Government gold-plates private pensions while cutting public ones

.@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/b6Hdk5zn

.@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/b6Hdk5zn

.@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/b6Hdk5zn

Left Foot Forward – Government gold-plates private pensions while cutting public ones http://t.co/AeXFTyfd

#UK : Government gold-plates private pensions while cutting public ones http://t.co/B0cB9EZn

#UK : Government gold-plates private pensions while cutting public ones http://t.co/B0cB9EZn

#UK : Government gold-plates private pensions while cutting public ones http://t.co/B0cB9EZn

.@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/b6Hdk5zn

Government gold-plates private pensions while cutting public ones: Cormac Hollingsworth reveals the government’s… http://t.co/4q8RUvaX

The two major losers here are both pensioners: Public sector pensioners lose out, because they directly receive payments from the government; but so too do private sector pensioners. As Chart A.1 shows, this is because the only buyers of government index-linked gilts are the funds that pay private pensions. There are no other buyers.

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Not true. The BoE pension fund switched to inflation linked gilts at the same time they were allowed to be let off the hook for controlling inflation, when the government told them to print lots of cash [QE]

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here are literally no other sellers of bonds that will pay interest linked to inflation rates. And given the pension funds need to receive these payments from the government so they can pass them onto their pension clients

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That’s just because of regulation. You made the regulation saying RPI, so the pensions funds hedge with RPI bonds. That was the intention. Force pensioners to invest in ILG, so the government can borrow lots of cash. Down to one of Labour’s donors. Maxwell.

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In 35 years, that means private pensioners will be receiving 63 per cent more in their pension than public sector pensioners, all facilitated by our government, as Chart 2 shows.

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So what’s missing? Ah yes. Those private pensioners have to pay for their pensions, and they have to pay for the civil service pensions.

The private sector gets to pay for everything, and the state creams off its large cut. 1,300 billion compared to a state borrowing of 1,000 bn.

Now you are right, its a default on the deal. But that’s just what you can expect when the government civil servants doing the accounts run a set of hokey books. If you leave off the liabilities such as pensions, don’t be surprised when they aren’t paid.

So the fairness point

What’s fair about the private sector paying for their pensions, and the civil servant pensions at the same time? Nothing.

.@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/b6Hdk5zn

I think this may be misleading, based on a false premise – that the private and public pension arrangements are identical apart from in the RPI or CPI linkage.

There is another difference:
- public pensions are linked to CPI on their output. In other words, if I retire next year and my pension is X, then the following year it will be X+CPI and so on for each year. The governmet determines X.
- private pensions are based on a fund that has been built up in order to purchase an annuity (the index linked guilts you refer to). Actually, the private pensioner can buy a non-index linked annuity (guilt) if they wish, in which case X will start at a higher level and NOT increase at all. Or they can start wit ha smaller X, and have it increase year by year by the CPI as you have suggested. So if the government were to switch from RPI from CPI for the guilts used to pay private pensions, this would simply be reflected in the X a private pensioner would be able to buy with their fund.

So the issue is apples and bananas, which means your comparisson is groundless and misleading. Don’t you agree?

The reason the private pension companies have resisted the change is simply that they want to be able to offer a RPI indexed linked annuity (alongside the non indexed linked versions). It does not mean that private pensioners get a better deal because it is RPI rather than CPI, because they pay for this difference when they purchase the annuity! Just as they would pay more for an indexed linked annuity rather than a non-indexed linked annuity.

Mark

Government gold-plates private pensions while… http://t.co/ggBYI04P #Sustainable_Economy #CPI #gold_plated #inflation #muslim #tcot #sioa

Government gold-plates private pensions while cutting public ones – http://t.co/iV7lBoM2

RT @leftfootfwd: .@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/BhwtYt6J

Government gold-plates private pensions while cutting public ones – http://t.co/iV7lBoM2

.@CormacHolly reveals how the government is gold-plating private pensions while cutting public ones: http://t.co/b6Hdk5zn

Private sector final salary schemes (of which there are few and are ever diminishing) pay either RPI or CPI, depending on what their scheme rules say. What they invest in has no direct influence on the benefits that pensioners receive (indeed the converse is true), so just because schemes are buying RPI linked bonds does not mean that their pensioners are receiving RPI linked pensions.

I’m also interested in how you get to the figure of 63% better if pensions are linked to RPI – using the inflation figures released last week of 5.2% for RPI and 4.8% for CPI as an example, 1.052^35/1.048^35-1=14.3% better (and as pointed out above, this will not be the case for all schemes). I’m fully aware that these rates will change over time, but there is zero evidence for the scaremongering figure that you have used.

