The UK also needs to confront the costs of Public Sector pensions . . .

[TorquayFan]

Thanks TOG for a polite reply - I realised I was on dangerous ground LOL.

 

Your 'negotiations' re. the 'Budget Challenge' sound a bit of old Sir Humphrey to me. Some sort of salary sacrifice for pension benefits . . MMMMmmmm

 

I understand that NHS funding comes out of the varied tax take.

 

Re. higher salaries for CS 'jumping ship' as you say. Of course! But generally, I think CS pay has not been lagging, given the differences.

 

ATB

[Baht Simpson]

16 hours ago, noobexpat said:

 

Its wakey-up time.

 

What type of plan is it, when you contribute a fixed amount and get a guaranteed income for life?

 

You remember all those employer schemes that closed because they were unaffordable and unsustainable. Now you see it??

O.k. No need to be sarcastic. I'm not financially illiterate; I worked in finance for 40 years. The bank I worked for did close their final salary pensions but froze them and honored their commitment at maturity, substituting them with a shared private pension system. So all contributions up to the pension date were honored, which is what I think should happen with State Pensions. 

[Baht Simpson]

16 hours ago, TorquayFan said:

Baht. However the contributions are assembled over the years, the fact is that the OAP and PS pensions come out of our current tax takes each year. The Country has never been able to tuck it away for each of us in a bucket. It's not a private pension where broadly this stuff does happen.

 

The wider view is that it's no good us complaining about it, had the Govt in any of these schemes tucked the money aside as we might have wished, then other taxes would have had to rise substantially.

I understand how the State Pension is funded TF, and I realize that reform is needed going forward. My gripe is about means testing State Pensions. 

 

Apart from the moral issue of arbitrarily taking away or reducing a pension that someone may have contributed to in full, which we can discuss,  how do you means test 12m people? This will necessitate obtaining financial information on these people on a yearly basis. The administration cost will be phenomenal and will be ongoing.

 

Also State Pensions are taxed if you are above the nominal tax allowance. A reduction would mean less tax from pensioners into the exchequer. 

 

 

[TorquayFan]

Thanks for then reply Baht. I'm not suggesting means testing everybody.

 

HMRC know what people income is and if it's over say £50K p.a. then a State Pension sacrifice kicks in on a progressive basis.

 

And the triple lock should be replaced by RPI index only.

 

Gotta save a bit of dosh wherever we can !

[retarius]

Every country I have ever lived in, has had a problem with public sector pensions. The US has 'public servants' who spend their lives avoiding work and get extraordinarily lucrative pensions and now get higher rates of pay than are available in the private sector. 

Time to rein it in, and for governments to default. The US is worse than Italy was for public sector pensions and benefits....including 30 days each year in sick leave that you can take as vacation if you don't use it. 

[Baht Simpson]

23 minutes ago, TorquayFan said:

Thanks for then reply Baht. I'm not suggesting means testing everybody.

 

HMRC know what people income is and if it's over say £50K p.a. then a State Pension sacrifice kicks in on a progressive basis.

 

And the triple lock should be replaced by RPI index only.

 

Gotta save a bit of dosh wherever we can 

I wonder how many on State Pension have 50T per annum in earned income. Probably very few. A lot more sitting on large equity in their homes and in shares. 

It's basically a wealth tax and I think you have to be very careful there, targeting those that are genuinely wealthy rather than those that are just comfortable or just surviving.

 

I agree on the triple lock.

 

 

 

[theoldgit]

Those of us lucky enough to be in receipt of a State Pension and a Civil Service Pension are being caught up in the Fiscal Drag, along with other pensioners. The Treasury are well aware that this is quite popular with those still in employment who take the view that pensioners have had too good for too long, maybe they have a point, as we don’t pay NI, unless we’re in employment.

 

We will be aware that State Pensions are not taxed at source but Personal Allowances are reduced by the same amount ensuring that the tax due on the State Pension is collected by Pension Providers, my Personal Allowance is reduced to £1,500 for 2024/25.

