Re: UK economy comes to a standstill

In article <84ae46a3-d7ba-4d08-996f-5755ff5044f1@xxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
Nigel Worm <mel.rowing@xxxxxxxxxxxxxx> wrote:
On 14 Sep, 02:39, a...@xxxxxxxxx (Andy Walker) wrote:
Public sector pensions have always been paid on the same rob Peter to
pay Paul basis that applied to State Pensions. [...]
If so, this is not easily discovered.
It's very easily discovered:
http://www.teacherspensions.co.uk/index.htm

I didn't spot the bit in there that says "Actually, we don't
bother to collect the money that is supposed to have been contributed
and invest it properly, we just hope we can pay out from the money
coming in from the DCSF". But perhaps your eyesight is better than
mine?

"The TPS is a contributory scheme administered by Teachers' Pensions
(TP) on behalf of the Department for Children, Schools and Families
(DCSF)"
Notice administered by the DCSF - no mentions of members or teachers.

Administered by *TP* on behalf of DCSF. My pension scheme
was, in its most recent version, administered by Capita [as are CS
pensions] on behalf of the university -- I don't think that carries
any implications, good or bad, about how my own pension was funded.
I don't see any structural difference between your scheme and mine
at this level.

The TPS is a government agency and, in more honest days, used to be
called the TPA (Teachers' Pensions Agency) There are no trustees there
are no funds under investment management.

But there are auditors amd accounts. One hopes that someone
would notice if some civil servant with access to the scheme managed
to relieve it of a significant fraction of its funds.

[...] You can even stay in service and transfer your fund to a private
provider (*your* contributions + 3% p.a.)

So if you do that they're swindling you of 9/15 = 60% of
your fund, and of an extra 3-5% pa of interest? They have you by
the short and curlies! Interest at 3% pa is ridiculous [and has
been throughout my career], and doesn't even cover inflation. But
that's why you see your benefits as Good -- they are indeed excellent
by comparison with your nominal fund, but rubbish by comparison with
what your fund could have been if you had all of it and had invested
it yourself.

Well the good days can hardly go on for ever (much that I'd like them
to) Here we are two full teacher pensions, two state pensions,
mortgage paid off. investments and money in the bank yet in receipt of
free bus pass (which in effect means that we seldom pay a parking
charge) concessionary rates where'er we go, winter fuel allowance,
enhanced personal allowance ...

Er, not the last -- did you not notice that it is clawed
back by a 30% tax band? But by dint of no longer paying NI or
superann, you do get a roughly 25% boost in net income. But you
have still been short-changed by TPS -- even more so than I
realised previously, as the info on TPS reveals that you were
contracted out. So you [and your wife] are each missing out on
some #150K, I guess, that your pension pot should have had if it
had been invested properly *and* your S2P of perhaps #6K pa each
[index linked, so actuarially worth, say, #100K]. Wouldn't you
have quite liked an extra half-million between you?

[...]
I could have done with some of this largesse at the time when I had a
couple of toddlers running around, a non-working wife, a mortgage and ~
#45 p.m. coming in after stoppages. [...]

Quite so. Join the club! But having survived that phase of
my life, I intend to enjoy a comfortable old age, based on the fruits
of decades of scrimping.

Whatever is going to be the basis of paying future pensions it cannot
be based on meeting that liability out of current taxation. We are
entering an age where the number of pensioners is going to exceed the
number of workers.

Well, there are two parts to this, often confused in the
public mind. One is the basic state pension. This *can* be paid
out of current taxation, and indeed [IMHO] should be, along with
other benefits and similar payments, and preferably as "citizen's
income". The other is public-sector pensions, which should not
be paid out of taxation but out of pension funds built up by
teachers and civil servants on the same basis as any funds built
up by [eg] plumbers and lawyers. It's public-sector *pay* that
should come out of taxation.

I don't see any great problem in numbers of pensioners.
CI will adjust itself to prevailing economic climates and tastes.
Private pension funds are just that -- private. It's up to us
to decide how much to provide, over and above CI, for our own old
ages. If many of us become people of leisure, is that not a Good
Thing? Some jobs will disappear with automation/computerisation;
but others are appearing in the leisure and service industries.
It will all work out ....

There are plenty of valuable assets in this country. There are even
more in the world at large. The only way out of this dilemma as I see
it is to give incentive to young people to acquire an interest in such
assets (not least their own home) , whether directly indirectly or
both, throughout their working lives with a view towards eventually
gradually disposing of these assets to the oncoming generation so as
to maintain themselves throughout their retirement.

OK, Isn't that what the older generation have always done?
The difference is that the younger generation used to have to wait
to inherit the often meagre possessions of their parents, whereas
today many [most?] retired people are relatively wealthy and are
spending that wealth, on holidays, restaurants, cars, eventually
on care homes, as well as providing assistance and an inheritance
to their children. It's all helping the UK's economy.

The trouble with any such scheme, as I see is it, is one of both
political and social culture.
Taking the last first, a couple of generations or so of high tax, high
inflation, enhanced consumerism and increased availability to easy
credit have led to a culture in young people that saving is uncool.

True. Certainly my children -- who, let it be said, are
sensible and cautious with money -- have a very different attitude
to debt from mine, and no wonder in view of the enforced debt they
have incurred as students. But I don't think they would object
very loudly to a standard retirement package, by which something
of the order of 15% of their salary, with incentives and safeguards,
was diverted into investments. We could perhaps call such a thing
a PPP or SIPP?

They never think they will grow old (I never did) and regard
superannuation schemes as "stoppages" (akin to tax) Money lost for
ever. [...]

That'a because they are *sold* as stoppages rather than
as investments! If you had been given choices about how your 15%
was to be invested, for good or ill, and had been told how your
decisions were working out, rather than just ambling through to
your half-pay [come what may], you might have taken a *lot* more
interest. [And *received* a lot more interest than 3% pa ....]

--
Andy Walker
Nottingham
.

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