Robin Hood in Reverse
Here's an article I posted on 22 June 2010 - explaining how final salary pension schemes - take from the comparatively 'poor' and give to the comparatively 'rich'.
For some reason the trade unions always end up defending the position of the better paid - instead of standing up for the interests of the low paid.
But this particular leopard - seems incapable of changing its spots.
"Robin Hood in Reverse"
"The final salary pension schemes operated by Scotland's councils - are a fine example of Robin Hood in reverse.
Why? Because they take from the 'poor' and give to the 'rich'.
What happens is that low paid employees - end up subsidising much higher paid groups - including many senior and middle ranking officials.
In effect, the part-time cleaner is subsidising the lifestyle - of the council chief executive.
The system works in favour of senior council staff of all kinds - including many teachers.
Let's take an example to illustrate the point - a chief executive paid £150,000 a year - now the person doesn't actually work at that salary level throughout his or her council career.
But their pension is based on this final salary - even if they've only done the job for a relatively short time - as part of their overall service which can be a maximum of 40 years.
The pension scheme rules changed in April 2009, but for the great majority of employees (i.e. those in post before April 2009) - the maximum pension is still worth half of a person's annual salary - plus three times their annual pension as a tax free lump sum.
So, a chief executive on £150,000 and a maximum service would receive - £75,000 annual pension plus £225,000 as a tax free lump sum, i.e. 3 x £75,000.
The new post-April 2009 rules provide for an even bigger pension - worth two thirds of a person's final salary - 25% of which can be converted into a tax free lump sum.
But under both sets of benefits and rules - the reality is that other lower paid council workers (and other tax payers) - are helping to subsidise the scheme - for the benefit of the better paid staff.
Why? Because the higher paid take out much more than they pay in - over their working lives.
Meanwhile - at the other end of the pay ladder - the scheme is not so generous.
Because most low paid workers remain relatively low paid - by and large they don't have a career path - or many opportunities for promotion.
For most low paid workers - their pensions reflects what they pay in to the scheme over the years - because their pay rises only very slowly and mainly through an annual 'cost of living' pay increase.
Now what would be much fairer - and more progressive - is a scheme based on average salary.
So that people get back roughly what they put in over their working lives - this could even leave a bit of room to boost pension benefits - in favour of the lower paid.
The unions like to pretend they're on the side of the low paid when it comes to pensions - but in truth they're propping up a system that favours the relatively better paid.
Does this remind anyone of how the trade unions behaved over equal pay?"
For some reason the trade unions always end up defending the position of the better paid - instead of standing up for the interests of the low paid.
But this particular leopard - seems incapable of changing its spots.
"Robin Hood in Reverse"
"The final salary pension schemes operated by Scotland's councils - are a fine example of Robin Hood in reverse.
Why? Because they take from the 'poor' and give to the 'rich'.
What happens is that low paid employees - end up subsidising much higher paid groups - including many senior and middle ranking officials.
In effect, the part-time cleaner is subsidising the lifestyle - of the council chief executive.
The system works in favour of senior council staff of all kinds - including many teachers.
Let's take an example to illustrate the point - a chief executive paid £150,000 a year - now the person doesn't actually work at that salary level throughout his or her council career.
But their pension is based on this final salary - even if they've only done the job for a relatively short time - as part of their overall service which can be a maximum of 40 years.
The pension scheme rules changed in April 2009, but for the great majority of employees (i.e. those in post before April 2009) - the maximum pension is still worth half of a person's annual salary - plus three times their annual pension as a tax free lump sum.
So, a chief executive on £150,000 and a maximum service would receive - £75,000 annual pension plus £225,000 as a tax free lump sum, i.e. 3 x £75,000.
The new post-April 2009 rules provide for an even bigger pension - worth two thirds of a person's final salary - 25% of which can be converted into a tax free lump sum.
But under both sets of benefits and rules - the reality is that other lower paid council workers (and other tax payers) - are helping to subsidise the scheme - for the benefit of the better paid staff.
Why? Because the higher paid take out much more than they pay in - over their working lives.
Meanwhile - at the other end of the pay ladder - the scheme is not so generous.
Because most low paid workers remain relatively low paid - by and large they don't have a career path - or many opportunities for promotion.
For most low paid workers - their pensions reflects what they pay in to the scheme over the years - because their pay rises only very slowly and mainly through an annual 'cost of living' pay increase.
Now what would be much fairer - and more progressive - is a scheme based on average salary.
So that people get back roughly what they put in over their working lives - this could even leave a bit of room to boost pension benefits - in favour of the lower paid.
The unions like to pretend they're on the side of the low paid when it comes to pensions - but in truth they're propping up a system that favours the relatively better paid.
Does this remind anyone of how the trade unions behaved over equal pay?"