 

There was an interesting letter in yesterday’s Telegraph which discusses my claim that Civil Servants were traditionally paid less than those in the private sector, to fund their “gold plated pensions” and job security, it’s just a shame that the Treasury didn’t pay these savings into pension pots.

 

“SIR – Neil Record takes a swipe at “gold-plated” public-sector pensions (Business, March 28).

In the early 1980s I was a middle-ranking civil servant responsible for administering a £7 million annual grant scheme, which frequently involved complex negotiations with senior businessmen. My salary was a whisker over £12,000, with no provision of overtime payment for long days spent away from home. 

I eventually discovered that my opposite numbers in industry were earning three or four times my salary, and enjoyed the perks of annual bonuses, company cars, medical insurance and private dining rooms.

Civil servants accepted that a modest salary was offset by full job security and – by the standards of the day – a generous pension that paid 50 per cent of final salary after 40 years’ service. In other words, the pension was partly deferred pay. Blame for the Treasury’s failure to make provision for this commitment should not be laid at the feet of pensioners.”

 

 

[topt]

On 3/29/2024 at 3:34 PM, theoldgit said:

and the concession to retire at 60 is long gone-

Are you saying this for new joiners and if so from when? 

The reason I ask is I was playing golf with a guy last week who said he was retiring at 60 in 2 years and admitted he would be in very good shape......Apparently he is in a reasonably senior civil servant position.

[Baht Simpson]

45 minutes ago, theoldgit said:

Those of us lucky enough to be in receipt of a State Pension and a Civil Service Pension are being caught up in the Fiscal Drag, along with other pensioners. The Treasury are well aware that this is quite popular with those still in employment who take the view that pensioners have had too good for too long, maybe they have a point, as we don’t pay NI, unless we’re in employment.

 

We will be aware that State Pensions are not taxed at source but Personal Allowances are reduced by the same amount ensuring that the tax due on the State Pension is collected by Pension Providers, my Personal Allowance is reduced to £1,500 for 2024/25.

 

There was an interesting letter in yesterday’s Telegraph which discusses my claim that Civil Servants were traditionally paid less than those in the private sector, to fund their “gold plated pensions” and job security, it’s just a shame that the Treasury didn’t pay these savings into pension pots.

 

“SIR – Neil Record takes a swipe at “gold-plated” public-sector pensions (Business, March 28).

In the early 1980s I was a middle-ranking civil servant responsible for administering a £7 million annual grant scheme, which frequently involved complex negotiations with senior businessmen. My salary was a whisker over £12,000, with no provision of overtime payment for long days spent away from home. 

I eventually discovered that my opposite numbers in industry were earning three or four times my salary, and enjoyed the perks of annual bonuses, company cars, medical insurance and private dining rooms.

Civil servants accepted that a modest salary was offset by full job security and – by the standards of the day – a generous pension that paid 50 per cent of final salary after 40 years’ service. In other words, the pension was partly deferred pay. Blame for the Treasury’s failure to make provision for this commitment should not be laid at the feet of pensioners.”

 

 

As I understand it you don't pay NI even if you go back to employment after 67. I stand to be corrected on this though. 

 

I worked in the private sector and it was much the same regarding final salary pensions, except that the final salary was calculated on an average pay over the last five years of employment. The pension formed part of your salary and for a better pension you got paid rather less. I can assure you that banks do not give away money for nothing. 

 

I think that an equivalent pay of 4 x salary in the public sector is a bit fanciful, but I can only speak for banking.

 

The assumption that final salaries were gold-plated was exploded when they did away with them. Like, "banking is a job for life" which disappeared with the enormous redundancies in the late 80s.

 

The contention that State Pensioners have had it too good for too long is just absurd. It just locks into the false narrative that they are getting something for nothing which is clearly untrue.

 

 

 

[Chomper Higgot]

On 3/29/2024 at 9:16 PM, noobexpat said:

 

Its wakey-up time.

 

What type of plan is it, when you contribute a fixed amount and get a guaranteed income for life?

 

You remember all those employer schemes that closed because they were unaffordable and unsustainable. Now you see it??

