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February 27, 2006
Public Sector Pensions
So the Treasury is now calculating the public sector pensions costson the same basis as it forces the private sector to. Not surprisingly, using the new discount rate, the sums have ballooned.
The Treasury figures disclosed that the provision for the NHS pension scheme this year is some £26.8 billion, rather than the £7.8 billion in the previous year's figures.
The Teachers' Pension Scheme for England and Wales is £22.2 billion, compared to £6.9 billion, while the Armed Forces scheme is £14.5 billion rather than £3.8 billion.
The Civil Service superannuation scheme, meanwhile, is £16.7 billion, compared to £5.5 billion previously.
The increases were caused by a change in the so-called "discount rate" used to calculate how fast interest rates will erode the pensions bill.
The Government had previously used a generous formula including a discount rate of 3.5 per cent on its liabilities but has reduced that to 2.8 per cent - closer to rates used by the private sector.
One interesting question. Is that a one off adjustment showing the effects of the change? Or are those figures annual? Is the debt accumulating at 71 billion each year? I hope not as that’s about half of the entire income tax take.
"The annual cash payment from unfunded schemes will rise gradually from about 1.5 per cent of GDP now to 2.1 per cent by the middle of the century, putting the UK in a much better position than many other developed economies to deal with the fiscal challenges of the future."
Hhhmm. 2.1% of GDP? No, that’s about 5 p on income tax. Still, it’s a pretty large sum to be paying just for public sector pensions, isn’t it. Perhaps they might need to come of the inflation proofing, early retirement and final salary things. After all, they do get paid more than the private sector anyway, don’t they.
February 27, 2006 in Your Tax Money at Work | Permalink
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Perhaps they might need to come off the inflation proofing, early retirement and final salary things. After all, they do get paid more than the private sector anyway, don’t they.
Giggle. Yes, Tim, teachers at state schools earn far more than their private-school counterparts. Treasury economists earn far more than their counterparts at, say, JP Morgan. An NHS doctor is rich by comparison to a doctor in a private hospital. Mercenaries are far worse paid than squaddies.
You're just operating in a world of your own there, aren't you?
Tim adds:As the figures used by the EOC and the Women and Work Commission show, average hourly wages in the public sector are higher than they are in the private. Straight from the ONS that is. If that isn’t relevant then, of course, nor is the fact that female average wages are lower than male.
Posted by: ajay | Feb 28, 2006 6:07:03 PM
Yes, I checked that out. The median public sector worker earns a whopping £12 more a week than his private sector counterpart.
In the top 25% of earners (the inflation-linked final salary lot you decry) the private sector clearly outearns the public sector.
And, the CIPD says, this is not a permanent state of affairs anyway: "For several decades the pay of public sector workers has followed a clear cyclical pattern – periods when public sector pay has fallen behind that in the private sector followed by periods of catch-up."
Posted by: ajay | Mar 1, 2006 5:48:39 PM
