h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

On the "final salary scheme" schtick.

Being a Union Rep in the CWU (Massive dispute with Royal Mail on the horizon over pensions) I know a fair bit about pensions right now.

One of the biggest problems with a lot of the schemes is that during the mid eighties a tax ruling was made that any scheme with a surplus of more than 5% (meaning if the projected value of all assets was more than the project total payout)then anything on top would be taxed fully (and heavily), meaning that pensions trustee's were encouraged to allow companies to take holidays.

I think anyone with even a cursory understanding of the way economic cycles work can see the flaw here, the value of investments can go up or down, and therefore the value of a pension could be in surplus one minute and in deficit the next.

The whole idea of a large pension scheme is to build up a surplus to insulate yourselves against the possibility of this happening. And well economic downturns have happened, also my lot when in power imporoved on this and did another "tax raid" (cheers Mrs T and Gordy)

Truth is if like me you are in the Private Sector (ish ) and you have a final salary scheme you quite simply arr going to have to accept one of a coule of things:-

Paying more

Retiring later

Getting less

But as long as you and your unions accept this there no in principle reason why they can't continue. Final Salary schemes are in trouble because of cray tax decision and boardroonm greed. Well mine is anyway

FB

I need to wind back to the basic premise of this argument, viz, that public sector pay doesn't affect inflation.

Patently, as you will see, I am no economist. And Sealboy is probably right to question La Wakefield's assertion.

However, my thinking is that we presently have what might be termed a different set of circumstances. Inflation is not being driven by the cost of money. Nor is it being driven by wages break out. It is being driven by simple supply and demand economics of a fundamental resource. In the wake of irresponsible lending practices, Oil futures have become a refuge for capital: it is an economic fundamental in the way that gold was. So the cost of oil has risen. Corollary so has the cost of everything else: hence inflation.

It is inflation that cannot be fought with domestic interest rates, a 20th Century solution to a 21st Century economic problem.

Public sector wage agreements are reactive, not proactive. So the public sector is simply demanding (I reckon) no net loss. And good luck to them.

Ditto.

The NHS has settled for 2.75 this year as part of a three-year deal. There is an option to reopen negotiations if inflation remains high. Should be interesting to see whether the Pay Review Bodies and the Government will agree with the TUs when the time comes!

Hey FB. Best of luck with your pension dispute when it comes.

We recently lost our final salary scheme in the RCN. At least the GMB managed to get us a career average scheme to replace it which is better than a money purchase or nothing at all.

t.

Cheers Turvy.

We also are getting a CARE scheme. I think we will have to compromise but what RM are trying to force on us right now is unacceptable.

CARE schemes are OK if you are at the top of your incremental scale for a number of years before retiring because pension approaches final salary in that case. It's people that climb the greasy pole that loose out and folks who don't stay long and preserve benefits.

The RCN scheme is with the Pension Trust http://www.thepensionstrust.org.uk/TPT/website/Homepage.htm

t.

" It's people that climb the greasy pole that loose out and folks who don't stay long and preserve benefits."

And funnily enough, for the first time in the history of the company we might get simultaneous industrial action with the guvnors, as this effects them more than us.

FB

http://news.bbc.co.uk/1/hi/uk_politics/7486612.stm

This could make this bad boy a bit interesting no?

Isn't one of the main criticisms of the city private sector the bonuses they get for indifferent results?

Who knew the same happened in the public sector?

http://news.bbc.co.uk/1/hi/uk_politics/7491808.stm

The government is running a "something for nothing" culture after it was revealed civil servants were handed £128m in bonuses, the Tories claim.

The 2007-8 figures, obtained through Parliamentary questions, show the average senior civil servant banked a bonus of more than £7,000, they said.

Top-level staff at the Department for Culture, Media and Sport earned the most, at £11,000.

Gee I'm losing out at all ends.

I work in the private sector - running government contracts they've outsourced.

I don't get bonuses.

My final salary scheme has been closed, and I've been moved to a money purchase scheme.

My job is under threat because someone in India can do it cheaper - in fact so much cheaper, they can employ 3 people to do my job. They don't do it as well, but hey....

The staff around me who were TUPE'd do get final salary pensions, and their jobs are protected as part of the transfer.

If it helps, I'm doing a managerial job in the NHS for 20% less than the basic rate it should get, which is about 20% less than its equivalent in the private sector. But I'll continue to do it because I can't expect any better. You're welcome.