I read that AXA are stopping theirscheme like most private companies.

Will their be a strike. What do you think , this is not the private sector

Most government pension schemes are unfunded because the Governments spends the members contributions instead of investing them. It seems unfair to penalise people because the Government has not acted wisely.

State pensions are also unfunded because the Government spends NI contributions. Does anyone think the state pension scheme should be disbanded because it is unfunded?

I except that public sector pensions are unfunded but the money the members put in over their lifetime of work would only pay for a pension of a great deal less.
Stop the Pensions and suggest they invest themselves as the private sector have to.

Didnt Rupert Murdoch do the same?

As usual Roz you leave me a bit confused.

I am at a loss to understand why public sector workers expect to be subsidised by mostly poorer private sector workers.

Simple solution let then set up their own private pensions. Live in the real world.

Right, let's get this funded issue cleared up once and for all.

The LGPS is described here and I quote below the relevant bit (my bold):

Both employees and employers contribute to the LGPS: employees' contributions are fixed, while employers' contributions vary depending on how much is needed to ensure benefits under the Scheme are properly funded.

That is the problem the employers contributions are fixed the employers , ie us , are not.

As people live longer and costs to provide these gold, plated pensions increase , the employees should increase their contributions.

They are not quite as gold-plated as you think.

The average pension is approximately £4,000 per annum!

That may be right but crucially inflation linked

I wonder how much you would have to invest for guaranteed payout at 60
for 4k a year plus inflation.

A lot more that has been put in by HMG , ie us .

Some private sector pension schemes are linked to RPI.

Very few still exist especially for new employees.

Occupationa; schemes were brought in when one tended to work for one employer for life. Rarely happens nowadays

I suggest all schemes are stopped and up to individuals to invest in their own pension

Well Brian,

How about reducing existing pensions for those on guaranteed final salary deals? They have taken far more money than they have put in. Why the whole reduction in pension benefits should be borne by those currently paying in. And there were good private pensions around when annuity rates were higher and guaranteed (remember Equitable Life - those already having pensions did not suffer)

So the argument that younger generation should take all the debts now is not very fair.

the argument seems to have become somewhat confused. In terms of economics it makes no difference whether a service is provided by the public or private sector. Production takes place and and a cost allocated. One might argue that the generation of price differs, but this is only a technical debate. The "taxpayer" pays for public sector and "workers" pay for the private sector. In both sectors there are workers who pay taxes. In other words we have a system where everyone who works pays for everyone else whether in the private or public sector. The analytic distinction made in the discussion here is political rather than economic.

The questions to be properly addressed might be:
1. Do all people deserve reasonable pensions?
2. Should we all be in it together in addressing the economic crisis?

The current weasel words by some commentators is that the crisis is in some way the fault of older people who should have their pensions cut (which they have paid for) and should give up their houses (which they have paid for) because, in some other way, they have "robbed the young".(e.g. Guardian 20/10/11 'Should older people be expected to downsize?') This is clearly aimed at a division to make the removal of pensions and housing from older people politically acceptable.

This suggests that the answer to the two questions in both cases is 'no'.

Instead the 'blame' for the crisis is laid at the doors of the old, the public sector and the poor. In whose interest might this be?

Derby Hill Top
No problem with asking existing inflation proofed pensioners to take their share of cut.
Especially Sir Fred Goodwin.


Kipya
The idea that older people should move out of houses with spare bedrooms is Labour suggestion

We must expect to save ourselves for old age. the government and peivate pensions cannot be expected to pay for anything other than basics.

What has "Labour" got to do with the issue?

I agree with Brian that "We must expect to save ourselves for old age". There is nothing to be gained from dying beforehand. However, having gone through the act of survival to arrive at old age, receiving a pension which provides the basics would seem appropriate if not obvious. I think the "basics" might be covered by, let's say, a pension at 50% of final salary and indexed linked to RPI so that we might save ourselves in old age - and in particular from reckless bankers.

I agree with Brian, too, that for people who want to do so AVCs are an excellent way of saving an additional amount over the state and occupational pension contributions.

Kipya,
You pose interesting questions:
1. Do all people deserve reasonable pensions? - YES especially if you worked all your adult life and contributed to it. What is worrying me is that no matter how much I save it will not be nearly enough to fund a third of my current income, let alone a greater percentage of my future income. As someone with great earning potential, and who has been putting 20% into pensions for a long time I am losing confidence in the whole system.

