Will our children fund our retirement?

[peterstorm1985]

The events of the last few days have led me to wonder whether we should trust our children to continue with a model that pays today's state benefits from current taxation. We're all living longer, but with dwindling pensions, so there will be ever more of us demanding a retirement on the state. That, combined with medical advances and the consequent demands on the NHS, mean the taxpayers of tomorrow are going to see a very high percentage of their earnings being snatched at source.

Is there a chance that one day they'll say 'enough is enough' and refuse to cough up.

[maxxi]

People don't pay tax because they like to fund state benefits and pensions - they are prepared to do it though because it's the only way to prevent gangs of marauding pensioners attacking the 07.49 to London Bridge and mugging postmen.

State benefits and pensions are the modern equivalent of the city wall - they keep the haves (or at least the have-somes)safe and the have nots (or have-littles)at bay by giving them just enough to deny them the motivation to risk life and liberty in taking what they need to survive. Doesn't always work of course.

It's not altruism, it's self preservation.

[????]

...of course they may come to the correct utilitarian conclusion that people outlive their usefulness and start to be the major drain on society at about 75, so cull uss all then solves population, pension and national health pressures in one swift injection

[????]

People still act as if the birth rate's the problem for demographics, crap. That's mad lots of new healthy soon to be productive and active new human beings is great nope all the drain comes in the winter years...it's people living longer that is ours and the globes major problem.

[Undisputedtruth]

Well if the Hutton's report says Public pensions are affordable then I think this thread is a non debate. Moving on to the real world, the debate should be why some UK companies refuses to pay their fair share taxation which results in shifting the tax burden on workers. Is this fair?

[Marmora Man]

UDT - the report did not state that Public Pensions were affordable. It did point out that the cost of Public Pension, assuming recent changes were fully implemented would fall as a proportion of GDP. That is not the same as "affordable".

There is a still a rational debate to be had about the extent to which the tax payer should subsidise public sector pensions and what is "fair".

Given the broad parity between public sector and private sector salaries & benefits then:

a. Is it fair that a private sector employee has to save 20% of their salary to provide a reasonable pension for their future?

b. Is it fair that they should also pay an additional ?1,000 a year in tax to pay for some else's public sector pension to which they (the public sector employee) only pays in 3% of salary?

[peterstorm1985]

I'm afraid I have to admit to not having read the Hutton report, only edited highlights, but I thought it was a review of public sector employees pensions only, not a review of all pension payments made by the state (ie the state pension), or of the adequacy of private pensions in the longer term. Rather than focus on one group of future pensioners I am concerned about the reality of a society where a large group are in retirement for almost as long as they are in work, thereby creating a disproportionately heavy burden (whether real or simply perceived) for those who are paying tax.

[Undisputedtruth]

@marmora man,

The thread is about whether our children will fund our retirement and I made my answer accordingly. Are you seriously saying the issues relating to public sector pensions, and in particular the Hutton report, would remain unresolved in the future?

In answer to your following questions.

a. Is it fair that a private sector employee has to save 20% of their salary to provide a reasonable pension for their future?

Private sector employees made their choice on the packages that was available to them when they entered into employment. If they thought their compensations for work was unfair then why enter into the private sector?

b. Is it fair that they should also pay an additional ?1,000 a year in tax to pay for some else's public sector pension to which they (the public sector employee) only pays in 3% of salary?

Yes, because over the years the public sector pay lagged well below private sector pay. It would cost the tax payer a lot more money if public sector pay matched the private sector.

[Undisputedtruth]

peterstorm1985 Wrote:

-------------------------------------------------------

> I'm afraid I have to admit to not having read the

> Hutton report, only edited highlights, but I

> thought it was a review of public sector employees

> pensions only, not a review of all pension

> payments made by the state (ie the state pension),

> or of the adequacy of private pensions in the

> longer term. Rather than focus on one group of

> future pensioners I am concerned about the reality

> of a society where a large group are in retirement

> for almost as long as they are in work, thereby

> creating a disproportionately heavy burden

> (whether real or simply perceived) for those who

> are paying tax.

There is a growing number of people working beyond pension age. Vince Cable is a good example.

[Marmora Man]

UDT - you're making this up as you go along aren't you?

The Office for National Statistics (ONS) reported (Sept '10) that the average weekly income for a private sector worker is ?465. Average weekly income for public sector worker is ?539 - a difference of ?75 a week.

Add in the fact that > 85% of public sector workers have pensions and < 40% of private sector workers have pensions then the effect is greater (a pension is simply deferred pay / salary / income). Once this is factored in the difference becomes ?136.00.

People choose jobs and careers for all sorts of reasons - at the beginning it seldom has much to do with the pay & pension arrangements - more about - suitability, aptitude, ability, availability, locality and other less financial factors.

