30/11/11 UK Airport Disruption (The Strike Thread)
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Some people are quick to criticise striking public sector workers. I'd just like to point out two facts. Firstly, the Members of Parliament who are imposing these public sector pension cuts are going to keep their own final salary schemes. Secondly, the governments own official reports concede that if we kept the system we currently have, the cost of providing public sector pensions would actually fall by up to 20% by 2060.
The fact that some private sector pensions have been decimated should not be used as a justification for the governments actions- two wrongs do not make a right.
In this together? Draw your own conclusions...
http://www.parliament.uk/documents/commons-information-office/M05.pdf (page 3);
http://www.hm-treasury.gov.uk/d/hutton_pensionsinterim_071010.pdf (page 10)
P.s. I thought long and hard before deciding whether this post is relevant to the thread. Given some of the comments above, I believe it is. Also, for the record I do not work in the public sector.
The fact that some private sector pensions have been decimated should not be used as a justification for the governments actions- two wrongs do not make a right.
In this together? Draw your own conclusions...
http://www.parliament.uk/documents/commons-information-office/M05.pdf (page 3);
http://www.hm-treasury.gov.uk/d/hutton_pensionsinterim_071010.pdf (page 10)
P.s. I thought long and hard before deciding whether this post is relevant to the thread. Given some of the comments above, I believe it is. Also, for the record I do not work in the public sector.
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I rather think that the predictions mentioned in the previous post are based on a much larger fall in staff numbers over the next half-century, accompanied by an increase in the cost of the pensions for them.
Forecasting minutiae like the tally of Civil Servants in 2060 in 2011 makes no more sense than forecasting the 2011 establishment in 1962.
Forecasting annual pension costs in 2060 is fatuous.
Forecasting minutiae like the tally of Civil Servants in 2060 in 2011 makes no more sense than forecasting the 2011 establishment in 1962.
Forecasting annual pension costs in 2060 is fatuous.
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Capot:
The predictions in my previous post come from the Hutton Report on Public Service Pensions, the very same document from which this government has formulated its proposals on pensions. They are based on the status quo being maintained. No larger fall in staff numbers than predicted. No increase in employee contributions.
Granted, it is difficult to predict the exact size and nature of the civil service in 2060 which is why the report gives a best and a worst case scenario. Even in the worst scenario, the cost of providing civil service pensions would still fall by over 10% from their current levels. Whilst I'm not advocating doing nothing, this does contradict the governments claim that public sector pensions are inherently unaffordable and unsustainable in their current form.
Forecasting annual pension costs between now and 2060 is far from fatuous; it is impossible to judge the affordability of such schemes without making such predictions.
The predictions in my previous post come from the Hutton Report on Public Service Pensions, the very same document from which this government has formulated its proposals on pensions. They are based on the status quo being maintained. No larger fall in staff numbers than predicted. No increase in employee contributions.
Granted, it is difficult to predict the exact size and nature of the civil service in 2060 which is why the report gives a best and a worst case scenario. Even in the worst scenario, the cost of providing civil service pensions would still fall by over 10% from their current levels. Whilst I'm not advocating doing nothing, this does contradict the governments claim that public sector pensions are inherently unaffordable and unsustainable in their current form.
Forecasting annual pension costs between now and 2060 is far from fatuous; it is impossible to judge the affordability of such schemes without making such predictions.
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this does contradict the governments claim that public sector pensions are inherently unaffordable
I note the careful wording "No larger fall in staff numbers than predicted". Are you a politician?
Forecasting annual pension costs in 2060 is fatuous.
Forecasting annual pension costs between now and 2060 is far from fatuous. Yes, so it is.
I see that the dreaded "range of error" has crept in, and quite right too. Whenever a report is produced, tailored to prove a point or justify some huge overspend, its writers cover themselves with the "range of error", aka "best and worst case" ignoring the fact that this usually renders the report useless, since the true answer lies anyway in between, but only if you're very lucky. (The same methodology, applied to travel demand forecasts, has been used to "justify" pet infrastructure projects since 1950.)