2. Should we all be in it together in addressing the economic crisis? - YES. If rules are being changed for younger generations it is only fair to apply the same logic to the older ones too. Equitable life - went into difficulty because it could no longer honour the deals to the current pensioners. So their protected rights meant that my contributions have lost significant value. My hubby’s employer recently changed his final salary deal. For the increased contribution, he'll be lucky to get a half of what he was expecting. Again current pensioners didn't even have to give up the inflationary link.

So it is not that I have anything against older generations, it is just that the younger ones are really getting scr4w4d. The youngsters who are facing tuition fees will live their whole life in debt. When will they accumulate a pension pot? Will they not work hard enough compared to older generations?

I think I see what's getting folks all riled up about final salary pensions...

I'm sorry to say, that the pension you get is not the same as your final salary, merely based on it.

As stands in the LGPS , for every year you work and contribute to the pension scheme you get 1/60th (1/80th for years before 2008) of your final salary as pension.

So, to get that 50% of final salary that kipya refers to, to cover just the basics, you'd have to have worked between 30-40 years.

It a dismal scenario for all of us. The reason is probably that there are more baby boomers and older than younger people, people are living longer healthier and more active lives, and the younger generation are likely to be saddled with student debt and in todays circumstances not likely to get into work for some time. Thats capitalism for you unfortunately.

I agree that people currently receiving pensions should not see them reduced but then the rest of us are facing that prospect in any case so why not share the pain in that way? There are many older people who are well off who receive state funded old age pensions. Do they need it necessarily?

I've worked for over 22 years with two periods of maternity leave and several periods of unemployment in between probably totalling 4 years. My pension pot is really puny despite my earning just above average earnings and having professional qualifications. Savings have been eroded paying for childcare and keeping us out of trouble. I'm currently looking to prepare for a third career as my current has limited prospect due to public sector cuts and other changes. There is a great deal of ageism and sexism in the workplace that does seem to work in favour of young single men, presumably because employers can work their socks off and because there are still various glass ceilings around for various sections of the community.

I also never really felt that final salary arrangements were as good as others would make out as most people would not accrue the length of service needed to make it work for them. I have an ex colleague who has just retired at 57 with 35 years continuous service in local government. He decided to go due to to immense pressure of work as well as likely erosion of the pension pot he already had. He got around £20k per annum in total as he was senior. Thats not bad really but there are actually very few people now in the public sector in his position. Most of them are around that age and leaving now before things get worse. Remaining workers won't see anything like that sort of pension.

I don't know what the answer is nor do I think there will ever be a solution. It would be nice if we stopped waging wars for the sake of oil. Might save a few pennies all round.

Reduced pensions, higher university fees, cuts to schools, the breaking up of the national health service and so on are fundamentally about an ideological stance which asserts that markets are better than communal provision of services. There is huge evidence to show that this is not a sustainable assertion, but we have the fetishisation of markets and that's the nub of the problem.

Brian says we must all DIY, but the extension of that argument is there is there is no general provision of water, cleaning of public spaces, maintenance of roads, nor police nor armed forces and so on. The issue is where to strike the balance between communal (public) provision and individual (private) provision of goods and services.

My feeling is that the post-war solution of a range of problems through the nationalisation of power, transport, health and schools was probably sensible. I also think that people should have an expectation for a reasonable pension which means that there is a system set up to achieve this. Just because New Labour and the Conservatives both have adopted policies of marketisation doesn't mean they are correct. The resiling from pension provision by private companies after the dot.com bubble (and the opportunity for theft like Robert Maxwell did at the Mirror) doesn't mean that public sector pensions should now be cut.

The low tax policies of governments since 1979 have inevitably required a cut in public provision. The solution to the problem of poor pensions, lack of housing, the NHS and so on can be achieved through higher taxation with better off people paying more. The current system is roughly the opposite of this. People get upset about paying tax because they want more pay. The issue then, is one of pay, not of tax rates.

Anyway, these are well rehearsed arguments. If there is a national debt to pay off, then from each according to his(sic) means might be the all-in-it-together strategy. The effect of dividing young/old, private/public is to shift the debate away from "means".

Gordon Brown increased the percentage of public expenditure relative to GDP from 40% to 52%.

Personally, I think 40% is about right.