If you believe some people NHS pensions are gold-plated. In truth the average NHS pensioner receives around £6,000 per year. By the way, opponents of the public sector always state pensions based on how much the lifetime pot is, but that's only because a £90,000 pension sounds a lot more gold plated than £6,000 per year.
I'll be honest here, assuming I make it through to retirement in the NHS, then I will get a comfortable pension, but paying in a significant slice of my income (currently 6.5% of my salary that I pay, 14% more from the employer) for 43 years working full time should mean that I don't have to rely on the state to subsidise my pension. And that's the point, if NHS workers are lumbered with the shabby pensions that only seem to provide a good living for the pension fund managers then those NHS workers will have to live off means tested benefits.
So say an incoming Tory government got rid of the "gold plated pensions" who wins and who loses?
The NHS could take the opportunity to reduce the employers pension contribution some time in the future (it's the future because the existing pension contribution that we pay out now funds the existing pensioners and then the NHS pays for us later). Long term - taxpayer wins.
The pension won't pay out as much as it otherwise would. Long term - NHS workers lose.
But a lot of the loss will be made up by Pension Credit or whatever means tested benefit is out there. Long term - taxpayer loses
In the meantime pension fund companies charge administration fees and get their slice of one of the largest pension schemes in the world. Short and long term - Pension Funds win.
The effect to taxpayers will be marginal at best, it's just a simple transfer of money from public sector workers to the City of London masked by the Tory version of class warfare. It's typical from a party who treats politics as an opportunity to enrich the already fortunate in society.
★ Face the Critic: Ian Betteridge Edition
6 hours ago
1 comment:
As I said in a comment on your most recent post, private sector pensions are very different to NHS pensions because:
- the investments are taxed
- the contribution rates are much lower e.g. I get 10% from my employer if I pay in 10%, and that's only just started happening. It used to be I could get only 8% if matched
- we have to be our own investment managers nowadays, which is hard. It's £150 an hour (IFA costs) hard. You get that free.
- investment risk, your outcome is defined, any shortfall, NHS pays. Private sector people, we just have to be poor if there is a shortfall.
You say:
but paying in a significant slice of my income (currently 6.5% of my salary that I pay, 14% more from the employer) for 43 years working full time should mean that I don't have to rely on the state to subsidise my pension.
Welcome to the world of forward looking actuarial projections which I've had to learn, for the reasons stated above.
You say "should mean" but go and work it out. Go and work out whether you have funded the pension expectation. It's taking me a lot of effort to even manage this. I could pay an actuary, but guess how much they cost.
The reason the NHS pensions are gold-plated is because, the staff contributions rates don't fund the expected benefits. Google around for people who try and calculate this. Some people are saying that the equivalent pension contribution rates are 30%+ (and higher, IIRC).
Your discussion of the options open is very interesting.You say:
But a lot of the loss will be made up by Pension Credit or whatever means tested benefit is out there. Long term - taxpayer loses
Good point, except effective T&C's of this can be changed. Have a look at Age of Aging by George Magnus. Pension credit will be unaffordable. They'll change when it becomes available (e.g. 70).
In the meantime pension fund companies charge administration fees and get their slice of one of the largest pension schemes in the world. Short and long term - Pension Funds win.
Yeah. I hate them.
The effect to taxpayers will be marginal at best
Maybe, maybe not. Don't feel you've shown this. Your pension is a long term liability. The tax payer will have to pay it. But they can choose to freeze that liability now.
Btw, the average pension of £6000 a year is excellent. State pension is perhaps £5000, + £6000, the tax situation is zero up to somewhere around £9k for pensioners. Using entitledto.co.uk I've realised what a cushy deal the >60s are currently getting, all unfunded as yet, all being paid for by future tax payers who seeing their old-age commitments disappear into their 70s. We're all (people your/my age) are being ripped off, in the future.
Post a Comment