I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
Lies, damned lies and statistics and all that - but assumptions can be false as well as true.
In April 2023, median weekly earnings for full-time employees in the
public sector were 8% higher than those in the private sector. The gap
had been narrowing prior to the pandemic, but increased again in 2020,
partly because of greater use of furlough in the private sector. It has
been narrowing since 2021.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
I think a lot of that is a fallacy. Especially when it comes to teachers, nurses & doctors. Not sure where else they can work on a comparable job where they would get an annual bonus.
And you forget the inflation linked pension. Every year they are getting guaranteed increases in retirement. Try building that into an annuity or a drawdown pension.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
I agree. I don't see it working properly. Certainly not with equity based. Maybe like a corporate bond, but even then would have to be guaranteed by the government to convince pension trustrees it's sensible. As a trustee for a pension scheme that's my take anyway.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
Lies, damned lies and statistics and all that - but assumptions can be false as well as true.
In April 2023, median weekly earnings for full-time employees in the
public sector were 8% higher than those in the private sector. The gap
had been narrowing prior to the pandemic, but increased again in 2020,
partly because of greater use of furlough in the private sector. It has
been narrowing since 2021.
Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc.
My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere especially the likes of teachers and health workers.
Historically at least the public sector has offered / advertised the pension as a genuine element of the remuneration package.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
I think a lot of that is a fallacy. Especially when it comes to teachers, nurses & doctors. Not sure where else they can work on a comparable job where they would get an annual bonus.
And you forget the inflation linked pension. Every year they are getting guaranteed increases in retirement. Try building that into an annuity or a drawdown pension.
Not forgetting at all. It’s part of the overall package.
But I take your point about finding direct or like for like comparisons.
Surely there are a lot of relatively average paid civil servants who might do better in a private sector role in more generic roles - finance, HR, marketing etc?
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
Lies, damned lies and statistics and all that - but assumptions can be false as well as true.
In April 2023, median weekly earnings for full-time employees in the
public sector were 8% higher than those in the private sector. The gap
had been narrowing prior to the pandemic, but increased again in 2020,
partly because of greater use of furlough in the private sector. It has
been narrowing since 2021.
Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc.
My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere especially the likes of teachers and health workers.
You mean not like the automatic pay scales that doctors & nurses are on. Pay scales that mean they get pay rises every couple of years due to just being in the job. This is above any CPI or pay award body increases. And no real fear of redundancy either.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
Lies, damned lies and statistics and all that - but assumptions can be false as well as true.
In April 2023, median weekly earnings for full-time employees in the
public sector were 8% higher than those in the private sector. The gap
had been narrowing prior to the pandemic, but increased again in 2020,
partly because of greater use of furlough in the private sector. It has
been narrowing since 2021.
Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc.
My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere especially the likes of teachers and health workers.
Historically at least the public sector has offered / advertised the pension as a genuine element of the remuneration package.
It would seem the figures are across all public sector versus all private sector and would presumably come from HMRC data. It also says very clearly 'median'.
Of course there would be some roles where public sector pay lagged behind private and vice versa - that's the nature of averages.
Also, the vast majority of private sector employees do not get 'big' bonuses - don't be swayed by the bonuses paid to FTSE 100 CEO's - there's only 100 of them!
Yes - no surprise that DB pensions, index linked forever, are a pretty good recruitment tool.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
Lies, damned lies and statistics and all that - but assumptions can be false as well as true.
In April 2023, median weekly earnings for full-time employees in the
public sector were 8% higher than those in the private sector. The gap
had been narrowing prior to the pandemic, but increased again in 2020,
partly because of greater use of furlough in the private sector. It has
been narrowing since 2021.
Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc.
My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere especially the likes of teachers and health workers.
Historically at least the public sector has offered / advertised the pension as a genuine element of the remuneration package.
It would seem the figures are across all public sector versus all private sector and would presumably come from HMRC data. It also says very clearly 'median'.
Of course there would be some roles where public sector pay lagged behind private and vice versa - that's the nature of averages.
Also, the vast majority of private sector employees do not get 'big' bonuses - don't be swayed by the bonuses paid to FTSE 100 CEO's - there's only 100 of them!
Yes - no surprise that DB pensions, index linked forever, are a pretty good recruitment tool.
Depends how you define big.
Anything when you get nothing in public sector seems ‘big’.