However, it is not "fair" to have one sector of the workforce apparently protected from the reality of planning for their future after retirement by a subsidy from the other sector of the workforce. Such a situation, if allowed to prevail, would create all sorts of perverse incentives that would damage British society.

The madness of the Greek economy demonstrates what can happen when a job in the public sector is sought rather than private enterprise because public sector workers earn well over the average wage, retire at 50 on pensions equivalent of 80% of salary - all funded via dodgy bank loans from the EU.

NOTES:

1. All figures taken from Office of National Statistics annual Labour & Workforce survey.

2. Copied also to the Public Sector Pensions thread

[Undisputedtruth]

What I found interesting about the East Dulwich Forum is that you have a group of people spouting right wing propaganda.

Mamora Man, is your other alias Huguenot? Anyway here are my following points,

1) using only one month's stat to support your argument on the difference in pay between private & public sector is very misleading, marmora. Why not use the last 25 years stats and you should see the difference in public sector pay lagging behind private sector?

2) it is not fair for the public sector to pay the price for screw ups in the private sector such as the ones created by the banking sector.

3) It was policies supported by the right wing that has caused the financial mess in the UK.

I shall copy the post to PS pensions thread and carry forward discussions there.

[taper]

The average weekly wage comparison is junk and worthless for the purposes of this discussion. It doesn't compare like with like.

[peterstorm1985]

There is a lot of talk about what is 'fair' or 'reasonable' and of who is to blame for the situation that we are now in, but that wasn't my point.

I'm much more concerned that all of today's arguments will be meaningless to the typical thirty something tax payer in, say, twenty years time, when he or she looks about them and sees how many are living off how few. Unless there is a dramatic increase in the pension age then the number of workers funding the benefit and care system with be ludicrously small compared to those who will be reliant. Pensions are just a small part, although it is worth noting that a lot of private pensions will fall so short that the state will have to help. Advances in medicine mean we live much longer but that additional time is gained at a cost to the NHS. Someone has to pay for that. Tomorrow's graduates will be paying off horrendous student loans and there must come a point when the numbers are too great. When that time is reached I'm not sure any of the then taxpayers will care too much about those waiving bits of paper that say they agreed a pension deal in 2011.

[Loz]

taper Wrote:

-------------------------------------------------------

> The average weekly wage comparison is junk and

> worthless for the purposes of this discussion. It

> doesn't compare like with like.

That's true, because if you also factor in pensions benefits then the PS/private sector rewards are even more skewed to the PS.

[DJKillaQueen]

Look surely the issue here is that we have a pension model that is no longer relevant to the current working and economic model. When Malthaus drew his pyramid, whenever it was, it was without the foresight to see anything like longer life expectancy and technological advancement. That for me is the key lesson. You can not apply a model for a lifetime and expect it to pan out....the world moves quicker than that. Yes the funding of pensions needs redesigning and yes it needs to be more flexible than in the past.......for obvious reasons.

[taper]

"That's true, because if you also factor in pensions benefits then the PS/private sector rewards are even more skewed to the PS."

A non sequitur. The data cited is worthless to this argument.

[Loz]

taper Wrote:

-------------------------------------------------------

> "That's true, because if you also factor in

> pensions benefits then the PS/private sector

> rewards are even more skewed to the PS."

>

>

> A non sequitur. The data cited is worthless to

> this argument.

How so?

[taper]

Jobs in the public sector comprise a richer mix of managerial and white collar functions than in the private sector. There is for instance a very large and poorly paid retail sector in the private sector, which has no comparison in the public sector. Counting all these wages in and coming up with a mean average is pointless.

What you want for the purposes of your argument is a like for like comparison.

Policy Exchange, a right leaning think tank, have sought to do this. Here is a study which, although controversial, makes the case for what you're trying to say more effectively

http://www.policyexchange.org.uk/publications/publication.cgi?id=240

[Pugwash]

I have worked all my life with the exception of 5 years when I went to university as a very mature student. Worked in the public sector for 20 year before becoming a student, in a clerical and administration capacity. Whilst at Uni I paid voluntary NI contribitions of ?3 something a week out of my ?1000 pa grant, to ensure I had enough contributions for my pension. Took a professional job in public sector when graduated with degree plus a 2 year professional qualification, always aimed to retire at 66 as enjoy my work. My colleagues think I am mad not retiring at 60 -but that was never on my agenda. Recent blurb from work indicates that my annual pension will be around ?6,000 - ?7,000 a year.

My contract states that my employer may increase my contribution without consultation up by 3% if they wish. The only public sector workers who get a high pension are those who are in the ?80 - ?200K a year bracket - Chief Executives and Senior Managers.

I have a friend who worked in the Civil Service from the age of 16 - 55 when was told he would be retired as his job had ceased to exsist. He has had to find alternative work full time as his 'retirement' pension is insufficient to live on as has a mortgage still to pay.