Liebrary: Are public sector pensions ballooning? The government's own figures show this is not true.
Posted by Jake on Sunday, December 04, 2011 with 7 comments | Labels: Article, benefits, Comment, Graphs, inequality, Liebrary, pay, pensions
A succession of government reports have shown that public sector pensions are not ballooning out of control, as is shown by this summary of government figures produced by the Institute of Fiscal Studies:
And yet all the main political parties - Conservative, LibDem and Labour - are united in continuing to spout the opposite.
Even without the shenanigans currently being fought over – raising retirement age; changing inflation link from RPI to CPI; changing from final salary to career average – the cost would stabilise (as shown by the Treasury 2004 forecast). This is inspite of the overall population aging, as is shown by the Office of National Statistics graph below.
The ONS population pyramid graph shows how the population will age between 2010 and 2035. ONS figures state that the number of retired people in the UK will grow by 28%, from 12.2 million in 2010 to 15.6 million in 2035.
Inspite of this growth in numbers of pensioners, there is still no explosion in pension costs as a share of national income. This is because national income is expected to grow more than enough to support this. The current proposals being pushed through actually bring the pensioners' share of national income below the current level, inspite of pensioners being a bigger share of the population.The Hutton proposals will reduce the share of wealth, inspite of the share of pensioners rising. Why?
Pensions are paid for by company profits and tax. Cutting pensions is nothing about affordability, and everything about moving wealth from the poor to the rich.
And that in a country that is already the most unequal in Europe, according to OECD stats:
"The NUT has calculated the total payments into and from the TPS over the period 1923 to date, using its official valuation reports and accounts. Adjusting these figures in line with GDP growth shows that at least £46.4bn more in current prices has been paid into the TPS in contributions over the years than has been paid out in pensions."
ReplyDeletehttp://www.teachers.org.uk/node/14349
To clarify: the Hutton projection is based on pension changes that have already been implemented. That's why Unions object to any further changes. However, Hutton has said it is risky to assume projections so far into the future are completely reliable, and recommends further pension changes.
ReplyDeleteSee http://blogs.channel4.com/factcheck/factcheck-anger-off-the-charts-as-pensions-showdown-looms/7852
Quick note to Jake. What you say is correct but successive governments have spent all your contributions. There is no "pot" to pay new pensioners. This is a scandal that should be exposed. The fact is public sector workers pay MORE tax then private sectors workers as their contributions are spent as if they are tax revenue.
ReplyDeletePublic sector workers dont really pay tax. If I give you ten pounds and you give me three back I have less than I started with not more
ReplyDeleteIf you go to a McDonalds and give them £5 and they give you back £2 you have less money but you also have a hamburger.
DeleteIf you pay a public sector worker £10 and they give you back £3 you have less money but you also have:
a) Teachers: education
b) Nurses: health
c) Policemen: safety
d) etc. etc.
The article ignores the fact that those of us in the private sector are paying taxes to cover public sector wages AND their gold-plated pensions, without choice, and then we have to make savings out of our NET wages to cover the cost of our own pensions - we are buying TWO pensions. Private sector pension risk has also passed to the employee as DB schemes close. Yes, public sector workers buy private goods & help companies to cover the cost of private pensions, but that % of product cost is miniscule compared to the public sector pension liabilities our private sector taxes need to cover. And yes, I know public sector workers do pay taxes, but that is a refund out of taxed money!
ReplyDelete@F_Galt
That’s a joke, right? Are you seriously saying that nurses, police and firemen should pay separately for their NHS, policing and someone to put their fires out? Because they haven’t really paid tax? Hey, that’s so funny I think we’re gonna use it in a cartoon.
DeleteAnyway, as the post says, cutting pensions is about moving wealth from you to the wealthy. And if you didn’t know that up to 50% of your pension savings is taken in fees by banks, I suggest you read what the real problems are...
http://www.blog.rippedoffbritons.com/2011/12/liebrary-cutting-pensions-is-needed-for.html
http://www.blog.rippedoffbritons.com/2011/10/britains-predatory-companies-gorging-on.html