Reply to: Public Sector Pensions

[Lockhouse]

In the olden days public sector employees were not as well paid as the private sector so the pension was seen quite rightly as equitable and a reward for long and trusted public service. These days for similar roles public sector employees are more highly paid than the private sector (and in addition the growth of lucrative public sector non-jobs) the reverse is now true. The public sector pension is now unfair and should be scrapped.

[Cyberman]

What is really mindblowing about the incompetence of Brown etc., is that they thought that giving Goodwin an index-linked pension guarantee from the age of 50 was cheaper than just sacking him.

[Gibbon]

These are exactly the type of pension that have been closed in the private sector to new entrants because they are unaffordable, and many have even lost their pensions when their employer has gone bust, which is not going to happen in the nannied public sector.

These types of pensions have to be stopped for new employees, the same as has happened in the private sector, and retirement ages have to be increased as they also have in the private sector, because it is the hard-pressed taxpayer that is paying these unsustainable, ever increasing employer's contributions.

It's time for a government with the guts to take the bull by the horns and to make public sector pensions equate with the private sector to avoid a two-tier system. I expect the Tories to do this as they are the only party that will ever take on the unions.

Fine in theory but cripplingly expensive for the next 20 - 40 years until worked through. Currently council employee super ann pays for most of the pensions. Therefore new employees would not be contributing to this so more money would have to be found and also the employer contribution to be found.

Now if the council want to match my wifes 500 a month, great, retire even earlier.

[Cyberman]

Councils run a super annuation scheme not a pension pot as such so tax credits etc don't come into it. They pay a % based on salary and then get a pension worked out on average salary over the number of years worked.

What I was trying to point out was these pensions aren't free albeit they are good ones if you live a good while after retirement as they are index linked.

These are exactly the type of pension that have been closed in the private sector to new entrants because they are unaffordable, and many have even lost their pensions when their employer has gone bust, which is not going to happen in the nannied public sector.

These types of pensions have to be stopped for new employees, the same as has happened in the private sector, and retirement ages have to be increased as they also have in the private sector, because it is the hard-pressed taxpayer that is paying these unsustainable, ever increasing employer's contributions.

It's time for a government with the guts to take the bull by the horns and to make public sector pensions equate with the private sector to avoid a two-tier system. I expect the Tories to do this as they are the only party that will ever take on the unions.

[Gibbon]

I think you will find £500 a month after tax is equivalent to £1250 a month after the tax credit. And that amounts to 450000 aftre 20 years of 5% growth.

And thats fine if it is funded from her contributions alone (seems a very big sum, £500 a month after tax income going into a pension for a £50K job, or have you not explaine dit well/me not understood it well?)

Councils run a super annuation scheme not a pension pot as such so tax credits etc don't come into it. They pay a % based on salary and then get a pension worked out on average salary over the number of years worked.

What I was trying to point out was these pensions aren't free albeit they are good ones if you live a good while after retirement as they are index linked.

[Cyberman]

Its all much of a non-issue when the economy is booming, loads money wot etc...

but when the tulip hits the fan, is when we see what is truly WORTHY of our hard earned (ahem) taxes.

It was never a non-issue. The time to correct these problems is when the economy is doing well. Waiting until we are in a depression is totally ridiculous and public spending cuts should have been made years ago because booms do not last for ever and money should be put aside for the bad times. Now we have absolutely no spare room for tax cuts to boost the economy.

The fact is that Labour never take tough decisions because they do not want to upset their paymasters, the unions, and thus 'bottled' public sector pension changes about five years ago when threatened with strikes.

[Solidec]

Public pensions aren't free !!!!!!!!

My wife works for the local city council and on her 50K she pays 500 after tax into her pension.

Over the last 20 years at 5% that would give her in the order of 225K. her pension if she took it now would only be 14K !!!!

However this money is effectively an employee subsidy to the council as it doesn't go into a pot as the council use it, much like NI.

If the council went over to a traditional big company pension where both employer and employee both paid into a pot that the council couldn't use then wage costs would increase by 20%.

I think you will find £500 a month after tax is equivalent to £1250 a month after the tax credit. And that amounts to 450000 aftre 20 years of 5% growth.

And thats fine if it is funded from her contributions alone (seems a very big sum, £500 a month after tax income going into a pension for a £50K job, or have you not explaine dit well/me not understood it well?)

[Gibbon]

It should be done the way it is on Oz, the employer has a responsibility to pay for the pension, 7% I think it was there.

Can you see the public sector taking a 7% wage drop to pay for something that will be given to them?

Public pensions aren't free !!!!!!!!

My wife works for the local city council and on her 50K she pays 500 after tax into her pension.

Over the last 20 years at 5% that would give her in the order of 225K. her pension if she took it now would only be 14K !!!!

However this money is effectively an employee subsidy to the council as it doesn't go into a pot as the council use it, much like NI.

If the council went over to a traditional big company pension where both employer and employee both paid into a pot that the council couldn't use then wage costs would increase by 20%.

[minestrone]

It should be done the way it is on Oz, the employer has a responsibility to pay for the pension, 7% I think it was there.

Can you see the public sector taking a 7% wage drop to pay for something that will be given to them?

[crimdon]

No, I think he's suggesting that as these types of people are performing an equivelent job type (pay, skill, boredom etc), that it's a little unfair that the public sector worker be rewarded with a much heftier pensoin at the end.

So for example:

Person A works for Starbucks for 40 years on minimum wage and retires on a state pension (if it still exists)

Person B works for local council as a receptionist and retires in a very modest pension becuase of their low wage.

Person A will probably receive subsidies from local govenment because it will be impossible for them to survive. Person B will probably be just above the level set and receive nothing.

The only winner I can see is the Starbucks shareholders because they invested in a company who explouits their workforce.

[minestrone]

the financial sector really takes the biscuit (and your life savings).

Tell me about it, my last gig was working for my pension provider, I can now see why my pot is worth less than the total amount I have put in over the last 10 years.

I have a theory that the larger the company the lower the worker's efficiency, with the government being the largest company of them all.

[Mich the Tester]

Contracted in the public sector twice. I have seen quite a lot of usless folk in the big financials but the public sector takes the biscuit. I met loads of folk in their 30s who were complete fools, who would do nothing all day, no drive, nothing, but were hanging on for the pension.

Opposite experience here in NL. I’ve seen plenty of pretty incompetent civil servants, but the financial sector really takes the biscuit (and your life savings).

[expat]

...
Hell I have no issues with teachers/nurses/firefighters/heart surgeons! earning MORE in salary and LESS in pension, because over generous pensions are effectively deferred taxation. ...

They are taxation spread over a person's life to correspond to their income received over their life. Seems fair to me.

[minestrone]

Contracted in the public sector twice. I have seen quite a lot of usless folk in the big financials but the public sector takes the biscuit. I met loads of folk in their 30s who were complete fools, who would do nothing all day, no drive, nothing, but were hanging on for the pension.

[Solidec]

No, I think he's suggesting that as these types of people are performing an equivelent job type (pay, skill, boredom etc), that it's a little unfair that the public sector worker be rewarded with a much heftier pensoin at the end.

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