These public sector pensions...
Discussion
After all the debate about PS pensions, I thought I would have a closer look at my local authorities Pension Fund accounts. The latest figures I can find are up to 31st March 2009.
I will admit I know nothing about pensions, so I've popped the key figures below.
Looking at the balance sheet, the net assets have decreased a fair percentage (19%) over the previous 12 months, but net assets are still £1.38bn.
I will admit I know nothing about pensions, so I've popped the key figures below.
LA Pensions Report said:
Contributions: £100.3M (£73.8M Employer, £26.5M Employees)
Transfers In: £8.0M
Total Income: £108.3M
Pension Benefits Paid: £85.1M (13,644 current pensioners)
Administration Costs: £1.4M
Total 'Expenditure': £86.5M
Member Stats:
Current Contributing Members: 21,500
Current Pensioners: 13,644
Deferred Members: 17,600
To me, this doesn't sound too bad? What else do I need to consider?Transfers In: £8.0M
Total Income: £108.3M
Pension Benefits Paid: £85.1M (13,644 current pensioners)
Administration Costs: £1.4M
Total 'Expenditure': £86.5M
Member Stats:
Current Contributing Members: 21,500
Current Pensioners: 13,644
Deferred Members: 17,600
Looking at the balance sheet, the net assets have decreased a fair percentage (19%) over the previous 12 months, but net assets are still £1.38bn.
musclecarmad said:
look at what they are paying in compared to the employee - which private firms contribute 3 times more than the employee? not many!
Any?Im in the private sector with a FTSE 100 company, and I put in 10% and they put in 8%. Hopefully should provide a good pot, but mostly funded by myself.
Public sector pensions are a ticking timebomb, politically sensitive. Strikes etc would be the all the rage if/when changes occur.
Changes to pensions are the only way. Before anyone says "well, they cant change what I signed up for years ago". Oh yes they can, and they could/should. Happens all to often in the private sector. My company could quite easily change their contribution downwards, and theres nothing I could do.
As a miniumum changes to new starters should occur, at least making it easier for future generations, but people who still be peeved about that, aka BA & their strikes.
Public sector workers would just hold the country and government to ransom, lets face it, most public sector workers vote for the current government anyway!
B120WNY said:
musclecarmad said:
lets face it, most public sector workers vote for the current government anyway!
Maybe we should get all those 'rich' people to start paying all the tax they owe! There's plenty of threads on here about how to avoid it.
Pension scheme accounts are pretty worthless to be honest, and I say that as a pension scheme auditor myself. Since the Fund Account (effectively a pension scheme accounts version of a company's balance sheet) contains the caveat that it doesn't take account of the liability to pay benefits which fall due after the year end, the financial position will always look good because all you show are the assets and some small current liabilities, leaving you in a large net asset position.
You'd be better off looking in a bit more detail at the actuarial disclosures in the Trustee's Report and the accompanying actuarial statements which will give you a bit more of an understanding about the true financial position of the scheme.
How well is the scheme funded on an ongoing basis? A lot of schemes that I work with are currently in the region of 60-80% funded, which if applied to your scheme would mean that it had a deficit of approximately £350-900m. That £1.38bn suddenly doesn't look so useful. If you were to look at the valuation on a buy-out basis (the cost that you would need to pay an insurance company to take the liabilities of your hands) that deficit would probably rise to more like £1.2 - £1.5bn.
And that's before you consider the impact of increasing longevity on liabilities and recent poor investment performance of most scheme's assets. Final salary schemes are just becoming more and more financially onerous, hence the continuing trend in the private sector away from this form of provision.
And it is only a matter of time before the public sector is forced to face up to reality and follow suit. It's simply indefensible that the majority of private sector workers, most of whom will not have access to a defined benefit pension scheme, pay a huge cost for a minority to enjoy such priviledged benefits.
Having said that, if someone offered me membership of a DB scheme, I'd bite their hand off!
You'd be better off looking in a bit more detail at the actuarial disclosures in the Trustee's Report and the accompanying actuarial statements which will give you a bit more of an understanding about the true financial position of the scheme.