Not strictly true.

 

Bean counters spotting an opportunity to cut company contributions to employee pension schemes and transfer the money saved to shareholders was a decision to cut the share workers received from company profits. Not one of affordability but of driving up dividends to share holders at cost to employees.

 

Added to which changes to pension regulations to penalize pension funds for being over funded, encouraged employers to run funds down and take ‘contribution holidays’.

 

 

 

 

[Baht Simpson]

51 minutes ago, theoldgit said:

We will be aware that State Pensions are not taxed at source but Personal Allowances are reduced by the same amount ensuring that the tax due on the State Pension is collected by Pension Providers, my Personal Allowance is reduced to £1,500 for 2024/25.

I'm in the same position, as the tax due on my State Pension is deducted from my private pension. Tax is of course collected on earned income and State Pension is treated as such. 

[Baht Simpson]

57 minutes ago, theoldgit said:

Those of us lucky enough to be in receipt of a State Pension and a Civil Service Pension are being caught up in the Fiscal Drag, along with other pensioners. The Treasury are well aware that this is quite popular with those still in employment who take the view that pensioners have had too good for too long, maybe they have a point, as we don’t pay NI, unless we’re in employment.

 

We will be aware that State Pensions are not taxed at source but Personal Allowances are reduced by the same amount ensuring that the tax due on the State Pension is collected by Pension Providers, my Personal Allowance is reduced to £1,500 for 2024/25.

 

There was an interesting letter in yesterday’s Telegraph which discusses my claim that Civil Servants were traditionally paid less than those in the private sector, to fund their “gold plated pensions” and job security, it’s just a shame that the Treasury didn’t pay these savings into pension pots.

 

“SIR – Neil Record takes a swipe at “gold-plated” public-sector pensions (Business, March 28).

In the early 1980s I was a middle-ranking civil servant responsible for administering a £7 million annual grant scheme, which frequently involved complex negotiations with senior businessmen. My salary was a whisker over £12,000, with no provision of overtime payment for long days spent away from home. 

I eventually discovered that my opposite numbers in industry were earning three or four times my salary, and enjoyed the perks of annual bonuses, company cars, medical insurance and private dining rooms.

Civil servants accepted that a modest salary was offset by full job security and – by the standards of the day – a generous pension that paid 50 per cent of final salary after 40 years’ service. In other words, the pension was partly deferred pay. Blame for the Treasury’s failure to make provision for this commitment should not be laid at the feet of pensioners.”

 

 

 

4 minutes ago, Chomper Higgot said:

Not strictly true.

 

Bean counters spotting an opportunity to cut company contributions to employee pension schemes and transfer the money saved to shareholders was a decision to cut the share workers received from company profits. Not one of affordability but of driving up dividends to share holders at cost to employees.

 

Added to which changes to pension regulations to penalize pension funds for being over funded, encouraged employers to run funds down and take ‘contribution holidays’.

 

 

 

 

Absolutely true. We were urged to buy shares in the company to compensate for lower pension contributions. On top of that they moved from yearly salary increases to a bonus system that benefitted the higher earners and punished middle management. 

[Chomper Higgot]

5 minutes ago, Baht Simpson said:

 

Absolutely true. We were urged to buy shares in the company to compensate for lower pension contributions. On top of that they moved from yearly salary increases to a bonus system that benefitted the higher earners and punished middle management. 

And now with private sector workers stripped of their pensions, attention turns to stripping the pensions from public sector workers.

 

First move towards that end, incite some spite and envy.

 

The people who stripped out private sector worker pensions goading those they robbed to be envious of the next target of their never ending hunger for more money to be fed up the ladder.

Working people who swallow the gambit respond like crabs in a bucket.

Divide and conquer.

 

It’s worked for centuries.

 

 

 

 

[Baht Simpson]

10 minutes ago, Chomper Higgot said:

And now with private sector workers stripped of their pensions, attention turns to stripping the pensions from public sector workers.

 

First move towards that end, incite some spite and envy.

