Spending Cuts & Economy - Austerity Forever!

[Richard Brinck-Johnsen]

Pension provision for low paid workers in the private sector seems to be virtually non existent as well.

[Ralph]

Hi Si - what you say is a very fair point. I agree that lots of public sector workers on the lower to middle payscales are probably not an issue but just like the top of the private sector I think there may be a greed mentality by a proportion of high paid public sector workers. I think the Union Leaders are happy to push this also because they have their own agenda to protect their generous pensions?

I think the fundamental problem is the demographic changes. The baby boomer generation (1946-1966) supported the system and now that they're starting to retire - the system's top heavy with not enough workers to sustain it.

Anyway I've said to my clients I hope they don't mind me coming along with my zimmer frame So yes I'll probably work on until 70s/80s too unless of course we all go for very simple needs - fresh air's still free (at the moment!) .

I think opinion will be split down the middle on ongoing strikes on pensions. It's probably quite an emotive subject but I think one that needs very careful discussion rather than going for strikes that may debilitate our very fragile economy.

But that's all heavy stuff isn't it - I think I want to go into the TARDIS and see the bright future which I'm sure will bring back some of the feel good factor!

[Si Hunt]

I don't get any pension other than what I pay into it myself, nor do I expect one.

Si.

[Ralph]

Decades back people would retire and die within a few years, and so the state didn't have to pay for them for long..

Yes when Lloyd George set up the State Pensions back in 1906? he set the pension age at 65 for men (the main earners clearly at that time) knowing the average life expectancy of a male life was 56...

[Ralph]

I don't get any pension other than what I pay into it myself, nor do I expect one.

Si.

Same here, no employer conntributions. I just pay into an ISA because while there's no tax relief but you don't get taxed at the back end and you have access to all your funds.

Next year from April the EU has made men and women equal on life expectancy so despite the fact men die around 6 years earlier we're equal...
As a result males with personal pensions will get even less. Another reason to build up your resources where it's not locked into annuity rates...

[Jon Masters]

While I sympathise with public sector workers I just wonder why it's considered the tax payer should bail out these gold plated salary pensions?

Sorry, Ralph, but that's just the sort of line the Government are using to support their shoddy actions.

I wouldn't complain if my pension was (a) voluntary and (b) paid into a proper pension fund where I would be informed of its value, could make voluntary top ups if I wanted to increase its value, or move it to another fund if I wasn't happy.

Instead what happens is (a) its removed from my wages at source, so I can't opt out of it or put it somewhere else and (b) I have had to suspend my private pension that I had in my previous job because I can't contribute to it any more.

What's really heinous is that my money doesn't go into a protected fund or a managed system, it just goes straight to the Treasury. So, in effect, I'm being taxed twice. It may be on the understanding that, at some point in the future, the government will pay me back more than I paid in (assuming with the shifting goal posts I ever reach retirement age). However, as has been shown, with no legal contract the government are free to change the arrangements completely as they see fit.

What the government are doing is trying to spend my pension money on other things, in the hope they don't have to have so much standing by to pay me in the future. If a private company did this, it would be illegal (hello, Robert Maxwell), but because it's dressed up as 'taxpayers' paying for it, it somehow seems to be OK.

Like any job, you look at the whole package when you decide to take it. And while pensions are not my highest priority, it does help to make up for the long hours, crap wages, ridiculous Performance Management, and the sometimes daily grind of being a teacher.

Of course, if the government were willing to pay me an equivalent private sector salary (and made it legal to do so) I'd willingly withdraw from the Teacher's pension scheme and rely on my own private arrangements. Hell, I'd rather have the extra money now than wait until I'm 70.
Strangely, they don't seem to have considered that as an option.....

[Rob McCow]

In addition, what is awful is when the Government promises you a pension for your working career and then they decide that actually they don't want to pay you after all.

I don't know if the Unions are being greedy. Maybe some of them are. But if people are going on strike, then the Government must shoulder some of the responsibility for failing to reach an agreement.

[Ralph]

Like any job, you look at the whole package when you decide to take it.

I was thinking myself did I make the right decision joining a company called Thorn EMI as a graduate in 1985. At the time the job I managed to secure in a competitive jobs market was in a Marketing position. Myself and all my colleagues were made redundant in 1989. The pension didn't start until 18 months into the job and clearly is tiny from that era. To cut a long story short I was out of work for 6 months before securing my current self employed contract in 1990. The responsibility for making pension contributions was mine but I was pleased to be back working.

The "whole package" was uncertain I guess and because I took the path I have while I have set aside resources for the future the stock market has not performed well so I'm no wealthier on these resources than I was 10 years ago.

In fairness while some may say you had the choice to work in the public sector, well the world looked very different 20 years ago plus is it feasible that all of us could work in the public sector which is the position in Greece.

It's a tough one and I take your points made but if public sector workers don't put more into their pensions and extend the retirement ages how can it be funded?