Within that report it does also say this:
Skills/occupation: The public sector employs a higher proportion of upper-skilled employees than the private sector. Many of the lowest paid occupations (for example, elementary sales occupations, bar and restaurant staff, hairdressers) are largely found in the private sector. However, high earners in the private sector tend to be paid more than high earners in the public sector.
A case of lies , damn lies and statistics perhaps?
I think we agree that it’s probably fair not to generalise too much. But it may be unfair to imply all public sectors have an advantage in some way.
We make our own choices
For the record I was not a public sector employee so no axe to grind but very aware different employees pay differently and pension benefit is part of the overall remuneration package individuals need consider
The public v private thing is an interesting one but the more interesting one and will be more as tome goes by is PAYE vs Self employment. For years I'd listen to people in the pub take the piss about what my day rate was compared to them. I didnt give much of a shit as I knew I'd see my money at the end of the month, would not have to save up to cover lost wages when off work as well as pay for a holiday and didn't have to be looking over my shoulder for the tax man to finally strangle some honesty out of me. However, these guys were all demonstratably materially wealthier than me, working as PAYE in the private sector.
One of the trade offs people make choosing to work in the public sector is the promise of a better pension at the expense of not having a dynamic wage increase each year.
The more I think about pensions and CGT, inheritance tax, tax on investment properties the more I think genuinely the powers that be desire us not to have retirements. It should be a goal to have saved and invested prudently to be able to give up work early and enjoy life but at every turn the doors slam shut. Pensions are now basically endowment policies, and any type of aspirational investment success is taxed so much it is barely worth it
Some private sector workers didn’t have pension schemes until the change was made. my wife worked in Halifax bank but was not employed buy the bank but by the estate agent owner who did not have a pension scheme so has 20 years or so with no pension.
The public v private thing is an interesting one but the more interesting one and will be more as tome goes by is PAYE vs Self employment. For years I'd listen to people in the pub take the piss about what my day rate was compared to them. I didnt give much of a shit as I knew I'd see my money at the end of the month, would not have to save up to cover lost wages when off work as well as pay for a holiday and didn't have to be looking over my shoulder for the tax man to finally strangle some honesty out of me. However, these guys were all demonstratably materially wealthier than me, working as PAYE in the private sector.
One of the trade offs people make choosing to work in the public sector is the promise of a better pension at the expense of not having a dynamic wage increase each year.
The more I think about pensions and CGT, inheritance tax, tax on investment properties the more I think genuinely the powers that be desire us not to have retirements. It should be a goal to have saved and invested prudently to be able to give up work early and enjoy life but at every turn the doors slam shut. Pensions are now basically endowment policies, and any type of aspirational investment success is taxed so much it is barely worth it
I disagree.
I noticed that from the list of your "investments" you missed out ISA's, the most tax efficient & flexible savings vehicle there is. Compared to investment property which is very illiquid, tax inefficient & not very flexible.
I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
For which they have likely sacrificed relatively bigger private sector salaries and bonuses.
Swings and roundabouts is my point.
Yeah but you also don't have to do much work so there's swings and roundabouts there too.
The public v private thing is an interesting one but the more interesting one and will be more as tome goes by is PAYE vs Self employment. For years I'd listen to people in the pub take the piss about what my day rate was compared to them. I didnt give much of a shit as I knew I'd see my money at the end of the month, would not have to save up to cover lost wages when off work as well as pay for a holiday and didn't have to be looking over my shoulder for the tax man to finally strangle some honesty out of me. However, these guys were all demonstratably materially wealthier than me, working as PAYE in the private sector.
One of the trade offs people make choosing to work in the public sector is the promise of a better pension at the expense of not having a dynamic wage increase each year.
The more I think about pensions and CGT, inheritance tax, tax on investment properties the more I think genuinely the powers that be desire us not to have retirements. It should be a goal to have saved and invested prudently to be able to give up work early and enjoy life but at every turn the doors slam shut. Pensions are now basically endowment policies, and any type of aspirational investment success is taxed so much it is barely worth it
I disagree.
I noticed that from the list of your "investments" you missed out ISA's, the most tax efficient & flexible savings vehicle there is. Compared to investment property which is very illiquid, tax inefficient & not very flexible.
Fair one, but if you are only earning 12k a year the ISA wouldn't be worth a lot would it ;-)
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
You would like to think that before they consider doing any of these things that they will take advice from all manner of financial experts. The implications of what they are proposing may well prove to be catastrophic. If what's being proposed is such a good idea then why hasn't it been done before?
