Comments on: The Post office Pension fund – why not another £7 billion of taxpayer obligation? http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/ Conservative Party Candidate for Wokingham Fri, 19 Mar 2010 18:16:21 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Bazman http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29222 Bazman Tue, 16 Dec 2008 21:06:08 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29222 I am reading the American interest rate is 1% and ours is 2%. Why does anyone have to work? I am reading the American interest rate is 1% and ours is 2%. Why does anyone have to work?

]]> By: Ian Jones http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29221 Ian Jones Tue, 16 Dec 2008 20:29:49 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29221 Why should those "lucky" enough to be working there now still get to contribute to the same gold plated schemes? They need to be closed off and moved to defined contribution plans. Obviously they keep the benefits accrued to date! Why should those “lucky” enough to be working there now still get to contribute to the same gold plated schemes? They need to be closed off and moved to defined contribution plans. Obviously they keep the benefits accrued to date!

]]> By: John http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29220 John Tue, 16 Dec 2008 19:04:47 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29220 Neil Craig " I strongly suspect that some time in the next 20 years some key to the aging process itself will be found. Actually this is one of the elephants in the room for all human society which probably explains why aging research gets £10s of milliions in funding worldwide while AIDS get billions. " Speaking from the Alzheimer's front line - as a reseach medic you understand!- I suspect Alzheimer's is closer to a breathrough - a number of them in fact, than AIDS. Probably to be expected in a year or three. Research in Alzheimer's might also be intrinsically cheaper ie for this disease compared to others. re the ageing process , this is perhaps more distant but 10-20 years is highly likely and then we'll really see the pension effect. Could be positive! Neil Craig
” I strongly suspect that some time in the next 20 years some key to the aging process itself will be found.

Actually this is one of the elephants in the room for all human society which probably explains why aging research gets £10s of milliions in funding worldwide while AIDS get billions. ”

Speaking from the Alzheimer’s front line – as a reseach medic you understand!- I suspect Alzheimer’s is closer to a breathrough – a number of them in fact, than AIDS. Probably to be expected in a year or three.

Research in Alzheimer’s might also be intrinsically cheaper ie for this disease compared to others.

re the ageing process , this is perhaps more distant but 10-20 years is highly likely and then we’ll really see the pension effect.
Could be positive!

]]> By: Acorn http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29219 Acorn Tue, 16 Dec 2008 18:46:24 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29219 Why would this government bother to cover the deficit; it doesn't bother to cover the rest of the public sector deficit. The assets of the PO pension fund will just be used to cover the Treasury fiscal deficit. As far as I can understand, the governments pension paying company, is shelling out £30 billion a year in current public sector pensions. Over a third of this comes directly from the taxpayer. If you capitalize that at about 3.8% - the rate you would get for an RPI inflated annuity at age sixty - that comes to a pension pot of £800 billion. Adding the future liabilities for the now 5.8 billion public sector employees must bring it to about £1100 billion. At some point, reality will have to kick in. The public sector can't go on collecting £3 of benefit for £2 of contributions. Public sector business units at central and local government levels, must be made to cover the whole cost of their pension liabilities. I suspect they will not be so keen to continue their final salary schemes, just like the real world private sector. Why would this government bother to cover the deficit; it doesn’t bother to cover the rest of the public sector deficit. The assets of the PO pension fund will just be used to cover the Treasury fiscal deficit.

As far as I can understand, the governments pension paying company, is shelling out £30 billion a year in current public sector pensions. Over a third of this comes directly from the taxpayer. If you capitalize that at about 3.8% – the rate you would get for an RPI inflated annuity at age sixty – that comes to a pension pot of £800 billion. Adding the future liabilities for the now 5.8 billion public sector employees must bring it to about £1100 billion.

At some point, reality will have to kick in. The public sector can’t go on collecting £3 of benefit for £2 of contributions. Public sector business units at central and local government levels, must be made to cover the whole cost of their pension liabilities. I suspect they will not be so keen to continue their final salary schemes, just like the real world private sector.

]]> By: Donitz http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29218 Donitz Tue, 16 Dec 2008 18:41:34 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29218 As a holder of cash at the moment I'm very concerned about the whole printing of money thing. Two years ago I predicted this Socialist induced crisis and so liquidated about 60% of my assets. At the time I was undertaking bank valuations of "Buy your Council House at 60% of market value from the Government and blow the remaining 40% of equity on day time telly loans to buy that new kitchen, plasma screen, sovereign ring" Now Cash is King unless .................................. As a holder of cash at the moment I’m very concerned about the whole printing of money thing.

Two years ago I predicted this Socialist induced crisis and so liquidated about 60% of my assets.

At the time I was undertaking bank valuations of “Buy your Council House at 60% of market value from the Government and blow the remaining 40% of equity on day time telly loans to buy that new kitchen, plasma screen, sovereign ring”

Now Cash is King unless …………………………….

