Death, taxes...pensions?

[Black Swan]

Was looking at the latest ONS report in relation to the huge growth in the economy last Q, revised up to 0.3% (Yay! let's party like it's 1999 and you're in the Dome party designed by Mandelson with Blair the Queen and a load of 5hite acts)...Growth of 0.3% for £1 trillion support of the system, if we pump in another £5 trill we might reach a full percent... http://www.statistics.gov.uk/cci/nugget.asp?id=192

Anyhow, what struck me, whilst looking at the life expectancy graph, was the debt burden/pension burden which is appearing insoluble given that life expectancy has risen exponentially over the past century...

What we need is a couple of *good* wars to give us a spike in the death rate and kill of public sector pension burden, now approaching a guaranteed £1 trillion..As you were...

Oh, for trading relevance if I were into share trading (as opposed to investing in its general uselessness) I wouldn't be in anything related to pensions...ever...

Death Registrations; Deaths fall below 500,000

http://www.statistics.gov.uk/cci/nugget.asp?id=952

 

[dealer911]

Smoking should be actively encouraged !
Also what about euthanasia ? - If you knew exactly when you were going to die it would make pension planning much easier !
Condoms should be banned - you get the double whammy with this one - birth rate rises - death from Aids increases.. there you go problems solved!

 

[meanreversion]

The pension timebomb is scary. On one side you have a small number of public sector workers with nice index linked final salary schemes and a small number of private sector individuals with enormous pension pots (e.g. Sir Fred). Then on the other side the vast majority of people who will have nothing to live on when they clock off.

The "pensions apartheid" between public and private sector has been left unchecked for far too long, with the result that not only do public sector workers get to retire at 60 (90 pct of them), everyone else has to soldier on to 65 to get a measly state pension.

This is going to end in strife, there is no way around it. Either public sector workers take a haircut on their promised pensions, or we continue printing money to pay for all our obligations, which will lead to hyperinflation. Either way, not good.

The Labour party have totally f-cked the pension system. Not only did Brown's scrapping of dividend tax relief for pension schemes steal money from people who were saving, his government also ducked the chance to raise the retirement age for public sector workers (about 3 years ago).

I don't think it is fully apparent the damage Brown has done to the UK is yet, but it will become so. The man should be tried for treason.

 

[barryb]

The man should be tried for treason.

Off with his head!

 

[meanreversion]

It's no joking matter. Blair and Brown have destroyed this country, the damage they have wrought is incalculable.

 

[barryb]

I agree, let's re-open the Marble Arch Guillotine.

 

[Black Swan]

I agree, let's re-open the Marble Arch Guillotine.

Would be fantasy land, move over x-factor over the winter months. My first victim out of the fresh batch would be the odious Caroline Spelman, secretary of state for the environment, ex lobbyist who realised where the gravy train left the station and moved into politics. She claimed £10K expenses for her nanny, broke the rules by paying a young bloke to work for her at 47K a year, and juggled 40K expenses between her country pile and her £2mil London flat. Her husband is an MD of Accenture, stood for election to the Euro parliament, he has the contract for the part of department she is now in charge of...

 

[montmorencyt2w]

The Labour party have totally f-cked the pension system. Not only did Brown's scrapping of dividend tax relief for pension schemes steal money from people who were saving, his government also ducked the chance to raise the retirement age for public sector workers (about 3 years ago).

Some changes must have been made. My son joined a public sector organisation 4 or 5 years ago, whose main pension scheme is exactly analogous to the civil service scheme. When he joined, he was told he was one of the last to join under the old rules with entitlement to pension at age 60. However, after he had been in the job for some time he was told that the rules (essentially determined by the government) had changed, and that he would now only be entitled to take it at 65. Other changes were made like increased contributions and it was generally less financially advantageous.


Rather than criticising the public sector because their pensions are relatively good, perhaps a more honest approach would be to look into why private sector pensions are often so bad, with the exception of Fred Goodwin and his ilk. I think the reasons are probably many and varied, but if the private sector were so wonderful, you would have thought they would have come up with some better systems by now, don't you think?

The private sector, in the form of banks, were bailed out by the public sector, and not the other way around. That's why we have such a large deficit.

If you look back, you will see that Conservative governments have been in power for many more years than Labour governments, so the public sector pensions that exist now can't have all been the work of evil Labour governments, can they? If you think about it, you may see that even Conservative governments who tend to favour private over public, still recognise that in order for a sophisticated society like ours to function, you need a well-ordered civil service and public sector generally, treated fairly, and reasonably rewarded. I suspect that one of the reasons for Greece's problems is not that its public servants are too well-paid, but that it is shockingly organised. In fact a little googling reveals that public sector pay is shot through with gross anomalies, i.e. unfairness, and unfairness leads to corruption. Similarly, Italy's public sector is notoriously corrupt, which is part of the reason for Itay's problems.


A word on final salary pensions: For anyone who might be under a misapprehension, a final-salary pension scheme does not mean that you receive the equivalent of your final salary as your pension! It means that your final salary is used as a basis for working out your pension entitlement, with the number of years service used to determine the value. In the scheme I was in, it was based on a norm of 40 years service, and you were entitled to 1/80th of your final salary as pension for every year, so the most you would receive would be 40/80ths, i.e. 1/2 of your final salary as pension.

 

[meanreversion]

I believe they changed the retirement age for new entrants around 3 years ago, it might have been 4. The government had proposed to raise it to 65 for everyone but backed down fairly quickly after a little sabre-rattling from the unions.

The public sector for the most part carries out immensely useful services. However, even the most ardent defender might admit that some jobs are not particularly productive (check out the Guardian jobs pages for evidence of that, although I think that might have just come to an end).

Whether you think the public sector are adequately paid or not (their average salary is around 1k/year HIGHER than private sector), or whether the pensions are generous or not, the plain fact is - the country can't afford it anymore. Something has to give.

It's pointless saying "doctors save lives" etc - indeed they do and I've got nothing but good words about the NHS, the fact is as a country we are living beyond our means and the public sector simply has to be cut, a process which is now underway.

(Incidentally, the pension schemes ARE very generous and are way in excess of contributions, e.g. if you work in public sector, your pension pot is around 5 times that of someone in the private sector who made the exact same contribution)

 

[Adamus]

The whole thing about pensions has got to be a bad joke.

Originally children would look after their aging parents just as parents looked after their children in childhood.

Now that deal is off, and OAPs are meant to fend for themselves. So you contribute to a pension while you work and then use it to buy an annuity and that gives you financial independence to pay for care workers to nurse you through your second childhood.

So what happens if you blow your pension in a crazy stocks and shares ISA or you just never have one or worse, you had a nice pension but the company you had it with accidentally goes under?

What kind of monthly income are you going to get from the basic state pension? Probably not enough for the pharmaceuticals, I bet.

And then of course the issue arises that actually even if you're clever enough to pay into a real pension, e.g. a public sector pension, apparently what you pay into the pension won't actually be enough to cover the pay-outs that the pension guarantees.

Pensions schmensions.

 

[nunrgguy]

Nuke North Korea, that'll sort it