baldysblog.co.uk

I have written before about the deplorable Bob Quick over the Damien Green Affair and Mrs Quick’s wedding car hire service run from their home:- http://baldysblog.co.uk/2008/12/21/an-early-retirement-decision/

His latest cock up was to walk into Downing Street for a meeting and clearly on show, a detailed A4 summary sheet of an on-going anti-terror operation which was photographed by the crowd of press photographers and transmitted around the world before you could say “Bob Quick”. The man should have been fired last time, finally the creep has resigned but this ‘blog’ is not about these events, it is about Public Service Pensions.

This Particular Case

Through laziness, arrogance or sheer stupidity, Bob Quick totally compromised a surveillance operation that already must have cost the taxpayer, an awful lot of money through his stupidity. It is worth pointing out here that a Government Minister Caroline Flint had done the exact same thing some months previously over some housing policy information she was to present so, the potential dangers of having documents on show were not exactly unknown, just ignored by a prat.

True, one could point out that the Public Sector generally through losing DVDs in the post containing all the personal details on millions of British families, leaving Top Secret documents on commuter trains, losing laptops containing sensitive information…is so lacking in any concept of basic security that this generation of “Political Policemen” of which both Blair and Quick were so prominent, are just part of the ‘mix’. However, this was the man in charge of “Anti-Terror Operations” Nationally and yet had not a clue about basic security… Let’s face it, this man was totally incompetent and unfit for duty.

What Will Happen

He will retire and receive an “Index Linked Pension”, in simple terms as long as he or his widow live, they will live off the backs of future generations of taxpayers with no penalty at all for being serially incompetent at the job he was paid to do, he has got 30 years in so therefore the rest of us are “lumbered” with paying this whether he was good or bad at his job.

Taking it Further

It is important to understand that “Public Sector” covers a very broad range of occupations from Whitehall Civil Servants, Local Government Officials, the Armed Forces, Police and Emergency Services, Doctors, Nurses, Teachers…the list is very extensive but the only real difference between the various schemes is whether they are fully funded, partially funded or not funded at all by the member’s contributions.

As a broad rule of thumb and emphasised by the collapse of Final Salary Schemes in the private sector, the vast majority of Public Service pensions are not funded, they like today’s Old Age Pension and associated benefits, they rely on today’s taxes/contributions to pay today’s benefits and with an ageing population and longevity, like it or not, we need to change the whole system. Frankly in a fiscal sense, we have no choice but even in a sense of “Equity” as illustrated by Bob Quick’s incompetence, we also should so that people like him are isolated from the public purse in future.

Being Fair

If you want to be “fair” to individuals, you need to create a “structure of rules” that cannot be overturned by the personal whimsy of the chap currently in charge or general dislike because of a media ‘storm’ at the time someone leaves office in disgrace as in the case of fat boy Quick.

The reality as I understand it, is that Bob Quick has some 30 years service in and it is likely that for at least some of that time, he did a reasonable or even good job so that needs to be acknowledged but and regardless of whether a ‘future view’ of his conduct would be more ‘beneficial’, should pension funding and benefits payments that cost extra money extend beyond actual service ?

My View is NO and as must now be clear just by the fuss over unrealistic “allowance” claims by MPs, the Public Sector now needs to come back in line with the cash reality of the wealth creating part of the economy, the Private Sector, playtime is now over, Reality Sucks but, it always bites hard, the whole of the Labour Cabinet, take note !

Basic Structures

Pension funding is complicated in one sense but simple in basic principles. Forget the “Tripod of Investment” – Property, Equity and Money Instrument but then again, don’t because these are the basic elements of any strategy. However if you examine it closely, you will realise that the most important element is the Private Sector, the wealth creation part of the economy.

Equity is Stocks and Shares in private sector businesses whether quoted or not. Property is commercial property based upon rental income that is paid by private sector businesses and Money Instruments are normally Government debt set against future anticipated tax income from private companies. All roads lead to Rome in the sense that the Public Sector is not cash generating, the Private Sector is.

If I set up a pension scheme and regardless of whether in the private or public sector, I take say 6% of your wages off you, add some % and invest it…in Icelandic Banks. In the private sector as I have now lost your money, you tar and feather me and ride me out of town on a rail but you have lost your investment and your future pension will be potentially reduced as a result.

If this was in the Public Sector it would be ignored and the ‘bill’ for my incompetence simply moved to a future generation of taxpayers.

The Way It Has To Be

Regardless of whether you work in the Public, Private Sectors or over the years, move between the two and back again over the years, it makes no difference, there is a flat contribution of say 10% and whether as self employed you do it by yourself or, as an employee it is split between you and your employer makes no difference, you decide which Fund Manager invests it for you and come retirement, whatever the accumulated fund is, goes to buy your annuity or pension.

In the Case of Bob Quick…

He would have 30 years accumulated fund of £x thousands and it is his choice what kind of ‘pension’ he buys with that but, the taxpayer is no longer involved. If he and/or his wife outlive their income and need more, they have to fill in a ‘Means Tested’ form detailing their assets and circumstances same as any other Old Age Pensioner in order to get a State top-up.