As I work in the Financial Services Industry I have a very clear understanding of how Private and Public sectors work which is why I made the comment you highlighted - I don't see any other way to pay for Public sector pensions if the workers themselves don't stump up.

Is it not fair for public sector as private sector to share the pain? We all work hard I do understand where you're coming from but it's just there's going to be tough medicine all round - the world's economics are in uncharted waters here.

[Si Hunt]

I find it's best not to rely on any one form of investment. So I have a pension fund, but I make what I consider to be the minimal amount into it each month (about £100) and just ignore it, trying to build up my capital in property by overpaying on my mortgage. At least that money can't be "taken away" from me.

Si.

[Ralph]

I agree Si, some pension so you have a basic lifetime income to pay the very basics. ISAs and Property. Spreading your resouces is definitely best.

[Si Hunt]

I'm still confused as to when Pensions go up and down. Frequently I get a statement saying my pension fund has dropped by £800 or whatever because it's been a bad quarter, but is it just the money added in interest that can drop? In other words, can it ever drop below the total of everything I have put in? If it can, what's the point in putting in hundreds of pounds each year if the markets are just going to dive and take it all away from me?

Si.

[Jon Masters]

Is it not fair for public sector as private sector to share the pain? We all work hard I do understand where you're coming from but it's just there's going to be tough medicine all round - the world's economics are in uncharted waters here.

Well there's fair and there's fair. Like private sector workers we've had to take a pay freeze - so effectitely a pay cut. And you never see public sector pay rises go above the rate of inflation, even during times of boom when private frims may be paying out bonuses.

Add to that the sweeping cuts being made in the number of public sector workers being employed (and yes, I know firms are also laying people off, but public sector workers only have one possible employer - the government - so if the government decides it needs less peopl, tough)

It's ironic that at the same time there is a huge rise in young people unemployment - maybe its because old people can't afford to retire.

And again , no-one seems to worry about taxpayers paying for those private sector workers who make no pension provision whatsoever, and then need social housing / care etc. - it's just assumed that we should because they are there.

As pointed out in one of the papers the other day, the Teacher Pension scheme has paid out far less than has been paid into it by teachers since it started in 1923. So, in effect, the governement is currently making a profit from it.

[Rob McCow]

There's no point for you. The Pension Companies do very well out of it though.

[Ralph]

I do want to come back to this thread later

[Ralph]

As pointed out in one of the papers the other day, the Teacher Pension scheme has paid out far less than has been paid into it by teachers since it started in 1923. So, in effect, the governement is currently making a profit from it.

What newspaper Jon? - thats an incredible claim and in my view totally unrealistic and I would happily show why it must be.

I wouldn't give that any credibility until it is proven, in my view it's anti-government propaganda to stir things up. I would go as far to say it's an astonishing claim. As I say I know what goes into these pensions and what comes out as I've worked with them for 20 years.

[Ralph]

I'm still confused as to when Pensions go up and down. Frequently I get a statement saying my pension fund has dropped by £800 or whatever because it's been a bad quarter, but is it just the money added in interest that can drop? In other words, can it ever drop below the total of everything I have put in? If it can, what's the point in putting in hundreds of pounds each year if the markets are just going to dive and take it all away from me?

Si.

Si - your money will be in a fund which is fluctuating with the assets it holds. A major proportion is likely to be equities which clearly change in value on a day to day basis therefore the value of your fund is different every day.

If you are making regular contributions particularly during these troubled times when share values are low you will benefit from what is called "pound cost averaging". Essentially you buy more units in the fund because the value of those assets on which the unit cost is based will be cheaper when stock markets have fallen.

So yes the real value of the assets of your fund can fall since your last statement which is why in the private sector money purchase pensions we are facing dropping values. Clearly if and when stock markets recover this value will rise.

It is indeed very possible for the value to fall below what you've totally paid in.

It doesn't mean it's a bad decision, we all just have to sit tight and wait for the recovery - rash decisions to change funds without careful consideration could make the situation worse.

[MacNimon]

It's a hard subject for any government to tackle, and it's one where there's going to be no easy, happy or simple solution. While what Ralph says (and the government) about people living longer etc is perfectly correct (longer life expectancy in itself is a great thing in it's own right but obviously a logistical nightmare concerning longtime pension payouts) it's only human nature NOT to want to pay more, work longer and receive less. I suppose it all boils down to your current standard of living, what you expect to receive in your retirement, and what you're prepared/able to do financially at the moment to help towards that day.

