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Re: Strikes Revisited : Mon Nov 14, 2011 7:18 pm

The Video Ref wrote:

With another 'day of action' approaching two articles have today caught my attention:

http://www.bbc.co.uk/news/business-15722791

http://www.google.com/hostednews/ukpres ... 271814444A

What is it with public sector workers at the moment? Their pay and pensions are, generally, far superior to their private sector counterparts yet they are complaining about paying slightly more towards their pensions, or working for a couple more years. Outside of the small protected bubble that they live in their strikes have very little public support.

Then we have tube drivers, demanding a whopping quadruple pay for working boxing day. That is a whopping £700 for one day work!

Public sector pay and pensions is unsustainable in its current format. The previous Government realised this, but was too afraid to do anything about it for fear of losing key voters.

With all due respects: b*llocks.

Public sector pay has been frozen for two years, following decades of below inflation rise.

Even the Hutton report accepted that public sector pensions are sustainable.

Before the 2007 reforms to the schemes, the costs of pensions were expected to peak at just below 2% of GDP around 2020, and then fall again (the Baby boom generation is a bulge, not a permanent increase).

After the 2007 reforms - which were negotiated, unlike the current attempt at diktat - that peak has already happened (the cost peaked iin 2009 at around 1.8%, iirc, and is already falling). The 2007 reforms cut the future costs of pensions by 10% (Hutton's figures) - and the Chancellor's unilaterial decision to base future increases on CPI rather than RPI* inflation has cut future costs by another 15%)

Incidentally, some figures on the two largest schemes:

The NHSPS is a 'pay as you go' scheme where pensions are funded by current contributions - over the past 10 years or more, contributions have exceeded payouts by £2bn a year, money that goes straight to the Treasury.

The LGPS is a 'funded' scheme - contributions are invested and pensions paid out of the investment funds: the scheme invests about £4bn a year in the UK economy - the various invesment funds are currently responsible for a total investment in the UK economy of £140bn. The scheme has enough funds to pay out its commitments for the next 20 years, even even if it received not another penny from either contributions or investment income[/b].

Both schemees are 'cash rich'.

What Hutton refused to answer was whether public sector pensions were 'affordable' -saying that was a political question.

And a point to note about the proposal to increase employees' contributions by an average of 3.2% wages (an average 50% or so increase in the amount people will be required to pay): not a penny of that will go into the actual pensions schemes.

In the pay-as-you-go schemes it will go straight tot he Treasury. Ind the funded LGPS, it will fund the £900m reduction in councils' block grant.

The proposal is nothing more than a 3% tax levied for being in a pension scheme and used to pay for reducing a deficit which is the direct result of the banks and financial services industry screwing the economy in 2008 (a tax, incidentally, is being levied at the same time that the government keeps floating the idea of a 10% tax cut for high earners).

But the big danger is that if you increase contributions by that amount, you discourage people to join the pensions scheme and make provision for their old age, so they will rely more on taxpayer** funded benefits, increasing future costs to government, and at the same time risk making the schemes themselves unsustainable if not enough people are paying in.

* There's a particular irony in the Euro-sceptic Tories opting for CPI. RPI is an index designed to measure UK inflation as it affects people who buy things. The CPI index was invented purely as a measure to make like-for-like comparisons across the EU (which is why it doesn't include, eg, housing costs - housing 'markets' being different and therefore not comparable across the EU).

Still, here's Freancis Maude being roundly shown to be talking through his posterior on the 'unaffordability' issue back in the summer.

** Taking both active members and deferred members into account, the pensions schemes in question cover about 20% of the workforce, in both the public and private sectors, who are - of course - taxpayers themselves.

On and some mythbusting:

Pensions: busting the myths
MYTH - People are living longer which means they're claiming their pensions for longer - this needs to be addressed.

The schemes were revised to take account of this three years ago - so scheme benefits and costs are now 25% lower.

In addition, life expectancy has increased, but less so for manual workers and the low paid.

MYTH - There's a big public sector pensions deficit that has to be repaid.

There is no funding gap - the public sector schemes were assessed for long term risk and adjusted accordingly three years ago and are now very secure.

Both the local government pension scheme and NHS pension scheme are currently cash rich with income far exceeding outgoings - some £2 billion in the case of the NHS pension scheme.

MYTH - Public services and public service pensions are causing the financial crisis.

It was the banking sector's reckless risk taking and excessive greed that caused this global recession.

MYTH - We're all in it together. Everyone has to make sacrifices right now - why not public sector workers?

We are all facing cuts to our public services - on top of this public service workers are facing unprecedented job cuts and a pay freeze.

We will all end up paying more tax if people drop out of the scheme to end up relying on the state in their old age.

MYTH - It's not fair, why should the public sector get good pensions when the private sector doesn't?

The average director of a FTSE 100 company has a final salary pension worth £3.6m or £174,963 a year, while the average occupational pension generally is £9,500 a year and the average public service pension is £7,800 a year. That's the real unfairness.

UNISON thinks everyone deserves an adequate pension, including workers in the private sector. We should improve bad schemes rather than make good ones bad.

Providing adequate pensions means that fewer people will be receiving welfare handouts after retirement, which would cost the taxpayer more money in the long run.

MYTH - Public sector workers have it too good with huge pensions.

The average public service pension is around £7,800 a year, for women working in local government the average is £2,800 a year, while the median for women working in the NHS is £3,500 a year: hardly huge pensions.

Saving towards an occupational pension in many cases means a person is receiving fewer welfare benefits during retirement, saving the taxpayer money.

MYTH - Taxpayers are paying for public service workers' pensions. That's not fair.

Everyone's taxes are used to pay for all public services - stethoscopes in hospitals, the salaries of primary school teachers, people to change the light bulbs in street lamps, and part of these people's pay is their pension.

A pension is part of someone's salary package and is no different than an annual salary, a car, or the London weighting allowance. It's not fair to change something in a job contract after someone accepted the job.

One in five people working in the UK works in public services. They are taxpayers too.

MYTH - Public service workers retire at 60.

The normal retirement age in many of the public service pension schemes is already 65.

Raising the retirement age hurts some people more than others. In general we're living longer, but that doesn't mean everyone will have the same quality of life.

Many public service workers have jobs that are physically demanding or stressful, making it difficult or even impossible to continue working into old age. Similarly many low paid workers simply don't have the option of retiring early because they can't afford it.

Though I'm sure you'll ignore the arguments and facts, and simply dismiss the source.