All in all, a poor article containing few actual facts.

@vincegraff Not even the first time what is essentially a strike by the finance industry has won over the government: http://t.co/bSQO2lGI

RT @leftfootfwd: Government http://t.co/RSefaZ6o

You’ve used a single data point for RPI and CPI and then claim the ARTICLE is poorly researched? The average difference, historically, is far higher than 0.4%!

No, the main difference is that the government is raiding public pensions at-will, making them a clear scam. There needs to be warnings put out from the appropriate bodies about this scam – it’s no different to any other form of mis-selling of pensions.

“So what’s missing? Ah yes. Those private pensioners have to pay for their pensions, and they have to pay for the civil service pensions. ”

Great, just pay the public sector workers the equivalent their qualifications would gain them in the private sector then (some 80% more, on average).

…Nope, gotta oppress workers simply because of their employer. It’s not like they’re PEOPLE after all, they work for the GUBERMINT !&$!!

Keep on propping up government pension-raiding scams though, that’s your level.

Labour started the pension raid. Taxing private pensions.

Now they are going to ‘raid’ public sector pensions like yours.Raid in quotes because there is no fund. Its more of a default.

The raid on PS workers is the extra contributions. That’s where you are being done over.

Now those extra contributions do not change the debt one iota, because that money is being spent on other things.

So when you get to try and receive your pension, the kitty is still going to be bare.

What you need is money contribution into a fund in your name. You own the assets. That also needs a referenda lock that there is no taxation on the funds without a referenda agreeing to it.

That protects against governments taking pensions – the lot. See Argentina, Hungary for 100% examples.

You still won’t get your pension promise. No money just debt being the reason

As usual, you’re completely wrong.

Thatcher started it by allowing companies to stop paying into well funded schemes, bankrupting them.

And it does nothing whatsoever about governments “taking” pensions. The worthless pensions in Argentina show that quite clearly. Moreover, there cannot be a “referendum lock” without a fundamental reform of British democracy – you’re the radical and the revolutionary trying to break the system here.

You and your 1% are responsible for killing the economy. YOU. You’re the enemy. YOU’LL be able to eat, and you don’t care about anyone else. You’re quite happy to call for starving millions for a scrap of profit.

And since you can’t read, I DO NOT HAVE A PUBLIC SECTOR PENSION.

Nah, you’ve dependent on the state taking other people’s money. Now there is no money, the game is up and you’re worried.

Argentina had a very valuable pension set up. People had to contribute when their incomes were above a threshold. End result, lots of money for investment, employment went up and those who were poorer did well, moving above the threshold.

However, the government did what the government is doing in the UK. Spending money it didn’t have. Making promises like your pension/income.

Then the money was gone and they couldn’t borrow any more.

So they looked around, and said look at all this money in the pensions of the public. We can spend it, so they took the lot.

Same in Hungary.

By the way, 30K a year puts me in the top 1%? Think again.

30K – 7,237.64 in taxation (direct) plus employer on top.

9K to keep the debt level.

So I’m down to 13K to keep a family going.

So how much on top are you going to skim off for your pension?

I stated that the rates will change over time and was only using the current rates as an example. Current expectations, used in actuarial valuations, is that there will be a 0.7% difference going forward, nothing like the 1.4% difference used in the example in the article which IS scaremongering. I’m sure you could find a period of time when the difference is 1.4%, but equally you can look at periods of time when CPI is actually the higher rate of the two. Given the fact that the calculation of the rates has actually changed over time, the past history of the rates is not the greatest evidence anyway. The fact is that the makeup of CPI and the method for calculating is actually a truer reflection of the cost of living than RPI.

However all of this is beside the point. I presume you don’t take any issue with the first of my paragraphs? This was the main point I made against the article, and the fact that the government has changed the increase to CPI for private sector pensions as well (unless stated in the scheme rules). It was an unnecessary and unwarranted attack on the private sector. The fairness of CPI (and the difference) was an additional point.

[1.4% difference between RPI and CPI is needed to get to the 63% improvement mentioned in the article]

@paullewismoney @timothygodfrey This is an eye-opener as well: http://t.co/82yPhFYa. Anything for those Banker funders eh? ( #Labour )

[...] also: • Government gold-plates private pensions while cutting public ones – Cormac Hollingsworth, January 27th [...]

The 1.4% difference in the long term is the Office of Budget Responsibilty’s number.
The point is that private pensions will have the choice to pay RPI for the next 35 years

Government gold-plates private pensions while cutting public ones | Left Foot Forward http://t.co/l2ONVNe3

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