Govt Pensions Revealed

[wrighty]

2 hours ago, woolley said:

I understand your point, wrighty. I have considered this at length over many years. These arrangements were flawed from the start. They arose out of negotiations between trade unions representing government employees and, er, government employees representing the taxpayer, so no vested interests there then. I appreciate that some of the agreements have been foisted on us from across.

So you are worried about someone who has earmarked a £300k lump sum for a mortgage? I hardly think that £25k per year (plus state pension) and £75k lump sum is draconian. Most right thinking people would be extremely chuffed with that. What about the youngsters who will pay for this largesse all of their working lives, and who will be lucky if they ever amass enough capital for a deposit on a starter home? That is where chaos may ensue, and who could blame them for kicking against the elderly fat cats who may be sitting pretty for decades.

It's fine to make crazy promises but when things change you can't get blood out of a stone, as many in the private sector have found to their cost, in both terms of employment and pension arrangements.

I don't think they were flawed from the start (of the NHS, for example, so 70 years ago) - it's just that life expectancy increases have outpaced increases in pension contributions.  When retirement age was 65 and age at death was 69, 45 years of contributions at 5% covered 4 years of 50% salary (simplistic figures for illustration not meant to be a robust actuarial calculation).  Now it's more like 85, so the pension pays out for 20 years.  The problem is that successive governments have stuck their head in the sand as it's been considered too difficult a problem to solve, so in the UK they keep borrowing, here we'll dip into reserves.  I think this is changing though, and rather than Draconian measures, the preferred way seems to be gradual increases in retirement age, contribution rates, and possibly a tax on lump sums...  And as for definition of 'Draconian' - it really depends on your starting point.  So for most people a lump sum of £75000 is a lottery win, but if you've planned, year on year, to use a substantial lump sum to pay off a loan or similar, and suddenly you're told you're only getting 25% of what you were promised over the last 40 years, then yes, I consider that to be Draconian.

[finlo]

The increase in retirement age only seems to apply to those not on the government teat!

[woolley]

8 minutes ago, wrighty said:

And as for definition of 'Draconian' - it really depends on your starting point.  So for most people a lump sum of £75000 is a lottery win, but if you've planned, year on year, to use a substantial lump sum to pay off a loan or similar, and suddenly you're told you're only getting 25% of what you were promised over the last 40 years, then yes, I consider that to be Draconian.

Sorry. If a person has been pulling a high enough salary for enough years to qualify for a £300k lump sum and gravy train pension to match (plus the state pension), the mortgage or loan should have been paid off years ago. It is morally unforgivable to expect much younger people in more straitened circumstances to make rich people even richer by forcing them to honour a promise made decades before they were born that is no longer sustainable, justifiable or societally tenable. You are defending the indefensible.

[finlo]

45 minutes ago, wrighty said:

I don't think they were flawed from the start (of the NHS, for example, so 70 years ago) - it's just that life expectancy increases have outpaced increases in pension contributions.  When retirement age was 65 and age at death was 69, 45 years of contributions at 5% covered 4 years of 50% salary (simplistic figures for illustration not meant to be a robust actuarial calculation).  Now it's more like 85, so the pension pays out for 20 years.  The problem is that successive governments have stuck their head in the sand as it's been considered too difficult a problem to solve, so in the UK they keep borrowing, here we'll dip into reserves.  I think this is changing though, and rather than Draconian measures, the preferred way seems to be gradual increases in retirement age, contribution rates, and possibly a tax on lump sums...  And as for definition of 'Draconian' - it really depends on your starting point.  So for most people a lump sum of £75000 is a lottery win, but if you've planned, year on year, to use a substantial lump sum to pay off a loan or similar, and suddenly you're told you're only getting 25% of what you were promised over the last 40 years, then yes, I consider that to be Draconian.

You make it sound as though you had to work for little more than a stipend to qualify for such benefits?

[Albert Tatlock]

The civil and public service has grown significantly over the last 30 years. It would also be interesting to see the pension projections for the next 10 and 20 years, especially now that people are living much longer. We might easily see these figures doubling in 20 years time.