 

The people who stripped out private sector or pensions goading those they robbed to be envious of the next target of their never ending hunger for more money to be fed up the ladder.

 

 

Yes, and when they reduce our State Pensions we'll not only have been contributing to the pensions of those before us, we'll also be subsidizing those behind us. Who'd be a boomer eh? 😀 

 

The only thing I would say is that eroding the State Pension is a cast-iron vote loser, so both parties will be mindful of that. 

 

[Dolf]

On 3/29/2024 at 12:07 PM, Denim said:

I could suggest where the government could save 8 million pounds a day to help with meeting its other obligations but it would be like trying to stop water flushing down the toilet after the chain has been pulled.

Stop foreign aid

Stop payments for having kids

Stop supporting immigrants

Cut the number of politicians in half

Make all drugs available without a script

Cut pensions for public servants by 20%

Raise old age pension to 68

 

[theoldgit]

2 hours ago, topt said:

Are you saying this for new joiners and if so from when? 

The reason I ask is I was playing golf with a guy last week who said he was retiring at 60 in 2 years and admitted he would be in very good shape......Apparently he is in a reasonably senior civil servant position.

It’s certainly the case for those who joined over the last few years, or even longer, but I’m not sure if those who’ve been in the CS for decades are also affected.

There were numerous changes to the various CS pension schemes over the decades, at the time we were encouraged to transfer to the new schemes, many of us didn’t and that turned out to be a good decision, pure luck though.

 

[kickstart]

On 3/29/2024 at 10:26 AM, CharlieKo said:

Tell me if I'm wrong, But aren't National insurance contributions around 2% or qualified earnings? As for the pension can't be abolished! I beg to disagree. The same with the NHS at some stage the government will have to look at other funding methods. I think people will have to take out some sort of insurance to cover any medical needs. The government can't just keep poring funds into a black hole which both the NHS and state pension is. They just don't have the ball's to be honest with the people.

 I have been saying that for some time now, the UK will have to adopt another system for health care, it will have to be an insurance based system, with the government subbing the less well off.

You cannot tell me somewhere in Westminster they are not budgets proposals etc. about changing the system, but I would say for any government to implement new changes it would be political suicide, put that party in the wilderness for some time, the people would not have, would the present NHS staff have any changes, with the state the system is in now I would say yes.

[theoldgit]

8 hours ago, Baht Simpson said:

As I understand it you don't pay NI even if you go back to employment after 67. I stand to be corrected on this though. 

 

I worked in the private sector and it was much the same regarding final salary pensions, except that the final salary was calculated on an average pay over the last five years of employment. The pension formed part of your salary and for a better pension you got paid rather less. I can assure you that banks do not give away money for nothing. 

 

I think that an equivalent pay of 4 x salary in the public sector is a bit fanciful, but I can only speak for banking.

 

The assumption that final salaries were gold-plated was exploded when they did away with them. Like, "banking is a job for life" which disappeared with the enormous redundancies in the late 80s.

 

The contention that State Pensioners have had it too good for too long is just absurd. It just locks into the false narrative that they are getting something for nothing which is clearly untrue.

 

 

 

The requirement for pensioners to make NI contributions was made in a recent budget, I was considering taking a position post retirement, l would have been effectively working for half pay as l would have been taxed at40% and liable for NI contributions on top.

 

Civil Servants pensions were based on the best of the last three annual earnings, some of my colleagues who were overtime grades and received premium payments for weekend and bank holiday working, hammered both in their final year to enhance their pensions, this acceptable practice was abolished some years ago when the final calculation was based on a career average.

 

I totally agree with your response to the belief that pensioners have had it good for too long, l however believe this view is still out there, and the Chancellor may have addressed it to appease the Daily Mail readers.

[noobexpat]

8 hours ago, Chomper Higgot said:

Not strictly true.

 

Bean counters spotting an opportunity to cut company contributions to employee pension schemes and transfer the money saved to shareholders was a decision to cut the share workers received from company profits. Not one of affordability but of driving up dividends to share holders at cost to employees.