The public sector pensions bill is simply unaffordable. My daughter's daughters will be paying for it.
On the news this evening, it said that both lgw and lhr were fine. After all, only 20% of those covered by the ballot actually voted to strike. Just the teachers?
On the news this evening, it said that both lgw and lhr were fine. After all, only 20% of those covered by the ballot actually voted to strike. Just the teachers?
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Capot:
I'm not going to get into a slanging match with you except to say that I have come to certain conclusions based on an objective assessment of the facts. Furthermore, I have offered evidence to support my position.
You have offered nothing but your own personal opinion.
I'm not going to get into a slanging match with you except to say that I have come to certain conclusions based on an objective assessment of the facts. Furthermore, I have offered evidence to support my position.
You have offered nothing but your own personal opinion.
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Lord Hutton of Furness is first and foremost a politician
Paragraph 2.14 of Page 44 of Anasis’s second reference actually says
But that Interim report was published in 2010.
When will the final report be published?
Staying with the Interim Report I see that on page 140 in table C.1 the forecasts for 2010/2011 are 2.8% increase for CPI and 4.2% for RPI. This should be compared with actual figures - 5.2% for CPI and 5.6% for RPI Reference -__link
This forecast for 2010/2011 was evidently a bit wide of the mark.
If CPI uprating were to be continued through the 21st century, with an average differential from RPI of 0.75 percentage points as forecast, then subject to how cap and share is operated, this change could reduce public service pension expenditure by over 10 per cent by 2030 (£5 billion in 2008-09 prices) and by 20 per cent by 2060.
When will the final report be published?
Staying with the Interim Report I see that on page 140 in table C.1 the forecasts for 2010/2011 are 2.8% increase for CPI and 4.2% for RPI. This should be compared with actual figures - 5.2% for CPI and 5.6% for RPI Reference -__link
This forecast for 2010/2011 was evidently a bit wide of the mark.
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My interpretation of the Interim report is that the 20% is not a reduction of public service pension expenditure. The 20% is a simply the differential between CPI indexation and RPI indexation.
Actual public service pension expenditure will continue to grow.
Actual public service pension expenditure will continue to grow.
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Notlangley:
you can find the final report here:
http://cdn.hm-treasury.gov.uk/hutton_final_100311.pdf (specifically page 22 onwards).
This issue is currently being discussed on Newsnight. Jeremy Paxman made the same point that I made above. As a percentage of GDP, the cost of providing public sector pensions is set to decrease even without pension reform. The government appear to be using economic arguments to justify what is essentially a political decision.
From what I can gather, public sector pensions shifted from RPI to the lower CPI rate of inflation a few years ago, which reduced the overall cost of the scheme.
you can find the final report here:
http://cdn.hm-treasury.gov.uk/hutton_final_100311.pdf (specifically page 22 onwards).
This issue is currently being discussed on Newsnight. Jeremy Paxman made the same point that I made above. As a percentage of GDP, the cost of providing public sector pensions is set to decrease even without pension reform. The government appear to be using economic arguments to justify what is essentially a political decision.
From what I can gather, public sector pensions shifted from RPI to the lower CPI rate of inflation a few years ago, which reduced the overall cost of the scheme.
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That is interesting - "a percentage of GDP". I wonder how much faith Hutton has in GDP?
On page 97 of the Final Report, Hutton says
I wonder if "not viable" is different to "fatuous" (but I truly admit that I quote Capot's word out of its proper context)
On page 97 of the Final Report, Hutton says
4.31 One advantage of using the GDP measure is that in theory it will give a good degree of predictability for government about costs in the future and, since tax revenues are highly correlated with levels of GDP, it will also ensure that commitments remain affordable.
4.32 However, this measure is very difficult to control as it is influenced by a large number of variables outside the control of pension schemes costs such as future levels of GDP and the size of the public sector workforce. Having considered these factors the Commission has determined that this option is not viable.
