Neil Record, pensions guru, calculated that the true cost of unfunded pensions promises in the NHS* was about 35% of salary. In other words, if it were a funded scheme in the private sector, employer/employee contributions would have to be around 35% of headline salary.
The purely notional contributions are currently employer 14% and employee 6%.
Well, whoo-pee-do, the NHS has realised that this is a tad on the low side, so they have increased employee contributions by ... (wait for it) ... a whacking 0.5%.
And these are still notional contributions. So all it means is that for a headline salary of £20,000 the true gross will be £18,700. The figure £1,300 gets jotted down on the employee's contributions history, but it doesn't get paid into any sort of physical fund.
*under the old retire-at-sixty final-salary scheme, that is closed to new entrants but still applies to those already in the scheme.
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Compare with the University Scheme, which is funded. Employees pay 6.35%, employers 14%, retirement age is 65, you get full pension (= half pay + a lump sum) if you've paid in for 40 years. And it's clear that the employers are going to have to pay much more in future. Actual cash. Moolah. Jimmy O'Goblins. Pieces of Eight. The old spondoolicks. Bawbees. Sil'er.
D, that university scheme sounds nowhere near as reckless as the NHS, civil service and teachers' schemes. And it's not 'employers' paying is it? It is Ye Olde Taxpayer.
No, it is employers. The Universities aren't state-owned, just state-bullied. There is one feature that's odd. The one scheme covers all the universities (except the most recent) but the employers are the separate universities. Now, what happens when the first employer goes bust? The rest have to pick up the slack, I presume, which could start a vicious circle. I gather that the building trades have a similar one scheme/many employers arrangement.
D, I thought State-bullied and State-funded, although the £3,000 fees does cover, what, half of their costs? I ought to look it up really...
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