 

Added to which changes to pension regulations to penalize pension funds for being over funded, encouraged employers to run funds down and take ‘contribution holidays’.

 

Nonsense. 

 

 

[theoldgit]

8 hours ago, topt said:

Are you saying this for new joiners and if so from when? 

The reason I ask is I was playing golf with a guy last week who said he was retiring at 60 in 2 years and admitted he would be in very good shape......Apparently he is in a reasonably senior civil servant position.

It’s certainly the case for those who joined over the last few years, or even longer, but I’m not sure if those who’ve been in the CS for decades are also affected.

There were numerous changes to the various CS pension schemes over the decades, at the time we were encouraged to transfer to the new schemes, many of us didn’t and that turned out to be a good decision, pure luck though.

 

[noobexpat]

33 minutes ago, theoldgit said:

Civil Servants pensions were based on the best of the last three annual earnings, some of my colleagues who were overtime grades and received premium payments for weekend and bank holiday working, hammered both in their final year to enhance their pensions, this acceptable practice was abolished some years ago when the final calculation was based on a career average.

 

Its usually based upon a revalued career average of the previous earnings. The revaluation used is an earnings index, such as NAE.

 

A tiny technical detail which makes it look like you were penalised. 

In fact penalised far less than you think. 

 

This is the problem with 99% of people's comments and opinions - they are usually wrong in some way. But folks continue to think they know it all.

 

[noobexpat]

On 3/30/2024 at 1:33 PM, Baht Simpson said:

O.k. No need to be sarcastic. I'm not financially illiterate; I worked in finance for 40 years. The bank I worked for did close their final salary pensions but froze them and honored their commitment at maturity, substituting them with a shared private pension system. So all contributions up to the pension date were honored, which is what I think should happen with State Pensions. 

 

No they did not.

Pre 97 GMP accrues at a fixed rate.

Excess over gmp for pensions in deferment accrues at LPI.

Both a minimum statutory requirement.

 

40 years in finance eh? Ok then.

 

[soi3eddie]

On 3/29/2024 at 1:58 AM, TorquayFan said:

Yesterday, "Years of complacency have pushed Britain into a hole from which it will be extremely expensive to escape".

 

The cost of Public Sector pensions stands at about £49 billion p.a. which added to the costs of State OAPs, £124 billion, gives a total of £173 billion, more than is spent on the NHS annually. And let's remember, "These government pensions are not “funded”: the Government has not put any money aside for them, so all the promises have to be paid for out of current income."

 

'Defined benefit' schemes that were once available in the Private Sector have largely disappeared over many decades, because they were in essence, totally unaffordable. But almost 6 million workers in the Public Sector still have gold plated schemes - doctors, nurses, armed forces, police, civil servants and teachers, (some of these can retire much earlier than 67! ).

 

UK Government borrowings last year were £119 billion or about £1,750 per person, that's living above our income, each year. Outstanding UK Govt debt approaching £3 trillion equates to £44,000 for each man, woman and child.

 

Looking at the tax burden for Pensions alone, for each of our 33 million working population, each worker has to contribute £5,242 in taxes to pay for pensions alone. Average income stands at about £33K. Given that people are happily living longer and demographics are going top-end as birth rates fall, its frankly madness to think these costs are sustainable.

 

Figures are boring I know but unfortunately, there is no other way of making the case. I was suggesting on another thread that the triple lock has to go but it's not the only problem with pensions. if anyone reads this, I doubt these thoughts get many admirers, which gives emphasis to the idea that it's sometimes hard to do the necessary in democracies.

 

Worth the read IMO, even though it's the DT https://www.telegraph.co.uk/business/2024/03/28/great-pension-reckoning-coming-money-almost-run-out/

 

 

And, it's for all the reasons above and many more that the country is effed! Add in the welfare benefits, unemployment benefit, housing benefit, universal credit, child tax credits, pension credits and all the other state handouts then there is no way back. Like so many, Thailand is the best option for me, but I can't quite afford to pull the plug just yet. Another 3-4 years of work and getting ripped off with ever higher taxes and living costs first unfortunately.

