Nigel Farage has called for a crackdown on public sector pension “Ponzi schemes” after it emerged a quarter of council tax revenue is funding staff retirement pots.
The Reform UK leader warned gold-plated public pensions are the “biggest ticking time bomb” in government finances and that the disparity with those in the private sector amounted to “pensions apartheid”.
Quite what is to be done about it is another matter.
Myself – and no, I’m not part of the structure feeding policy into Reform – I’d just fire lots and lots of them. That’ll reduce the pensions costs.
It should be possible to make 10% of public sector workers redundant and therefore reduce the long term pension costs as well as plug any short term funding black holes. This could also be targeted so that the burden falls on the more questionable departments. Frankly, there will be departments and quangos that really do not serve a useful purpose and hence you can get rid of them completely.
Firing some of them will reduce long term costs of course. Shutting such schemes to new entrants is obviously a good idea. But there is still a massive overhang left over of people who have inflation proofed pensions 🙁
By all means dismiss lots and lots of them but that doesn’t address the absurd disparity between pensions in the public and private sectors.
Something more radical is needed and if employment in the state sector becomes less attractive that will encourage some to find jobs in the private sector which will come as a bit of a cold shower.
But it isn’t just pensions is it? As others have pointed out, it’s the whole of the welfare state WE* have promised ourselves.
* When I say WE, I don’t mean US ie: those who pay taxes and have the temerity to ask for some kind of accountability, responsibility and restraint, I mean all those people on the receiving end of the benefits OUR taxes pay for and the politicians and lawmakers who have decided to spend our money to garner the votes from said beneficiaries for themselves.
Quite what is to be done about it is another matter.
I’m at the point where I want the pension funds for govsec workers to go bust and the retired workers to wind up starving and living under bridges. Our taxes pay the ingrateful gits, and never do I hear a word of thanks for our paying for them.
Most council spending goes on (a) adult social care, (b) schools, and (c) children’s services (special needs, children in care, etc.). It’s not all fat-cat bureaucrats.
Apparently, there are more civil servants employed than there are personnel in the combined branches of the military. So, when the small boat invaders uprising begins, we can use the civil servants as the front line defence and, when the sbi have run out of bullets, the proper military can begin the mop up operation. Simple.
@ Andrew M
Yes, children with SEN are a blessing in areas that have been enriched with the cousin marrying immigrants. Lots of the money goes on taxis to ferry them to/from the special schools which generally aren’t close to them.
Co-incidentally, the taxi drivers are from the same “community”.
Another benefit that the Far Right are too blinkered to appreciate.
Mandate monthly covid boosters for all civil servants. Medium term, that should do the trick,
I’m a state pensioner. It’s so heartwarming to know that a quarter of my council tax, which I pay from my pension, contributes to the superior pensions enjoyed by retired council workers.
Now that’s what I call redistribution.
It’s not all fat-cat bureaucrats.
Not all, but still far, far too many. And the lower ranks are feather-bedded, poorly managed, inefficient and often idlers.
These chickens were always going to come home to roost, see also demographic timebomb.
For decades politicians thought they were being oh so clever negotiating public sector pay awards in such a way that they deferred part of the pay rises and leaving the liability unfunded. We’ve seen it with junior doctors who are claiming poverty now whilst looking forward to massive pensions in 30 years.
Like it or not they have gold plated pensions but its not their fault. That’s not to say we shouldn’t be reducing their number and I’d start by telling every department they need to make a 20% cut in headcount in the next 12 months.
These chickens were always going to come home to roost, see also demographic timebomb.
Surely that’s the very definition of a Ponzi scheme? That the originators and early adopters make out like bandits and vamoose before the inevitable collapse?
Thomas Sowell points out that everyone is a consumer but not everyone is a producer. So producers must overproduce (for their own needs) so that everyone may consume.
If it’s true that the private sector mostly produces wealth but the public sector mostly consumes it – which in the UK right now, it is – then there’s going to be a Laffer Curve equivalent point beyond which increasing the size of the public sector (including bennies recipients) vs. the private sector becomes counterproductive and the public sector must collapse from lack of resources because the private sector is disincentivised to produce them.
Where’s that point? Have we already overshot it and are waiting for the lag to catch up?
I entirely agree with the sentiments expressed above but, as a point of information , it is only central government pensions which are unfunded in the UK. Moreover, most local government pension schemes are currently estimated to be near fully funded.
Not quite clear where the 25 percent figure is coming from.
“Funded” simply means that someone is being paid in real-time to produce the goods and services being consumed by the pensioners.
Our problem is not “funding”. It’s that there are too few producers supporting too many consumers. Money can’t fix this, only production/productivity can.
I think Tim found an analysis that publicly run care homes were no cheaper and no better in quality than the alternative of outsourcing to private. Which translates as outsourcing to privately run care homes paid for from council taxpayers work out cheaper and better on aggregate.
There must be some well paid directors, managers, coordinators and just general lifers in this segment on every Council payroll with smashing pension entitlements. They can even retire at 55 don’tchaknow and have a spreadsheet to prove it.
Politically, merging income tax (20%) and NI (8%) could work to reduce public sector pensions disparity given that the latter are taxed at just the 20% basic rate. A basic rate tax of 25% with employees NI abolished would yield about the same income. For sure, private pensions would be affected too, but they are a smaller part of the whole picture, so the public vs private gap would shrink. Imv of course
Yes, a quarter of council tax revenue is funding staff retirement pots through this weird thing called “wages”. Local councils’ pension schemes are funded through payments made by the employer and employee at the time of employment. So, yes, pensions are funded by local councils, as part of the wage bill. And, yes, the majority of council expenditure is wages, as the majority of council work is staff-based not materials based. Social Services and Teaching is 90%+ wages, you don’t need to be buying tons of tarmac and concrete for the Social Services department.
The real Ponzi scheme is the State Pension. That is entirely non-contributory, and *is* paid at the time of drawing out from contemporary income.
On a similar topic, I’ve started to see public sector jobs advertised where they actually specify the pension as part of the wages. Eg, recently: Salary: £28,000 plus £8,000 pension contributions. In other words: Renumeration £36,000. This should be be compulsary in “wages” comparisons. My wages are £22,500 plus zero put into my pension, a colleague in the local council will be on £22,500 plus £6,000.