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Nobody wishes to begrudge the public sector workers a comfortable and secure retirement. However when they are able to retire at 60, or earlier, when the rest of the population (who in many cases have seen their own retirement plans devastated) have to work until they are 68, the situation is clearly unsustainable. Every family in the country is paying £900 annually to fund public sector pensions. This equates almost exactly the figure they are saving for their own retirement.
11% of private sector workers are on final salary schemes
100% of public sector workers are.
Since Labour came to power in 1997 over 600,000 extra public sector staff have been recruited, all of whom will receive an inflation proofed pension.
The Guardian recently carried pages of recruitment ads for the public sector with salaries up to £150,000. Apparently middle rank salaries in the sector now exceed those in industry by a little under £10,000.
Ken Livingstone’s London Council had a number of staff taken on at salaries of around £40,000. They then claimed equality with staff in Local Government and had their salaries increased to £100,000. As Ken said ‘it could have been worse, they could have asked for back pay’.
Haringey Council, in answer to a survey, said they had 4 staff on salaries of over £100,000. It turned out they actually had seventeen.
Protection against inflation in the private sector is to be halved. Instead of 5% or the rate of inflation, whichever is the lower, it is to be 2·5%. If the rate of inflation were above this figure pensioners would be hard hit. Pensioners in the public sector will still get full protection.
Surely another example of it being time for the worm to turn!
Did you know?
Under new regulations that came into force on 6th April 2006 the three year actuarial revue of Personal Pension Funds will no longer be required.
In its place Personal Pensions will be based on a Government Actuarial age based valuation on which a pension of 0 to 120% can be drawn.
However, when the pensioner reaches the age of 75, this figure will reduce to 70%. The stated reason for this absurdity is that pension funds may be reduced to such a level that people may become a burden on the state.
If you p*** your income away throughout your life and never bother to save for the future, the state will keep you in perpetuity.
Have your say pensions@turning-worm.com
Under new regulations that came into force on 6th April 2006 the three year actuarial revue of Personal Pension Funds will no longer be required.
In its place Personal Pensions will be based on a Government Actuarial age based valuation on which a pension of 0 to 120% can be drawn.
However, when the pensioner reaches the age of 75, this figure will reduce to 70%. The stated reason for this absurdity is that pension funds may be reduced to such a level that people may become a burden on the state.
If you p*** your income away throughout your life and never bother to save for the future, the state will keep you in perpetuity.
Have your say pensions@turning-
Pensions
There is a major problem in the pensions field due to the discrepancy between the funding of the public versus private sectors. Public Sector pension funds have a £960 bn. (one estimate puts it at over a trillion pounds) black hole if calculated on the same basis as private funds. With the ever expanding public sector, this figure will inevitably increase.
To put this into perspective, it compares with a £15 bn. Surplus in the pension funds of the FTSE 100 companies. This situation has been helped by the clsure of many final salary schemes following the £5 billion a year raid on pension funds by Gordon Brown when Labour came to power in 1997.
He was apparently warned at the time of the devastating effect this might have. He went ahead regardless and has destroyed a system that was the envy of Europe.
The shortfall in the public sector could cost taxpayers upwards of £30 bn a year over thirty years to fund. Equivalent to at least 3p on the basic rate income tax. These comparatively lavish, inflation proof, pension arrangements are totally divorced from economic reality.
At the same time the government were refusing to help the 85,000 people in the private sector who have lost their pensions due to company closures, even though they were persuaded to join by the government. Apparently the cost of around £500,000 per year over thirty years was said to be too high.
There is no fund to finance public sector pensions, they are paid out of current income from subscriptions, with any shortfall being met from taxation. According to a document issued by the Department for Education and Skills, under the Freedom of Information Act, in 2004 this shortfall in funding for teachers pensions alone was £928 million.
There is a major problem in the pensions field due to the discrepancy between the funding of the public versus private sectors. Public Sector pension funds have a £960 bn. (one estimate puts it at over a trillion pounds) black hole if calculated on the same basis as private funds. With the ever expanding public sector, this figure will inevitably increase.
To put this into perspective, it compares with a £15 bn. Surplus in the pension funds of the FTSE 100 companies. This situation has been helped by the clsure of many final salary schemes following the £5 billion a year raid on pension funds by Gordon Brown when Labour came to power in 1997.
He was apparently warned at the time of the devastating effect this might have. He went ahead regardless and has destroyed a system that was the envy of Europe.
The shortfall in the public sector could cost taxpayers upwards of £30 bn a year over thirty years to fund. Equivalent to at least 3p on the basic rate income tax. These comparatively lavish, inflation proof, pension arrangements are totally divorced from economic reality.
At the same time the government were refusing to help the 85,000 people in the private sector who have lost their pensions due to company closures, even though they were persuaded to join by the government. Apparently the cost of around £500,000 per year over thirty years was said to be too high.
There is no fund to finance public sector pensions, they are paid out of current income from subscriptions, with any shortfall being met from taxation. According to a document issued by the Department for Education and Skills, under the Freedom of Information Act, in 2004 this shortfall in funding for teachers pensions alone was £928 million.