4 ms·

There are police forces in the UK where 50% of their annual budgets is going to people who no longer work there. This is _insane_. Pensions should be funded fro

by retube 10y ago

There are police forces in the UK where 50% of their annual budgets is going to people who no longer work there. This is _insane_. Pensions should be funded from savings / investments made during working life, not taken from future tax recipes. Furthermore these pensions are gold plate: linked to inflation and guaranteed for life. We have 100s of thousands of middle tier public sector workers like teachers and council workers retiring every yesr with a guaranteed income stream that would cost millions if you were to buy the equivalent annuity. How anyone thought this was sustainable or sensible blows my mind. It needs to stop.

clort 10y ago
> This is _insane_. Pensions should be funded from savings / investments made during working life you might think that the people responsible for providing the pensions would have taken the contributions that the workers made during their working life and invested that money for the future! Unfortunately, that didn't happen. The UK government (who was the responsible party) made the decision to pay pensions out of future income rather than saving anything. It looked great on the balance sheet, since they could reduce taxes today and let somebody else look bad in the future.
- mrslave 10y ago
  It appears the majority of people don't understand that the national debt, and other unfunded liabilities, are future taxes. The socialist workers party is very popular in my country too despite eating the future in order to play Santa Claus in the present.
- makomk 10y ago
  Invested the money in what exactly? This essentially requires the government to decide what investments they think will be winners and losers, whilst influencing the rules that help decide who wins and loses. That would be politically controversial to say the least.
  - airza 10y ago
    so like... a sovereign wealth fund?
  - mbrameld 10y ago
    Alaska does it relatively successfully with their PFD fund.
  - bottled_poe 10y ago
    Investment in it's own share market perhaps? If a country can't back it's own economy it has bigger problems than not being able to fund pensions.
  - jamie_ca 10y ago
    Same thing a smaller-volume investor would do to spread their risk? A mixture of bonds (gov't giving itself money, to earn a return, ha!) and stocks (probably a wide index fund, both US and international). Deciding on the breakdown of what percentage to allocate to each bucket and how many stocks from each category to use in your index would be an interesting debate to have though.
  - peteretep 10y ago
    > Invested the money in what exactly? Buying government debt seems a pretty safe bet.
- shubb 10y ago
  There are a number of miscalculations which mean contributions would never have funded these schemes. One is the number of years people live after retirement. Another is that pensions (due to their terms) have outpaced wage growth significantly so current contributors can't fund them. Finally, a pension relative to final salary is difficult to fund from a percentage of mostly from early-mid career wages. In the UK, many public sector organizations have been privatized. Early privatizations often took the pension liabilities with them. As the employees who were members of such schemes leave the scene and current organizations must choose between meeting obligations and making a profit, I expect to see the companies look to duck out of obligations perhaps by packaging obligations into a spinoff company and then watching it go bankrupt. A lot of retirees I know are pulling money out of these schemes using the new option to take the money as cash. They then put the money into buy to let as a kind of annuity on the basis that even if they'd get more money from the scheme in the long run, they aren't a position to take that kind of a risk. Hope they have insurance.
kspaans 10y ago
Elected City Council members need to be held accountable for what they voted for, that's all. But I agree, "defined benefit" pensions are a thing of the past. There is a good BBC Radio Money Box show about it: http://www.bbc.co.uk/programmes/b0713p7s http://www.bbc.co.uk/programmes/b0713p7s
peteretep 10y ago
> There are police forces in the UK where 50% > of their annual budgets is going to people > who no longer work there Source? In 2009 20% of policing costs in the UK went to pensions[0], which doesn't seem that particularly insane; has it really risen so much, or are there certain police forces that aren't representative due to shifting demographics? > Pensions should be funded from savings > / investments made during working life Perhaps, but I don't see the relationship between this and your previous point. > these pensions are gold plate: linked > to inflation and guaranteed for life So ... an inflation-linked annuity? How does that differ from most private pensions? Is there anything stopping you purchasing one? > teachers and council workers retiring > every yesr with a guaranteed income > stream that would cost millions if you > were to buy the equivalent annuity This also needs sourcing, as it also fails the sniff test and some simple Googling. Taking the example here[1], a relatively senior teacher, looks like she'll get an annual pension of ~£20,000 if she retires at 60, which is probably equivalent to a private annuity of £500,000. I for one welcome our post-truth overlords... [0] https://www.moneymarketing.co.uk/lib-dems-reveal-police-pension-costs-up-50-in-five-years/ https://www.moneymarketing.co.uk/lib-dems-reveal-police-pens... [1] https://www.moneymarketing.co.uk/issues/29-october-2015/case-study-advising-on-changes-to-the-teachers-pension-scheme/ https://www.moneymarketing.co.uk/issues/29-october-2015/case...
- nextweek2 10y ago
  > a relatively senior teacher, looks like she'll get an annual pension of ~£20,000 if she retires at 60, which is probably equivalent to a private annuity of £500,000. There is the problem. I've had a 8% pension in the programming sector since I was 20, my projections are for £300,000 by age 67 and £10,000 retirement income. Teachers get 12 weeks off a year and to retire 7 years earlier on double the pension. Personally, I'm retraining to be a teacher. Pension calculators from the likes of legal and general show that you need vast pension contributions to match public sector employees. To match a teacher it recommended I made a 15% contribution, is any private sector company offering that? http://www.legalandgeneral.com/calculators/contributionCalc-6.jsp http://www.legalandgeneral.com/calculators/contributionCalc-...
  - 10y ago

by retube 10y ago

clort 10y ago

> This is _insane_. Pensions should be funded from savings / investments made during working life you might think that the people responsible for providing the pensions would have taken the contributions that the workers made during their working life and invested that money for the future! Unfortunately, that didn't happen. The UK government (who was the responsible party) made the decision to pay pensions out of future income rather than saving anything. It looked great on the balance sheet, since they could reduce taxes today and let somebody else look bad in the future.