[gettafa]

8 hours ago, John Wright said:

After all 20% of the higher pension is circular and goes straight back into Government coffers as tax, plus they spend, contributing VAT and duties.

Oh, so that makes it all alright then?

 

Edited June 18, 2018 by gettafa

[woolley]

Just now, gettafa said:

Oh, so that makes it alright then?

 

LOL, yes indeed. If it's such a virtue perhaps the government should shower us all in money so that we may all contribute similarly.

[P.K.]

9 hours ago, John Wright said:

But the contributions paid by both employer and employee over that 30 year period should have been invested and the longer they were in the fund the more their value should have increased.

If it had been fully funded we wouldn’t be having this debate, apart from the actuarial nightmare of increased life span.

Future generations of retirees will have paid in sufficient to cover their pensions.

So the problems arise with the existing CS pensioners, and those who retire over the next few years.

I read the full reply. The vast majority are on £10,000 or less. I’m not in favour of introducing pension caps. If they’re paid the right sum for their expertise and have worked 30 or 35 or 40 years. After all 20% of the higher pension is circular and goes straight back into Government coffers as tax, plus they spend, contributing VAT and duties.

Two things that occur to me.

You have ignored the totally unecessary and stupidly generous MARS scheme

"If they're paid the right sum for their expertise" leaves far too much open territory. My first point demonstrates only too well that the CS/PS should never be allowed to "manage" their own grading and thus remuneration.....

[wrighty]

10 hours ago, woolley said:

Sorry. If a person has been pulling a high enough salary for enough years to qualify for a £300k lump sum and gravy train pension to match (plus the state pension), the mortgage or loan should have been paid off years ago. It is morally unforgivable to expect much younger people in more straitened circumstances to make rich people even richer by forcing them to honour a promise made decades before they were born that is no longer sustainable, justifiable or societally tenable. You are defending the indefensible.

Had they known that their promised lump some would be quartered then it would have been. You say I’m defending the indefensible, but you’re advocating the unjust. It’s like getting a builder to fit you a new kitchen for £10000, so he selects granite, German appliances etc. Just before finishing the last bit of sealant round the sink you tell him you’re only going to pay him £2500, and that he really should have known to use mdf and Hotpoint. 

I think we probably have a similar objective for the pensions issue, but clearly radically different notions of how to achieve them. 

[RIchard Britten]

11 hours ago, woolley said:

It is morally unforgivable...

Sorry but you taking the "moral" high ground is a bit laughable.

[gettafa]

19 hours ago, Trueblood said:

What gets me is the percentages of final salary that they eligible too. A firefighter can get 67% of their final salary as a pension, that's nuts because there's no way during their employment that they would have contributed enough from their salaries, as over say a 30 year period, for the most part, they would have been earning nowhere near their final salary and their contributions would be in line with what they were earning at the time, not what they were going to earn in the future.

Erm, you've used the emotive word "firefighter'. 'Isle of Man Fire Service employed' is more correct. 

Yes, yes, tough work at times but same as police there are many that do office work or inspect properties etc. and still on shift-work maybe [enter pound signs here] but still so favourably ensconced on the Government employees gravy train. And promotions on a plate, especially with all those early aged retirements.

 

 

[wrighty]

5 minutes ago, RIchard Britten said:

Sorry but you taking the "moral" high ground is a bit laughable.

Play the ball, not the man, Richard. 

[RIchard Britten]

3 minutes ago, wrighty said:

Play the ball, not the man, Richard. 

Fair enough, his comments about morality with regards to pensions are laughable.

 

[WTF]

no doubt all the complainers are the ones it would affect in a negative manner.  never mind the fairness to the rest of the taxpayers funding their unaffordable excessive pensions.

[Declan]

15 minutes ago, WTF said:

no doubt all the complainers are the ones it would affect in a negative manner.  never mind the fairness to the rest of the taxpayers funding their unaffordable excessive pensions.

I work in the private sector and my pension is a defined contribution scheme, but I agree with Wrighty. You can't tell someone for years they are going to get X, allow them to structure their finances around that and a few years before they retire say "sorry you are only getting Y", when it's too late to make other arrangements.