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Number Crunching

David Craig, a former government consultant, calculates that private sector workers are for the first time being forced to pay more in taxes to fund public sector pensions than they manage to save for their own retirement.

Individuals poured about £15.6 billion into personal and company pensions in 2005. In the same year private sector workers paid taxes of about £18 billion to keep retired teachers, National Health Service staff and other state workers in their old age.

Switch them to defined contribution pensions, it\’s the only solution.

8 thoughts on “Number Crunching”

  1. “It makes no difference. The defined contribution = defined benefit.”

    Eh? You’ll have to explain that.

  2. A defined benefit pension costs the same as a defined contribution pension for the same level of pension, unless you are assuming something else, in which case you should say so.

  3. “A defined benefit pension costs the same as a defined contribution pension for the same level of pension” – you are being disingenuous.

    In a defined benefit scheme – as enjoyed by public sector workers, the risk of the ‘pot’ being too small to deliver the defined benefits is borne by the employer.

    In a defined contribution pension – as ‘enjoyed’ now by the majority in the private sector, thanks to Gordon Brown’s tax raids – the risk of a shortfall leaving benefits below those expected is borne by the employee.

  4. The three advantages of DC in the public sector for the taxpayer are:
    1. No more worries about public sector workers retiring too early – they can retire whenever they think their pot is big enough.
    2. As the employer contribution must be made in cash now, the true employment cost is more apparent compared to an unfunded DB scheme. I guess this might increase the funding demands of certain departments in the short term, but should hopefully force greater discipline and honesty in taxation/spending decisions in future.
    3. They give public sector workers a more direct interest in the financial health of the private sector, encouraging a more balanced viewpoint on taxation/spending, trade, regulations, etc.

  5. BlacquesJacquesShellacques

    How about term limits for the civil service. 10 years and you’re out.

    Politicians are much too stupid to plot most of the socialist nonsense the state is so fond of. No indeed for a piece of anti-business, leftoid, crack headed nonsense give me senior civil servants. You don’t suppose that legislative draughtsmen are top of their class, bright, sharp, junior lawyers snapped up by the government before a large law firm could get them, do you?

    See, pension problem solved, and even better, your civil masters are forced out of their upholstered sties to root for their grub like the rest of us, facing opposition every inch of the way from the pigs on the other side of that counter.

    The thought of one of the local city planners being forced out, then forced to successfully submit their own plans to their former fellows makes me quite light headed.

  6. “A defined benefit pension costs the same as a defined contribution pension for the same level of pension”

    Only with a time machine and the ability to go back and change the contributions to the necessary level.

  7. BJ:

    The bureaucratic model is probably the only acceptable for the organization of an executive function (and for much of the nitty-gritty of the legislative); the choice is simply between bureaucracy and despotism. Seen properly, bureaucracy transforms personal tyranny into
    a tyranny of dispassionate, all-encompassing paperwork.

    The problem is not with bureaucracy but with socialism. Without socialism, bureaucracy can never grow beyong the severely limited scope of the State; but, under socialism (or socialist practices), there is no limit to bureaucracy nor to the activities with which it must become involved.

    I know virtually everything there is to know about the subject. And so will you–once you’ve read Ludwig von Mises’ “Bureaucracy.” It’s far and away Mises’ most readable work–only 125 pocket-book-sized pages and available to be read free at

    There are, undoubtedly, some who actively desire bureaucratic management, though it’s detested by nearly everyone, even those espousing socialistic policies of one or another sort. What is needed is for more (and especially of the left-leaning) to appreciate the inextricable and inevitable connection.

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