Personally, as long as I get enough to pay the bills, plus a few luxuries such as a holiday etc, I'll be happy. I've never had a particularly great paying job, but it's local with little travelling involved and out here in the sticks its a much cheaper way of life. Maybe not for food or electric but certainly the likes of mortgages etc are much cheaper which helps compensate for the wages. This allows me to prepare for the future financially by paying an extra 30% into my mortgage each month, as well as money into an ISA and a long-term endowment policy, both money I can't easily get to but I know it's there for the future. All of which means of course that I don't have a great amount to spare on a month-to-month basis and as long as I resist the temptation to plunder my ISA (and I'm often tempted!) the money is there for a future time when it may be needed.

I'm not paying into a pension at the moment, though, and it's something I'm not particularly amused about. I had a great company pension at my last job which I'd been paying into for 20 years, and if I had been able to remain there until retirement I would have been happy with it. But redundancy changes these things...my pension has been frozen there since 2008 and shrinks in value with each passing year. The company I currently work for has a policy that you have to be an employee for 2 years before being able to join their pension, and I joined it last year at the first opportunity. However, over a year later there still hasn't been a single payment taken off my wages and nobody knows why. The woman who processed it has retired, and her successor hasn't a clue what the problem is and no-one seems to be in much of a hurry to sort things out. Very frustrating...I've half a mind to just forget about their pension and just stick more money into my ISA each month. Maybe that's just what they want though, so that they don't have to pay employer contributions, cheapskates that they are!

[Jon Masters]

So, over the past few days ministers have told the press that the strikes will definitely

• leave fat american businessmen trapped on planes at Heathrow for hours at a time
• cause all operations to be cancelled and sick people to get worse
• cost half a billion in lost economy
• make them take their crap offer away

Expect to hear stories over the next few days about how strikes can give kiddies cancer or make old people cry

They've only had since the last action to get this sorted out. Maybe they could spend their time better than spreading bu!!s#!t.

[Dirk Gently]

Due to new austerity measures the government would like it to be known that to save energy the light at the end of the tunnel has been turned off.

[Jon Masters]

Due to new austerity measures the government would like it to be known that to save energy the light at the end of the tunnel has been turned off.

" However, if members of the public would like to volunteer to hold a candle at the end of the tunnel, then the government will give them every encouragement - unless they're on benefits in which case they would become ineligible"

[Jason Thompson]

The really sad thing about all these public sector spending cuts arguments is the huge number of people who can't see that teachers and the like are already paid a really crap rate considering the importance of what they actually do. It is horribly depressing to witness otherwise intelligent people hold the twisted view that just because they didn't enojy school it was somehow not thanks to the staff and courses there that they obtained the know-how and skills they required to get a foundation in being a contributing member of society.

To help solve this problem, let's get these government bods in and put them in a school teaching for a month. Let's see how they like the disparity between the work they do and the pay they get: between the importance of the job and the level of respect they receive: between the public perception and the reality.

[Rob McCow]

Now the Unions are 'Itching for a showdown' says The Metro.

Oh! And guess who that quote's come from!

Could it be a Cabinet Minister?

Could it be someone with a lot to lose in this strike?

Could it be Michael Gove MP?

Oh yes it could!

He (Gove) said it was unfair to expect taxpayers to foot the bill for increasing civil service pensions.

Workers should ‘pause and reflect’ before joining an action called by ‘hardliners – militants itching for a fight’, he added.

‘They want scenes of industrial strife on our TV screens, they want to make economic recovery harder, they want to provide a platform for confrontation just when we all need to pull together,’ Mr Gove claimed.

Unions brushed off his comments. Unite assistant general secretary Gail Cartmail said: ‘It is the government which is behaving provocatively. Now, at the eleventh hour, they are trying to bully and browbeat public sector workers into not taking strike action. It won’t work.’

Wednesday’s action will see at least 90 per cent of schools closed
Britain’s borders will be manned by the army as border agency staff walk out, air passengers face major delays, hospital patients could have their operations put back and courts face closures.

Yeah!

[Jason Thompson]

I think someone's been having some fun with Gove's entry in Wikipedia. See if you can spot his unexpected TV credit...

[Rob McCow]

Ooo - well spotted Jason! He'll need to clean the spit off his screen though...

[Larry]

The really sad thing about all these public sector spending cuts arguments is the huge number of people who can't see that teachers and the like are already paid a really crap rate considering the importance of what they actually do. .

. I was a civil servant for 22 years when I took ill health retitrement I came off with a pension of £5500 p/y which is pretty pathetic for the number of years I'd served. If I had done another 15 years I'd be lucky if my pension was £8000 p/y there are many public sector workers especially those in the civil service at the lower grades who will get a similar pension. so it really angers me listening to all these smug Conservative ministers telling us what a great deal we are being offered and how bad we are for striking. Yet how many of these MP's are going to be struggling financially right now let alone when they retire they all get paid more than the average wage and will alll recieve gold plated pensions plus huge lump sum when they leave Parliment. You look at the front bench and they are all millionaires so for people like George Osborne, another millionaire to inflict these public sector cuts on pensions/pay and jobs and tosay we;re all in this together is thoroughly offensive.