Monday, June 20, 2011

There is no crisis, dammit

From yesterday's Obscurer, a story:
A senior union source told The Observer that it was clear Alexander had jumped the gun as the Treasury attempted to show it was taking a hard line on the burgeoning pensions bill.

"Danny Alexander has been reined in by the Cabinet Office," said a union source. "What he did was inflammatory and showed no sense of the seriousness of these issues for people's lives."

Did the senior union source really? Probably he said the bit that was directly quoted, but I doubt anyone senior in a union would talk about a burgeoning public-sector pensions bill. Because there is no such thing. No. There is no crisis.

They're lying to you

It is not, in fact, burgeoning. It is shrinking. Wilting. It falls year on year for the next forty odd years in the worst case scenario. This is not the work of subversive Bolshevik infiltrators, either, but of the government's own actuaries.

From today's Grauniad, here's Lord "Not the Judge" Hutton himself.
"It's an uncomfortable truth, but I'm afraid it's the reality, that the world is changing around us and people are living for much longer, and we have not been paying for those extra years of pensions – the taxpayer has. Strikes won't make this problem go away, we have to act now. If we don't act now, it's our kids who are going to pick up the tab, and it's not right."

Well, the problem is going away. Strikes or no strikes.

What bit of this chart don't you get, fucko?

Hutton can't plead ignorance. It's in his own report. Iain Duncan Smith commissioned it but he's not read it either:
He is expected to say: "We're heading towards an unprecedented burden being placed on the next generation who will have to pay for their parents' retirement on top of paying for the national debt. It's not fair. This bill will address the realities of our increasing longevity by sharing the costs between the generations. We will stand by the 2018 and 2020 timetable."

It's precedented alright - the precedent is now. It goes down from now on if we do nothing. Doing nothing fixes the problem.

Jesus wept - how many times do I have to say this?

Now, I don't expect very much from the pundit-wanker types like Patrick "Unseasonably Mild" Wintour or Toby "Toby" Helm. They're beyond help. But Allegra Stratton is usually worth reading in the Grauniad because she's a reporter rather than a pundit wanker political editor. However, even she didn't find it worthwhile to read the report or even just to look at a couple of blogs, or if she did she didn't think it newsworthy that this whole row is being sold to the public on false pretences, in total and absolute denial of the facts.

In the opinion of the people whose business it is to pay them, public sector pensions will cost less every year from here on in.

Surely, if you're writing a story about a labour-management dispute over pensions, it's incumbent on you to say something about the state of the pension scheme involved? It's as if the Islington Gazette covered Friday night stabbings without mentioning the location, the motive, or even that a knife was used. But national press journalism seems to inject people with some sort of morally fattening and neutralising hormone. And this is the Guardian!

Shall we take it to the bridge? Yeah? Yeah!

There are reasons, of course.

Pensions: the public sector is in denial, from Saturday's Money supplement. Oddly there isn't a Poverty supplement.
Ian Naismith, head of pensions market development for Scottish Widows, said although more people were saving adequate amounts towards retirement in the public sector, and the changes will still leave them with reasonable pensions, those in the private sector who are saving towards retirement are contributing a bigger proportion of their earnings — 9.7% compared to 9.3%.

Well, they oughter as they probably don't get any employer contributions.

Sadly, the Grauniad's hack doesn't mention them at all at any point and you have to rely on one Ken Chu, an NHS sysadmin, who gets randomly voxpopped to raise this issue. But the paper has bigger fish to fry. Scottish Widows' "head of pensions market development" - yes, really - has to get his sales-driven "research" in the media somehow. No doubt the nice lady from SW will be striding along the beach in next week's glossy for a sizable payment.

To finish, and repeat:

Public pensions as a percentage of GDP will fall every year for the next forty years.

There is no crisis and everyone in the newspapers is lying to you, personally, quite deliberately.


Lord Blagger said...

Might it have occurred to you that the report is a load of bollocks designed to keep the ponzi going?

Annuities use Gilts post Maxwell. The profit margins are 0.25% pa for them.

If you cost a civil service pension, it costs 32 times the annual income because of inflation proofing.

Add that up over the civil service and you get 1.3 trillion (not billion)

So the civil service is poorly paid, so how much is owed to the state pension? Add up the amounts currently being paid, and the accrued rights, and you get 2.4 trillion (present value again)

Present value means it goes up with inflation each year.

There is no fund.

Same applies for the state second pension.

So what's going on with these figures?

Well, there is one blatent lie in. The government assumes it has invested in AA corporate bonds, and that none of these corporate bonds default. Hence the low figure.

It's a con, pure and simple.

Lord Blagger said...

However, that leaves one solution.

If you believe the figures, we can buy out the civil service and all the other public sector workers for the cashflows listed below. We cap, or issue debts that match the cashflows.

I'm all for it, since the rest of us will be quids in.

Alex said...

The civil service schemes are PAYG, only the local authority ones are asset backed. So I presume "there is no fund" is just copy-paste from US Republican troll briefing material about the SSA trust fund not existing, yadda yadda.

Further, the Government Actuary's Department has a better track record than Some Guy Without A Website and I know which one I'd pick in a fight.

Also there's the general principle of "distrust anyone who has their own private accounting system that just happens to accord with their preferences."

Anonymous said...

They are rich people with a newspaper.
Of course they are going to lie and tell you something that justifies the politicians they own cutting your benefits and raising your taxes, so they can raise their benefits and lower their taxes.
What else would you expect them to do?

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