]]> By: mikestallard http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29211 mikestallard Tue, 16 Dec 2008 17:08:13 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29211 It is becoming more and more obvious that the top priority of this government is to bribe the voters for the coming election, and never mind the economy. So I totally agree with you: they do not even bother (so far as we know) to try your three ideas which might well get some pension money out of the Post Office itself. That said, I wonder if Lord Mandelson, recently returned from a similar job in Brussels, which took a large part in introducing rules which hobbled the PO, is pulling strings in the background with some chums from across the Channel? Unfortunately, because it is all so secret over there, we shall never know. Meanwhile the Scottish Banks both invested heavily in Mr Merdle. It is becoming more and more obvious that the top priority of this government is to bribe the voters for the coming election, and never mind the economy. So I totally agree with you: they do not even bother (so far as we know) to try your three ideas which might well get some pension money out of the Post Office itself.
That said, I wonder if Lord Mandelson, recently returned from a similar job in Brussels, which took a large part in introducing rules which hobbled the PO, is pulling strings in the background with some chums from across the Channel? Unfortunately, because it is all so secret over there, we shall never know.
Meanwhile the Scottish Banks both invested heavily in Mr Merdle.

]]> By: Bill Quango mp http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29205 Bill Quango mp Tue, 16 Dec 2008 13:49:19 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29205 The unions would not budge on an end to final salary schemes for new members. this led in part to the big strike which really damaged the Royal mail's profits. if the unions won't move on future members, and the CWU has just handed out a tidy sum to Mr Brown to bail him out, what possibility is there of any reform or even discussion of change to the pension system. And in all fairness you cannot blame the workers. they have been told that they will be getting "X" pension for "Y" contributions for years. it would be wrong to change that now.. But future members..that must change. And it must change for every Public sector worker. including MP's {sorry john} The unions would not budge on an end to final salary schemes for new members. this led in part to the big strike which really damaged the Royal mail’s profits.
if the unions won’t move on future members, and the CWU has just handed out a tidy sum to Mr Brown to bail him out, what possibility is there of any reform or even discussion of change to the pension system.

And in all fairness you cannot blame the workers. they have been told that they will be getting “X” pension for “Y” contributions for years. it would be wrong to change that now..
But future members..that must change. And it must change for every Public sector worker.

including MP’s
{sorry john}

]]> By: Matt http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29200 Matt Tue, 16 Dec 2008 12:10:51 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29200 I'm not sure that we need actuaries. They ran Equitable Life - taking the top positions on that board - into the ground. The company had managed for a couple of centuries without, I'm sure, the latest actuary statistical theories. When we did a leveraged buy out in the 80's - we had to replicate the sellers final salary scheme - this actuary that I engaged - he had a first in Mathematics from Cambridge - went away with all the figures and said that we, the company, should pay 11.5% of employee wages into the scheme - every year he adjusted this by .5% or so usually up. At last I said to him - make it 14% then we're on the safe side and forget your abacus for a while - he agreed to this, said it was a better option. A few years later I , thinking of the company taking a pension holiday asked him for a valuation of the fund - it was £500,000 overfunded - no problem with a holiday. I didn't take one - but when we floated the company a few months later - I was amazed that - in the due dilligence process he put the over funding at £50,000. Not much had changed in the meantime. The point is that its not like the law of gravity it is an inexact science (How could they wake up a few years ago to announce that they hadn't taken account of increased life expectancy) The funding deficit the tax payer takes on could be much greater - or less Perhaps it should be capped - we will provide x ammount and if thats enough for a final salary then fine - if not it reverts to money purchase I’m not sure that we need actuaries.
They ran Equitable Life – taking the top positions on that board – into the ground. The company had managed for a couple of centuries without, I’m sure, the latest actuary statistical theories.

When we did a leveraged buy out in the 80’s – we had to replicate the sellers final salary scheme – this actuary that I engaged – he had a first in Mathematics from Cambridge – went away with all the figures and said that we, the company, should pay 11.5% of employee wages into the scheme – every year he adjusted this by .5% or so usually up.

At last I said to him – make it 14% then we’re on the safe side and forget your abacus for a while – he agreed to this, said it was a better option.

A few years later I , thinking of the company taking a pension holiday asked him for a valuation of the fund – it was £500,000 overfunded – no problem with a holiday.

I didn’t take one – but when we floated the company a few months later – I was amazed that – in the due dilligence process he put the over funding at £50,000. Not much had changed in the meantime.

The point is that its not like the law of gravity it is an inexact science (How could they wake up a few years ago to announce that they hadn’t taken account of increased life expectancy)

The funding deficit the tax payer takes on could be much greater – or less

Perhaps it should be capped – we will provide x ammount and if thats enough for a final salary then fine – if not it reverts to money purchase

]]> By: Neil Craig http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29197 Neil Craig Tue, 16 Dec 2008 11:50:10 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29197 The elephant in the room of pensions is that for at least the last century lifetimes have been extending by about 1 year for every 4 that passes & I strongly suspect that some time in the next 20 years some key to the aging process itself will be found. Actually this is one of the elephants in the room for all human society which probably explains why aging research gets £10s of milliions in funding worldwide while AIDS get billions. The elephant in the room of pensions is that for at least the last century lifetimes have been extending by about 1 year for every 4 that passes & I strongly suspect that some time in the next 20 years some key to the aging process itself will be found.

