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Question for Public Sector Workers(27 Posts)
Today's newspaper contained an article about how private sector companies offering full salary pension schemes to new employees are rapidly diminishing (dropped this past year from 27% to 17%). Yet, full salary pension schemes are the norm for public sector workers. (see link below)
Any thoughts about if/how the gap between private and public sector pension plans can be equalised in a way that seems fair and equitable?
why should it be equalised? Like for like many higher paid public sector workers actually earn a bit less than they would it the private sector and the more generous pensions are a way of compensating them for their slightly lower salaries.
public sector workers stay working for one organisation (the NHS, the university sector and so on) and final salary schemes are great for them. For a private sector worker that has 2 years in one firm than 5 years in another, final salarly schemes would just be a real headache to organise.
when they raise my salary to the equivilent I would be paid in private sector, then I will agree to drop the amount I get in my pension.
I think many others feel the same.
pay in public sector is usually significantly less than pay for an equivilent job in the private sector.
I did read the article, and the figures they gave are not representative of many public sector positions.
I work for local govt, and if I did so full-time for 40 years, I would be entitled to half my salary on retiring. In this scheme, you cannot receive a pension of more than half your salary.
I chose to enter the public sector in part because of additional benefits such as flexible working, generous annual leave, and pension. But, in return, I receive a considerably lower wage than I would if I did the same role in the private sector.
IMO, some folk want it all ways ie to pull in a generous private sector salary, but have the perks of a public sector job.
also just ask one of the many low paid workers in the private sector whether they wanted higher wages now or a final salary pension scheme and see what they say
Actually there are big differences betweeen public sector schemes anyway. I have lots of colleagues at my local government employer who feel that they can't afford on their salaries to join the pension scheme, which is now over 6% for most people, so they don't get the employer's contributions or the benefits of it. Our salaries don't keep pace with London housing costs, fares, childcare or most other major elements in cost of living.
I'd suggest that private sector workers fight to defend or improve their own pension rights rather than demanding that their teachers, school support staff, NHS workers and all the others who keep their services going lose out further than they have already.
wot everyone else said. join a union if you don't like your pension in the private sector.
In any case, there's no guarantee that final salary pensions will remain open to new members indefinitely either and then there will be a real injustice as the people who wipe bottoms and empty bins will be really hard done by.
They aren't actually full salary pensions - the pensions were/are a percentage of final salary, eg 80% of final salary.
Yes. And most are maximum 50% of final salary and no more.
I agree with the other comments here - a percentage of final salary scheme (I work for one of the best public sector employers pensions-wise there is, and I will get about 50% on retirement) - is there to offset the often much lower wage and less scintillating work environment you get in councils/the NHS etc. I'd be on at least double what I earn in an equivalent role in the corp sector, and as senior manager I am not badly paid. As it happens that suits me fine - I like a not-for-profit ethos and environment. But I am not unduly concerned about people with share options, BUPA and workplace gym etc, not getting as good a pension deal as me. I think the relative pros and cons balance each other quite neatly, tbh. What really upsets me is seeing ads for posts such as physios, phlebotomists etc at my local hospital, or teaching assistants, care workers etc, all on rubbish pay. Now that is what I call inequitable.
Anyhow, why is this a question for public sector workers? Seems somewhat provocative.
Ask your employers. Ask your colleagues. Ask the people who manage the pension fund. Ask yourself.
Wish I was in his job! What does he do (roughly) if you don't mind me asking...
Good for him squeakypop but I bet there is a price you all pay for that handsome provision? I have some mum friends who earn £££ in the private sector and although they are comfortable with the way of life up to a point, they are constantly on-message with their Blackberries and work extremely long hours for the money. All of them have lost much of their enthusiasm for Mammon since becoming parents, they freely admit.
I assumed Squeaky was talking about her DH's public sector pension?
Or am I just being typically stupid?
Hmm, no Blackberry and doesn't work in the evenings. What an odd point of view!
It's a non-contributary scheme, unlike public sector ones.
Everyone in his company, regardless of rank, has the same pension scheme.
Yes. I am being stupid (ie can't read messages)
Wow Squeaky that does sound an excellent deal . I'd hazard a guess and say the firm must be one of those top-ranked in the "Best Employer" tables.
Final salary pensions were the norm in public sector, but many of them have closed to new entrants or don't offer nearly as good terms to new staff.
I joined the civil service in 2002 - was accepted by a Department but they wouldn't tell me what jobs I was being considered for. I told them I didn't care what my first job was as long as I could start on my chosen date - which happened to be the week before the classic pension scheme shut. So I pay 1.5% of my salary per year to get another 1/60 of my final salary in retirement, whereas people who joined a week later pay 3.5% to get 1/80 per year (give or take various tweaks). And they keep threatening to get rid of the scheme totally - my union nearly went on its first ever strike a couple years ago.
MrNC has worked for various private firms and has put up to 1/3 of salary into pensions (and given how incompetent firms are at merging pensions, I think he has 9 of them...), in order to get roughly the same provision in retirement.
He earns around twice as much as me, but not much more once tax and pension are taken out. Public sector jobs in my field tend to be more varied and interesting than private sector, but if I did cross to the private sector I could probably treble my salary - if my health could cope with extra strain, and more worries that the firm might not be so good at sticking to the law when it came to dealing with health/disability adjustments.
Civil Servant here - the whole point (IMO) is that we accept a lower salary over the years knowing that a good pension is in place when we retire.
We also get a tax-free lump sum - equivalent of 3 times annual pension.
The final salary schemme in the nhs is going - I think it may already be closed to new employees. The other clever little trick that the NHS trusts have pulled off recently is forcing many of their employees to take a paycut, under the guise of Agenda for change. This was supposed to ensure that people doing the same or equal jobs throughout the NHS were all graded equally. What actually happened was that thousands of people were downgraded in order to cut costs. Final salary schemes are just that. If they manage to cut your pay substantially in the last 2 years of your employment, you get a lower pension. For example, in my Trust, the medical secretaries were all downgraded. They are just about on minimum wage - but they work so hard, and their job requires a lot of skill. They would be paid much more in the private sector. It is a disgrace. Now they will get an even lower pension.
3lf - I agree entirely. I am lucky that I have been in the CS since 1989.
Alot of people do not realise how expensive final salary schemes are. The govt has been deliberately encouraging private companies to phase out final salary schemes as they think they are unaffordable in the long run The retired wrokforce will only have to live five or more years longerr across the board and it will put a huge strain on the pension fund resources. Bear in mind that in the public sector most final salary schemes are funded by payments of existing workers. As people live longer and the workforce shrinks the govt is fscing huge pension deficits come the future.
I have sympathy for the low paid workers in the public sector but when you see people higher up the chain getting huge pensions guaranteed I am not so sympathetic.
Given the importance of pensions I think this is something to be researched along with potential earnings when thinking about career paths. I am NHS employed, and think of the pension as a huge perk, along with flexible working arrangements being considered as normal. My husband has worked for a succession of little companies and has little or no pension, and it is a worry.
But like most other public sector employees I get 1/40th of my final salary for every year I work, and I pay in 6% (or therabouts). Unless I do very well I am unlikely to come out with a "huge" pension. The cost is more to do with the size of the public sector in the UK.
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