How well is the scheme funded on an ongoing basis? A lot of schemes that I work with are currently in the region of 60-80% funded, which if applied to your scheme would mean that it had a deficit of approximately £350-900m. That £1.38bn suddenly doesn't look so useful. If you were to look at the valuation on a buy-out basis (the cost that you would need to pay an insurance company to take the liabilities of your hands) that deficit would probably rise to more like £1.2 - £1.5bn.
And that's before you consider the impact of increasing longevity on liabilities and recent poor investment performance of most scheme's assets. Final salary schemes are just becoming more and more financially onerous, hence the continuing trend in the private sector away from this form of provision.
And it is only a matter of time before the public sector is forced to face up to reality and follow suit. It's simply indefensible that the majority of private sector workers, most of whom will not have access to a defined benefit pension scheme, pay a huge cost for a minority to enjoy such priviledged benefits.
Having said that, if someone offered me membership of a DB scheme, I'd bite their hand off!
this gives an indication of how well funded the average lgps fund is likely to be:
http://www.puntersouthall.com/files/documents/PSO%...
re the comment on the civil service scheme, this changed to a career-average scheme for new entrants from July 2007. Still defined benefit, so employer/taxpayer runs most of the risks, and generous by private sector standards. Most private sector schemes closed to new entrants well before this, and usually replaced by a much cheaper defined contribution scheme
http://www.puntersouthall.com/files/documents/PSO%...
re the comment on the civil service scheme, this changed to a career-average scheme for new entrants from July 2007. Still defined benefit, so employer/taxpayer runs most of the risks, and generous by private sector standards. Most private sector schemes closed to new entrants well before this, and usually replaced by a much cheaper defined contribution scheme
lauda said:
Pension scheme accounts are pretty worthless to be honest, and I say that as a pension scheme auditor myself. Since the Fund Account (effectively a pension scheme accounts version of a company's balance sheet) contains the caveat that it doesn't take account of the liability to pay benefits which fall due after the year end, the financial position will always look good because all you show are the assets and some small current liabilities, leaving you in a large net asset position.
You'd be better off looking in a bit more detail at the actuarial disclosures in the Trustee's Report and the accompanying actuarial statements which will give you a bit more of an understanding about the true financial position of the scheme.
How well is the scheme funded on an ongoing basis? A lot of schemes that I work with are currently in the region of 60-80% funded, which if applied to your scheme would mean that it had a deficit of approximately £350-900m. That £1.38bn suddenly doesn't look so useful. If you were to look at the valuation on a buy-out basis (the cost that you would need to pay an insurance company to take the liabilities of your hands) that deficit would probably rise to more like £1.2 - £1.5bn.
And that's before you consider the impact of increasing longevity on liabilities and recent poor investment performance of most scheme's assets. Final salary schemes are just becoming more and more financially onerous, hence the continuing trend in the private sector away from this form of provision.
And it is only a matter of time before the public sector is forced to face up to reality and follow suit. It's simply indefensible that the majority of private sector workers, most of whom will not have access to a defined benefit pension scheme, pay a huge cost for a minority to enjoy such priviledged benefits.
Having said that, if someone offered me membership of a DB scheme, I'd bite their hand off!
Thanks, that's great info - just what I was looking for!You'd be better off looking in a bit more detail at the actuarial disclosures in the Trustee's Report and the accompanying actuarial statements which will give you a bit more of an understanding about the true financial position of the scheme.
How well is the scheme funded on an ongoing basis? A lot of schemes that I work with are currently in the region of 60-80% funded, which if applied to your scheme would mean that it had a deficit of approximately £350-900m. That £1.38bn suddenly doesn't look so useful. If you were to look at the valuation on a buy-out basis (the cost that you would need to pay an insurance company to take the liabilities of your hands) that deficit would probably rise to more like £1.2 - £1.5bn.
And that's before you consider the impact of increasing longevity on liabilities and recent poor investment performance of most scheme's assets. Final salary schemes are just becoming more and more financially onerous, hence the continuing trend in the private sector away from this form of provision.
And it is only a matter of time before the public sector is forced to face up to reality and follow suit. It's simply indefensible that the majority of private sector workers, most of whom will not have access to a defined benefit pension scheme, pay a huge cost for a minority to enjoy such priviledged benefits.
Having said that, if someone offered me membership of a DB scheme, I'd bite their hand off!
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