4.32 However, this measure is very difficult to control as it is influenced by a large number of variables outside the control of pension schemes costs such as future levels of GDP and the size of the public sector workforce. Having considered these factors the Commission has determined that this option is not viable.
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public service pensions
a few facts/thoughts:
1. there is no 'one' public service pension scheme: some are funded (teachers, local govt), others are taken out of current tax revenue.
2. generally you get two-thirds of final salary as your pension if you have completed full length service. proportionately less if you have worked fewer years or were part-time.
in addition, you get state pension and you no longer pay national insurance contributions.
3. no one is forced to work through to the new retirement age: you can still take early retirement if you wish.
in that respect, both public and private sector employees can buy 'additional voluntary contributions' to boost their pension entitlement. tax relief on these is greater as you near retirement - a time when it is more likely to be affordable if you so wish(family hopefully being off your hands)
4. the problem of greater longevity and a reduced work force has been known for some 15 years. the previous government failed to take any effective measures, at a time when economy was more buoyant, to tackle the issue. indeed, the 'prudent chancellor' removed the tax relief from pension funds and exacerbated the problem.
5. taking an example, BBC recently said that, in middlesbrough, 60% of work force was employed in public sector. so, on a monday morning, of ten people waiting at the bus stop, six will be public servants on a final salary pension.
the remaining four will , at best be on 'defined contibution' pensions, offering lower (uncertain) benefit, but, through all the varieties of tax they pay, will be supporting the more generous benefits of the other six.
1. there is no 'one' public service pension scheme: some are funded (teachers, local govt), others are taken out of current tax revenue.
2. generally you get two-thirds of final salary as your pension if you have completed full length service. proportionately less if you have worked fewer years or were part-time.
in addition, you get state pension and you no longer pay national insurance contributions.
3. no one is forced to work through to the new retirement age: you can still take early retirement if you wish.
in that respect, both public and private sector employees can buy 'additional voluntary contributions' to boost their pension entitlement. tax relief on these is greater as you near retirement - a time when it is more likely to be affordable if you so wish(family hopefully being off your hands)
4. the problem of greater longevity and a reduced work force has been known for some 15 years. the previous government failed to take any effective measures, at a time when economy was more buoyant, to tackle the issue. indeed, the 'prudent chancellor' removed the tax relief from pension funds and exacerbated the problem.
5. taking an example, BBC recently said that, in middlesbrough, 60% of work force was employed in public sector. so, on a monday morning, of ten people waiting at the bus stop, six will be public servants on a final salary pension.
the remaining four will , at best be on 'defined contibution' pensions, offering lower (uncertain) benefit, but, through all the varieties of tax they pay, will be supporting the more generous benefits of the other six.
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Thank you rethymon for your excellent information
On 20 June 2010 the Chancellor of the Exchequer said
If you divide £25.4 billion by the population of the UK it is a large annual loss from the purses and wallets of you and me .This is a burden on taxpayers and because of the elastic way that supply and demand works, higher taxation reduces (in my opinion) the number of UK persons in gainful employment.
On 20 June 2010 the Chancellor of the Exchequer said
The total cost of unfunded public service pensions in 2010/11 is estimated at £25.4 billion, excluding funded schemes such as the Local Government Pension Scheme . This is more than twice the cost of Child Benefit.
link
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Hello Anansis
To lighten the tone, let's look for the, errr, contradiction between;
and your rather subjective assumption;
which gave me a good laugh, at least, in an otherwise gloomy day.
To lighten the tone, let's look for the, errr, contradiction between;
I have come to certain conclusions based on an objective assessment of the facts.
You have offered nothing but your own personal opinion.
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The Pubic accounts commitee (PAC) observed that officials appear to want to formulate policy re Public Sector Pensions on public pereception rather than a judgement of affordability.