mrslave 10y ago
It appears the majority of people don't understand that the national debt, and other unfunded liabilities, are future taxes. The socialist workers party is very popular in my country too despite eating the future in order to play Santa Claus in the present.
makomk 10y ago
Invested the money in what exactly? This essentially requires the government to decide what investments they think will be winners and losers, whilst influencing the rules that help decide who wins and loses. That would be politically controversial to say the least.
- airza 10y ago
  so like... a sovereign wealth fund?
- mbrameld 10y ago
  Alaska does it relatively successfully with their PFD fund.
- bottled_poe 10y ago
  Investment in it's own share market perhaps? If a country can't back it's own economy it has bigger problems than not being able to fund pensions.
- jamie_ca 10y ago
  Same thing a smaller-volume investor would do to spread their risk? A mixture of bonds (gov't giving itself money, to earn a return, ha!) and stocks (probably a wide index fund, both US and international). Deciding on the breakdown of what percentage to allocate to each bucket and how many stocks from each category to use in your index would be an interesting debate to have though.
- peteretep 10y ago
  > Invested the money in what exactly? Buying government debt seems a pretty safe bet.
shubb 10y ago
There are a number of miscalculations which mean contributions would never have funded these schemes. One is the number of years people live after retirement. Another is that pensions (due to their terms) have outpaced wage growth significantly so current contributors can't fund them. Finally, a pension relative to final salary is difficult to fund from a percentage of mostly from early-mid career wages. In the UK, many public sector organizations have been privatized. Early privatizations often took the pension liabilities with them. As the employees who were members of such schemes leave the scene and current organizations must choose between meeting obligations and making a profit, I expect to see the companies look to duck out of obligations perhaps by packaging obligations into a spinoff company and then watching it go bankrupt. A lot of retirees I know are pulling money out of these schemes using the new option to take the money as cash. They then put the money into buy to let as a kind of annuity on the basis that even if they'd get more money from the scheme in the long run, they aren't a position to take that kind of a risk. Hope they have insurance.

kspaans 10y ago

Elected City Council members need to be held accountable for what they voted for, that's all. But I agree, "defined benefit" pensions are a thing of the past. There is a good BBC Radio Money Box show about it: http://www.bbc.co.uk/programmes/b0713p7s http://www.bbc.co.uk/programmes/b0713p7s

peteretep 10y ago

> There are police forces in the UK where 50% > of their annual budgets is going to people > who no longer work there Source? In 2009 20% of policing costs in the UK went to pensions[0], which doesn't seem that particularly insane; has it really risen so much, or are there certain police forces that aren't representative due to shifting demographics? > Pensions should be funded from savings > / investments made during working life Perhaps, but I don't see the relationship between this and your previous point. > these pensions are gold plate: linked > to inflation and guaranteed for life So ... an inflation-linked annuity? How does that differ from most private pensions? Is there anything stopping you purchasing one? > teachers and council workers retiring > every yesr with a guaranteed income > stream that would cost millions if you > were to buy the equivalent annuity This also needs sourcing, as it also fails the sniff test and some simple Googling. Taking the example here[1], a relatively senior teacher, looks like she'll get an annual pension of ~£20,000 if she retires at 60, which is probably equivalent to a private annuity of £500,000. I for one welcome our post-truth overlords... [0] https://www.moneymarketing.co.uk/lib-dems-reveal-police-pension-costs-up-50-in-five-years/ https://www.moneymarketing.co.uk/lib-dems-reveal-police-pens... [1] https://www.moneymarketing.co.uk/issues/29-october-2015/case-study-advising-on-changes-to-the-teachers-pension-scheme/ https://www.moneymarketing.co.uk/issues/29-october-2015/case...

nextweek2 10y ago
> a relatively senior teacher, looks like she'll get an annual pension of ~£20,000 if she retires at 60, which is probably equivalent to a private annuity of £500,000. There is the problem. I've had a 8% pension in the programming sector since I was 20, my projections are for £300,000 by age 67 and £10,000 retirement income. Teachers get 12 weeks off a year and to retire 7 years earlier on double the pension. Personally, I'm retraining to be a teacher. Pension calculators from the likes of legal and general show that you need vast pension contributions to match public sector employees. To match a teacher it recommended I made a 15% contribution, is any private sector company offering that? http://www.legalandgeneral.com/calculators/contributionCalc-6.jsp http://www.legalandgeneral.com/calculators/contributionCalc-...
- 10y ago