 

[soi3eddie]

On 3/29/2024 at 3:54 AM, noobexpat said:

tate pension has been around since 1948 and was setup for those who finished working in cotton mills, with no savings. It has some deep mentality in the UK. The level of entitlement that old folks have towards it is also quite extreme.

 

If you've been paying into to something for up to 51 years (although minimum for full pension is 35 years) then it is not unreasonable to expect something back! I've already made 40 years of full contributions (qualified already at age 56), but still have to contribute for another 11 years if still working.

 

 

[Chomper Higgot]

6 hours ago, noobexpat said:

 

Its usually based upon a revalued career average of the previous earnings. The revaluation used is an earnings index, such as NAE.

 

A tiny technical detail which makes it look like you were penalised. 

In fact penalised far less than you think. 

 

This is the problem with 99% of people's comments and opinions - they are usually wrong in some way. But folks continue to think they know it all.

 

Except people can do the math.

 

And people do get to retirement and see the gap between what they would have received under their original pension contracts and what they actually receive under their new contracts.

 

99% you say.

 

When I see anyone quoting an opinion that 99% of someone or something they don’t agree with I 100% know they (you) are dreaming up nonsense.

[Chomper Higgot]

6 hours ago, noobexpat said:

 

No they did not.

Pre 97 GMP accrues at a fixed rate.

Excess over gmp for pensions in deferment accrues at LPI.

Both a minimum statutory requirement.

 

40 years in finance eh? Ok then.

 

You spotted that!

[Baht Simpson]

12 hours ago, noobexpat said:

 

No they did not.

Pre 97 GMP accrues at a fixed rate.

Excess over gmp for pensions in deferment accrues at LPI.

Both a minimum statutory requirement.

 

40 years in finance eh? Ok then.

 

Rather pedantic. By frozen I mean they stopped the Final Salary scheme, obviously with accruals.

 

But you're right to pull me up on the 40 years. It was actually 32 thinking about it. 😀 

[TorquayFan]

Thanks for the reply Eddie. You are right, there's much anger amongst working taxpayers about those on benefits, the costs of immigration and the high level of taxes producing a poor level of services.

 

You seem nearer to retirement but think how working youngsters feel as they contemplate a lifetime of work, (probably unable to buy a house), with uncertainty about what their own State pension might be later as demographic trends impact.

 

Taking away the triple lock would be perceived as an injustice by Pensioners, but if it remains and say, RPI is 2% and wage growth 5%, workers burdened with higher ever taxes will perceive injustice if Pensioners receive a 5% hike.

 

On balance we need to save the dosh and get working taxes down by this smidgeon and every other smidgeon that we can. It's those in work now we all depend on.

[Chomper Higgot]

34 minutes ago, TorquayFan said:

Thanks for the reply Eddie. You are right, there's much anger amongst working taxpayers about those on benefits, the costs of immigration and the high level of taxes producing a poor level of services.

 

You seem nearer to retirement but think how working youngsters feel as they contemplate a lifetime of work, (probably unable to buy a house), with uncertainty about what their own State pension might be later as demographic trends impact.

 

Taking away the triple lock would be perceived as an injustice by Pensioners, but if it remains and say, RPI is 2% and wage growth 5%, workers burdened with higher ever taxes will perceive injustice if Pensioners receive a 5% hike.

 

On balance we need to save the dosh and get working taxes down by this smidgeon and every other smidgeon that we can. It's those in work now we all depend on.

Opinions differ.

 

There’s plenty of unearned income going untaxed.

 

The latest scam of building loopholes into the tax code for Non Doms being an example Corporate Offshoring of profits being another.

Well past time to sign up to the CCCTB 

Oh… that’s what the Tories were trying to avoid.

 

 

 

[TorquayFan]

12 hours ago, soi3eddie said:

not unreasonable to expect something back!

 

Eddie - re. your last - of course you do get something back but what you will get back hasn't been sitting in an Eddie bucket, it will come from the current tax take.

 

What "you've been paying" has been paid into the current tax take.