The Govt. started out with an argument on affordability and had to withdraw it and is now going with 'fairness'. Even they don't say its unaffordable (unstainable meaning something else in this case I suspect).
The GDP projection is an argument in favour of it remaining affordable and sustainable. Capot, I understand that there is a lot of water to flow under the bridge between now and later but one can't really look at a graph from a report commissioned by officials and state the opposite of what it shows and then give that as the basis of an argument. If the graph shows what it shows then it can't be cited as a basis of unaffordability. Yes, the Pound note cost might increase but the % GDP cost is predicted as falling as a result of reforms in 2005.
It seems to be it's all about choices and that the choice is that whilst it is affordable now, the decision is to choose not to provide it in the future. A choice that finds favour with those in the private sector whose pension provision has been eroded by tax raids and contribution holidays. Just because it (reduced pension provision) has happened elsewhere does not seem to me to be a fair argument for wishing it on others.
In the final analysis it seems that this is an argument of sentiment over statistical facts. And bettter brains than me seem to agree.
Ted
The Govt. started out with an argument on affordability and had to withdraw it and is now going with 'fairness'. Even they don't say its unaffordable (unstainable meaning something else in this case I suspect).
The GDP projection is an argument in favour of it remaining affordable and sustainable. Capot, I understand that there is a lot of water to flow under the bridge between now and later but one can't really look at a graph from a report commissioned by officials and state the opposite of what it shows and then give that as the basis of an argument. If the graph shows what it shows then it can't be cited as a basis of unaffordability. Yes, the Pound note cost might increase but the % GDP cost is predicted as falling as a result of reforms in 2005.
It seems to be it's all about choices and that the choice is that whilst it is affordable now, the decision is to choose not to provide it in the future. A choice that finds favour with those in the private sector whose pension provision has been eroded by tax raids and contribution holidays. Just because it (reduced pension provision) has happened elsewhere does not seem to me to be a fair argument for wishing it on others.
In the final analysis it seems that this is an argument of sentiment over statistical facts. And bettter brains than me seem to agree.
Ted
Last edited by teddybear44; 1st Dec 2011 at 16:52.
Comparing MP's benefits with the rest of the public sector is pointless.
Firstly, let me say I don't agree with what the MP's get in their pension packages but them being wrong does not automatically exempt the rest of the civil service from being sorted out.
We have the option every four or five years to dump MP's (currently with an unacceptable severance package) but we don't get the same situation with the rest of the public sector. If we could vote on whether to sack or keep teachers, police, etc every four years, then maybe a comparison would be apt. Failing teachers would be dumped, fat policemen who could not run after suspects could be let go and anyone who failed to perform could find them on the streets and no manner of excuses from the public sector would be excused - the people would choose.
Somehow I doubt four years contracts for public servants would be something they would support.
Firstly, let me say I don't agree with what the MP's get in their pension packages but them being wrong does not automatically exempt the rest of the civil service from being sorted out.
We have the option every four or five years to dump MP's (currently with an unacceptable severance package) but we don't get the same situation with the rest of the public sector. If we could vote on whether to sack or keep teachers, police, etc every four years, then maybe a comparison would be apt. Failing teachers would be dumped, fat policemen who could not run after suspects could be let go and anyone who failed to perform could find them on the streets and no manner of excuses from the public sector would be excused - the people would choose.
Somehow I doubt four years contracts for public servants would be something they would support.
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GrahamO,
Without expressing my opinion of MP's pension package, I do disagree with the hypocrisy of them telling the rest of the public sector to suck it up with everyone else, er...apart from them! The only justification is that they may have sacrificed a career in private industry for a calling in public service themselves and are always on a bit of a tightrope as you rightly point out they can be dumped at the next election. They claim their pension scheme is affordable but that's not an argument they allow the rest of the public sector to use! I would definitley like to see them lead by example as the current proposals for change in the public sector do not encompass their pension scheme and I'm not aware of any proposal that does!
