the Hospital I don't think it has been paid back but the reserve to cover its eventual payment back is at £64 million so the difference is not big and is being provided for over time

 

I can think of no better way of investing part of our pension fund than lending it to a Governmwemt Department on commercial terms to allow our health care to be improved

[Chinahand]

The present Civil Sevice Pension bill is 30 million £ per year, paid out of tax.

 

I cannot see how the £1 billion figure is calculated in the report but if you invested £1 billion you should get a better return, I hope, than £30 million.

 

In any event there is a pension reserve fund of £100 million invested in equities. So if you take it you might get 4.5% return and that we already have £100 million invested the amount needed to fully fund would be another £567 million. Still a large sum but not the headline £1 billion

 

My previous post still applies to funded pension schemes but not to the civil Service scheme. My apologies.

 

Thieawin, in thinking about this the most obvious issue is that the Present Civil Service Pension Bill is 30 million. But looking out over the next 30 or so years, which I assume this report must be doing, it is guaranteed the bill will grow due to increased civil service numbers and retirements.

 

To fund the CURRENT requirement you calculate they need a £667 million pound pot. I'm not that surprised that the requirement will grow by 50% over the next few years. AFAIK the government's undergone a significant expansion in the last 20 years.

 

I admit this is total speculation, I know nothing about it. But I do think funding it from revenue is a disaster waiting to happen. The schemes have to be funded properly so that government considers its obligations properly over their lifetime. Expanding the civil service in one generation and leaving it to another generation to pay their pensions is terrible policy and results in costs being misallocated etc.

[John Wright]

Depends doesn't it.

 

If wages, taxes and incomes/pensions go up at same rate and civil service growth only increases at same rate as population then it will stay at a constant percentage and is no more disastrous in future than now.

 

In fact IOM government sub contracts many services out for exeactly this resaon, there is a cap on civil service numbers

[Gladys]

Thieawin, I was interested in your post about the effect of a new SSAP on pension funds. At that time I was working for a company that had a hugely overfunded pension scheme to the tune that it was non-contributory for employees for the whole time I worked there (16 years). This was confirmed by each actuarial triennial review. When this new standard was introduced there was much concern that the effect was to dramatically reverse it.

 

I can't remember the nuts and bolts of how it had that effect, but it did and I often wonder if the current 'pension crisis' is as much to do with accounting presentation than actual underfunding.