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
Good point made on Newscast last night. Even if they do get this idea off the ground & amalgamate the pensions into 6 mega pensions (that's the number I believe they are talking about), who's to say they will invest into UK infrastructure anyway ? They may find that better returns are to he had elsewhere......and surely the pension trustees mandate must be for the betterment of their members. Unless Labour make certain restrictions on non-UK investments or say you have to invest x amount into the UK.
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
Good point made on Newscast last night. Even if they do get this idea off the ground & amalgamate the pensions into 6 mega pensions (that's the number I believe they are talking about), who's to say they will invest into UK infrastructure anyway ? They may find that better returns are to he had elsewhere......and surely the pension trustees mandate must be for the betterment of their members. Unless Labour make certain restrictions on non-UK investments or say you have to invest x amount into the UK.
I think that’s exactly what they are saying. They want ,I think I read, 5% minimum in UK infrastructure stuff I believe.
Hard to see this will evolve very quickly to kick start economic growth plans.
We’re in very dangerous territory if government dictates where pension funds should invest. Hope the trustees of said funds have good Trustees insurance!!
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
I can understand some concerns until the detail is fully known, but surely we should be trying to emulate the best ways in which to manage these funds and Canada (and Australia) have led the way for some time. Canada have the world’s 3rd largest share of pension wealth in the world, despite being 38th in terms of population size. It has to be right that we learn from their successes (and failures) and make the billions held work for us…the same way we should have done with North Sea oil revenues.
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
I can understand some concerns until the detail is fully known, but surely we should be trying to emulate the best ways in which to manage these funds and Canada (and Australia) have led the way for some time. Canada have the world’s 3rd largest share of pension wealth in the world, despite being 38th in terms of population size. It has to be right that we learn from their successes (and failures) and make the billions held work for us…the same way we should have done with North Sea oil revenues.
AFAIK none of those sited (such as Ontario) have any restriction or government dictate as to what they can/should invest in.
up until the early 90’s they only invested in government bonds.
pension funds should be free to invest as they see fit (within the realms of their authority etc). I wouldn’t want to see a government say you have to invest x amount into y.
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
I can understand some concerns until the detail is fully known, but surely we should be trying to emulate the best ways in which to manage these funds and Canada (and Australia) have led the way for some time. Canada have the world’s 3rd largest share of pension wealth in the world, despite being 38th in terms of population size. It has to be right that we learn from their successes (and failures) and make the billions held work for us…the same way we should have done with North Sea oil revenues.
AFAIK none of those sited (such as Ontario) have any restriction or government dictate as to what they can/should invest in.
up until the early 90’s they only invested in government bonds.
pension funds should be free to invest as they see fit (within the realms of their authority etc). I wouldn’t want to see a government say you have to invest x amount into y.
I agree with you on freedom to invest and that certainly seems to be the case with the Canadians. It also now seems to be the thinking in Government if the latest updates are true. Any pension fund should be diverse and that should allow scope, within a larger pooled fund, to invest in infrastructure and smaller tech/pharma businesses, for example. It’s a criticism of the Canadian funds that they don’t do enough investment in-country and something we should learn from too. After all, overseas governments, pension funds have, largely done well out of investing here.
Ironically though Thames Water seems to be proving a dud for the Canadians, although they’ll have had some large dividends along the way.
Correct me if I'm being overly simple, but isn't the idea here to get pension funds to invest in infrastructure to save the government having to do it and lay out the cash?
The article is a little contradictory. It does state that it’s hoped this will see billions invested into infrastructure, but does later say that administrators will not be obliged to invest in the UK. This should be no different to any good pension fund administrator. They have to put together a diverse portfolio, which can boost long term returns. That may well include the UK and our infrastructure, if there are returns to be made.
I've done some work with one of the Canadian pension funds back in the early 2000's, and they operated exactly like a hedge fund, with fairly simple requirements to modestly beat a benchmark for an acceptable risk (i.e. volatility).
Advantages: - easy for them to outperform an index, as they didn't have to make a profit, like a private asset or money manager - consolidates lots of small schemes and can therefore rationalise overheads - can compete and pay for genuine investment and risk talent
That last point is why I think this approach is potentially safer than the current system, where you have legions of under-qualified 'investment professionals' that are raped on a daily basis by banks and other FIs. VFM and performance is no doubt woeful right now, but scattered across lots of small schemes.
I hope what might be 'under the covers' is that they will rethink the liability driven investment regulations, which were ludicrous to start with and - predictably - nearly brought the pensions industry down when interest rates started to rise. That should improve the allocation towards equities.