Interesting comment by the Teachers union secretary on Question time where she answered the charge of the taxpayer paying for public sector pensions with the point that the public fund private sector pensions through about £38 billion of tax relief a year (I think that's what she said).
On your point about inefficient public servants such as fat Policemen who can't run. Police officers have to pass an annual physical test including ability to restrain and handcuff. No pass = No issue of certificate = no ability to do job! Teachers are assessed in classrooms by Ofsted inspectors amongst other performance measures. Most civil servants performance is monitored and they can be sacked for inefficiency.
My concern about the changes to public sector remuneration and pensions is also about this:
I don't disagree that historically the civil service in the UK provided relatively secure employment with good pension arrangements. This was seen as a consolation for comparitively less pay than in the private sector, less bonuses and 'perks' etc. The pension was in effect 'deferred pay' In the last few years that pay comparison may have reversed but only for a few years and it is predicted to swap back by 2015 in favour of the private sector again. A calling to public service was always an option for bright kids. That chance and choice was available. If we make it so unattractive e.g working till 68 and paying 6-7% contributions (14% for Police) will OUR kids see it as a choice that is viable for them. Will OUR kids have the opportunity that we did, can they afford to or will we be telling them, no son don't go into public service, you can't afford it, even the pension is no good now. Are we cutting down the life choices for OUR kids by making something so unattractive when actually we might not need to. If the GDP graph is accurate, at least as far as trend if not actual % then we might be making a big mistake. You get what you pay for in anything. Public sector services are no exception. We want to attract good people to work in them, we want the choice that we had still to be available to our kids. Stop knocking them. We went down the road of swappnig our manufacturing base for an economy based on selling beefburgers and financial services and now we are in the clag. That was a mistake. Let's not make another one!
Without expressing my opinion of MP's pension package, I do disagree with the hypocrisy of them telling the rest of the public sector to suck it up with everyone else, er...apart from them! The only justification is that they may have sacrificed a career in private industry for a calling in public service themselves and are always on a bit of a tightrope as you rightly point out they can be dumped at the next election. They claim their pension scheme is affordable but that's not an argument they allow the rest of the public sector to use! I would definitley like to see them lead by example as the current proposals for change in the public sector do not encompass their pension scheme and I'm not aware of any proposal that does!
Interesting comment by the Teachers union secretary on Question time where she answered the charge of the taxpayer paying for public sector pensions with the point that the public fund private sector pensions through about £38 billion of tax relief a year (I think that's what she said).
On your point about inefficient public servants such as fat Policemen who can't run. Police officers have to pass an annual physical test including ability to restrain and handcuff. No pass = No issue of certificate = no ability to do job! Teachers are assessed in classrooms by Ofsted inspectors amongst other performance measures. Most civil servants performance is monitored and they can be sacked for inefficiency.
My concern about the changes to public sector remuneration and pensions is also about this:
I don't disagree that historically the civil service in the UK provided relatively secure employment with good pension arrangements. This was seen as a consolation for comparitively less pay than in the private sector, less bonuses and 'perks' etc. The pension was in effect 'deferred pay' In the last few years that pay comparison may have reversed but only for a few years and it is predicted to swap back by 2015 in favour of the private sector again. A calling to public service was always an option for bright kids. That chance and choice was available. If we make it so unattractive e.g working till 68 and paying 6-7% contributions (14% for Police) will OUR kids see it as a choice that is viable for them. Will OUR kids have the opportunity that we did, can they afford to or will we be telling them, no son don't go into public service, you can't afford it, even the pension is no good now. Are we cutting down the life choices for OUR kids by making something so unattractive when actually we might not need to. If the GDP graph is accurate, at least as far as trend if not actual % then we might be making a big mistake. You get what you pay for in anything. Public sector services are no exception. We want to attract good people to work in them, we want the choice that we had still to be available to our kids. Stop knocking them. We went down the road of swappnig our manufacturing base for an economy based on selling beefburgers and financial services and now we are in the clag. That was a mistake. Let's not make another one!