Actually this is one of the elephants in the room for all human society which probably explains why aging research gets £10s of milliions in funding worldwide while AIDS get billions.

]]> By: adam http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29195 adam Tue, 16 Dec 2008 11:14:41 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29195 Yea the Post Office stole their pensions, i dont know if anyone even got in trouble for it, probably not. Remember seeing on the news a few years back people who had their pensions stolen were protesting and the government actually said they would compensate them, maybe that was a different bunch of people. Digby Jones on the beeb last week said that Gordon had "no option" but to get further into debt, thats the kinda people who are looking after the country. So, Hey, why not? Lets just bail everyone out with their own money. Makes as much sense as anything else Labour come out with. Yea the Post Office stole their pensions, i dont know if anyone even got in trouble for it, probably not.
Remember seeing on the news a few years back people who had their pensions stolen were protesting and the government actually said they would compensate them, maybe that was a different bunch of people.
Digby Jones on the beeb last week said that Gordon had “no option” but to get further into debt, thats the kinda people who are looking after the country. So, Hey, why not? Lets just bail everyone out with their own money.
Makes as much sense as anything else Labour come out with.

]]> By: Ian Jones http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29192 Ian Jones Tue, 16 Dec 2008 10:58:32 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29192 John, I dont think the Government cares about the £7bn deficit, netted off against the £22bn in the fund and its a nice reduction in the net debt of the Government for 2008/9. Accounting tricks which the taxpayer ends up footing the bill for so Labour can spin their way out of their mess. John,

I dont think the Government cares about the £7bn deficit, netted off against the £22bn in the fund and its a nice reduction in the net debt of the Government for 2008/9. Accounting tricks which the taxpayer ends up footing the bill for so Labour can spin their way out of their mess.

]]> By: MarkE http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29190 MarkE Tue, 16 Dec 2008 10:45:38 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29190 Are there any underlying investments on which returns may be improved for Post Office pensioners, or is the Post Office pension scheme just another Ponzi scheme like National Insurance or the scam we've just seen, run by the wonderfully named Madoff? Reply: The PO scheme is certainly not a Ponzi scheme, and Mr Madoff has not been prosecuted or found guilty. Are there any underlying investments on which returns may be improved for Post Office pensioners, or is the Post Office pension scheme just another Ponzi scheme like National Insurance or the scam we’ve just seen, run by the wonderfully named Madoff?

Reply: The PO scheme is certainly not a Ponzi scheme, and Mr Madoff has not been prosecuted or found guilty.

]]> By: Brian Tomkinson http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29183 Brian Tomkinson Tue, 16 Dec 2008 09:54:44 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29183 It is truly frightening how much debt this government is prepared to burden onto the already overtaxed British taxpayers. How will this enormous deficit be paid? For some time I have had a fear that this will be done by printing money. This fear increases daily as I read certain commentators advocating such a measure and it was even mentioned by Vince Cable in the Commons yesterday so by now it will be the accepted wisdom and obviously the right thing to do! (I’m joking of course). Isn't this the road to absolute ruin as happened in Weimar Germany and Zimbabwe to name but two? I should welcome your views. It is truly frightening how much debt this government is prepared to burden onto the already overtaxed British taxpayers. How will this enormous deficit be paid? For some time I have had a fear that this will be done by printing money. This fear increases daily as I read certain commentators advocating such a measure and it was even mentioned by Vince Cable in the Commons yesterday so by now it will be the accepted wisdom and obviously the right thing to do! (I’m joking of course). Isn’t this the road to absolute ruin as happened in Weimar Germany and Zimbabwe to name but two? I should welcome your views.

]]> By: Letters From A Tory http://www.johnredwoodsdiary.com/2008/12/16/the-post-office-pension-fund-why-not-another-7-billion-of-taxpayer-obligation/#comment-29182 Letters From A Tory Tue, 16 Dec 2008 09:53:25 +0000 http://www.johnredwoodsdiary.com/?p=2391#comment-29182 I was reading this morning that if the government takes control of the £22 billion pension fund that the Royal Mail is currently lumbered with, it can use to it to reduce government debt as explained in the Times this morning: "Ministers refused to comment last night on Conservative claims that the Government was threatening a £22 billion raid on Royal Mail’s pension fund. The Post Office has £22 billion in its pension fund but faces a £7 billion deficit. Senior industry sources have suggested that the Government is planning to seize the £22 billion and use it to make it look as though government borrowing figures are lower." They have no shame and there are no boundaries to their desire to cook the books. www.lettersfromatory.com I was reading this morning that if the government takes control of the £22 billion pension fund that the Royal Mail is currently lumbered with, it can use to it to reduce government debt as explained in the Times this morning:

“Ministers refused to comment last night on Conservative claims that the Government was threatening a £22 billion raid on Royal Mail’s pension fund. The Post Office has £22 billion in its pension fund but faces a £7 billion deficit. Senior industry sources have suggested that the Government is planning to seize the £22 billion and use it to make it look as though government borrowing figures are lower.”

They have no shame and there are no boundaries to their desire to cook the books.

http://www.lettersfromatory.com

]]>