Correct me if I'm being overly simple, but isn't the idea here to get pension funds to invest in infrastructure to save the government having to do it and lay out the cash?
Not sure how that will work in reality..
Well, when a big scheme collapses or is curtailed (like HS2) then the pension scheme members lose shed loads of money.
But the Government and public sector workers like teachers & nhs staff will be totally safe.
Correct me if I'm being overly simple, but isn't the idea here to get pension funds to invest in infrastructure to save the government having to do it and lay out the cash?
Not sure how that will work in reality..
Well, when a big scheme collapses or is curtailed (like HS2) then the pension scheme members lose shed loads of money.
But the Government and public sector workers like teachers & nhs staff will be totally safe.
I'm all right Jack !
HS2 should really have been a no-brainer. Possibly even more so if investor is a Government Pension fund who can then take a stake in the revenue generating train company that uses the line and can guarantee long-term, stable income. More of an issue is how we allow ourselves to be ripped off in terms of costs in this country, a lot of which is down to planning restrictions. Have to see now whether those planned changes work and start bringing those costs down.
Comments
If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.
I dont think this will go down well & probably wont get off the ground.
But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded inflation linked pension.
Swings and roundabouts is my point.
Trends in public sector pay
In April 2023, median weekly earnings for full-time employees in the public sector were 8% higher than those in the private sector. The gap had been narrowing prior to the pandemic, but increased again in 2020, partly because of greater use of furlough in the private sector. It has been narrowing since 2021.
And you forget the inflation linked pension. Every year they are getting guaranteed increases in retirement. Try building that into an annuity or a drawdown pension.
Skills/occupation: The public sector employs a higher proportion of upper-skilled employees than the private sector. Many of the lowest paid occupations (for example, elementary sales occupations, bar and restaurant staff, hairdressers) are largely found in the private sector. However, high earners in the private sector tend to be paid more than high earners in the public sector.
A case of lies , damn lies and statistics perhaps?
I think we agree that it’s probably fair not to generalise too much. But it may be unfair to imply all public sectors have an advantage in some way.
We make our own choices
For the record I was not a public sector employee so no axe to grind but very aware different employees pay differently and pension benefit is part of the overall remuneration package individuals need consider
One of the trade offs people make choosing to work in the public sector is the promise of a better pension at the expense of not having a dynamic wage increase each year.
The more I think about pensions and CGT, inheritance tax, tax on investment properties the more I think genuinely the powers that be desire us not to have retirements. It should be a goal to have saved and invested prudently to be able to give up work early and enjoy life but at every turn the doors slam shut. Pensions are now basically endowment policies, and any type of aspirational investment success is taxed so much it is barely worth it
I noticed that from the list of your "investments" you missed out ISA's, the most tax efficient & flexible savings vehicle there is. Compared to investment property which is very illiquid, tax inefficient & not very flexible.
i read this as they will combine all the council schemes, of which the vast majority are DB schemes (the article refers as such) and try to copy the investment style of ones like Canadas.
The implications of what they are proposing may well prove to be catastrophic.
If what's being proposed is such a good idea then why hasn't it been done before?
up until the early 90’s they only invested in government bonds.
pension funds should be free to invest as they see fit (within the realms of their authority etc). I wouldn’t want to see a government say you have to invest x amount into y.
Ironically though Thames Water seems to be proving a dud for the Canadians, although they’ll have had some large dividends along the way.
https://www.cppinvestments.com/for-canadian/the-success-of-the-canadian-pension-fund-model/#:~:text=%E2%80%9C%255BCanada%255D%2520has%2520only%2520the,that%2520sets%2520us%2520apart%2520globally.
Not sure how that will work in reality..
Advantages:
- easy for them to outperform an index, as they didn't have to make a profit, like a private asset or money manager
- consolidates lots of small schemes and can therefore rationalise overheads
- can compete and pay for genuine investment and risk talent
That last point is why I think this approach is potentially safer than the current system, where you have legions of under-qualified 'investment professionals' that are raped on a daily basis by banks and other FIs. VFM and performance is no doubt woeful right now, but scattered across lots of small schemes.
I hope what might be 'under the covers' is that they will rethink the liability driven investment regulations, which were ludicrous to start with and - predictably - nearly brought the pensions industry down when interest rates started to rise. That should improve the allocation towards equities.
But the Government and public sector workers like teachers & nhs staff will be totally safe.
I'm all right Jack !