Public sector pension contribs - reactions?

[CogitoErgoSometimes]

Not a public sector employee myself but wondered what anyone thinks of today's announcement regarding extra contribs. Seems to hit the top earners disproportionately harder.... fair?

[AMumInScotland]

Well, for me its an extra £36 vanishing each month, on top of no payrise to cover the cost of living. And my bills keep going up. And from next August I'm likely to have a £4000 pay cut as well. We're not "fat cats", just ordinary people struggling like anyone else.

[niceguy2]

Personally I think it's more than fair for what is at the end of the day still a very very generous pension.

I suspect anyone who is in the private sector who suffered the loss of their own final salary schemes would have given their back teeth to pay that tiny bit more to keep it.


Yes it seems to hit high earners more and that bit isn't fair as such but then you could argue a 40%/50% rate of tax is also unfair to high earners but that's the norm.

[evieS]

niceguy2 - I am thoroughly sick of the private sector bleating 'they've got more than us' - and then using this as an argument to hammer everyone down to the same unacceptably low level. It's NOT a race to the bottom - but you obviously want it to be! As a public sector worker who will be lucky to retire with a £5k a yr pension in 2035 I'm frankly appalled that private sector workers have accepted situations where their pension pots have been raided and their pension schemes either altered to employee detriment or abolished altogether. I'll fight for your rights. Sad that you're not prepared to reciprocate. Nor - seemingly - are you prepared to defend your own private sector terms and conditions. Private companies have gotten away with bully boy tactics partially because their employees have allowed them to. You've always had the right to take action to prevent your terms and conditions being eroded. Why don't you exercise that right?

Please do not uncritically accept the propaganda concerning public sector pensions and their alleged 'generosity'. They are merely generous in comparison to the private sector - and I refer you to my first para.

The arguments advanced by the government in justification of the changes to the public sector schemes do not bear scrutiny. The changes are a tax upon the public sector (again) by this government who are, in any event, ideologically opposed to anything 'public'.

Go do some research. I'd suggest the TUC website - or any of the trade union (eg UNISON, UNITE, GMB) sites. Then examine the figures. You'll get them via the parliament website - look at the briefings papers etc.

[VivaLeBeaver]

Firstly I'm annoyed that as I joined the NHS in 2008 I don't have a final salary scheme but I'm sure my contributions will be hoiked up along with the pre-2008 staff. So I'm been shafted from both ends as it were.

Also the extra money isn't going to be going into the NHS pension fund as its not needed. I've read in several places that the NHS pension fund is in credit and does not need propping up. There is enough money to pay the pensions. So its this just a stealth tax to pay for more wars in Libya, etc?

[VivaLeBeaver]

My pension is predicted to be 7k a year if I retire at 65 after 33 years of working for the NHS. I can't see me enjoying long cruises, etc on that.

[ivykaty44]

The top earners will get tax relief so they are not really hit harder

[aliceliddell]

(sorry ng but you don't half say some daft things)

[aliceliddell]

Am I right in thinking top top top incomes get tax relief on pensions? Why no mass whingerating about that, then?

[EdithWeston]

"I'm frankly appalled that private sector workers have accepted situations where their pension pots have been raided"

They had to - it was one of Gordon Brown's early acts as Chancellor to change the taxation rules in one of the biggest heists ever - it cost (and continues to cost) the pension funds dearly.

If I heard the example on the news rightly, the proposed increases to certain NHS pensions will be higher than for a teacher on the same income. Does anyone have any good links for the basic facts of the proposals?

[EdithWeston]

aliceliddel: the tax reliefs are the same for all (but can be presented to look bigger if you're paying 40%)

ivykay44: all reliefs have ever-tightening limits on them, and there are new rules about taxation on actual/notional size of pot. In the public sector, the additional "hit" for higher earners will be significant.

[learningtofly]

I am reasonably ok with paying more if its actually going towards supporting the scheme.

If its just going into a general pot of money to cover the deficit its an additional tax and that really really gets my goat

[learningtofly]

Also as negotiations are still going I think the whole thing stinks!

[Mowlem]

To announce publicly how much public sectors are going to have to pay for their pensions, when they haven't agreed yet with the unions how much they are going to have pay reveals one of two options...

either a) The govt is lying - the amount they declare is not the true amount

or b) (and more likely) the govt talks with the unions over the pensions are nothing but a farce, and the govt will do what they want to do.

I suspect its b and the talks are meaningless, and are there just for propaganda so the govt can look as though they are talking.

I'm in the teacher's pension and tbh, I can't see how they can determine whether or not our pension is affordable or not until they do a valuation of the scheme - which the current government refuses to do. When the Govt values my scheme, tells me it is running at a loss of £X and needs £X to make up the deficit, then I'll happily accept that we'll need to change the system, but until they actually know what the shortfall is (if indeed there is any), then how can they justify if we need to pay more money? Surely without a valuation, the govt are just plucking a figure out of thin air?

[edam]

Edith - Gordon Brown's merely a bit player in the great pension rip-off, though. The rot set in long before that, during the previous Tory administration, when financiers, actuaries and company directors dreamt up the 'pensions holiday' wheeze - encouraged by the then Chancellor (Lamont, IIRC, or possibly even earlier - maybe Lawson?). Because, they told us, pension funds had too much money. So much money that they were bigger than the very companies that funded them. So they HAD to be cut down to size. So it was jolly convenient for all concerned if the company stopped putting any money in. Except the poor bloody employees, who, it turns out, have been royally shafted.

Don't see anyone who made money out of that little wheeze saying 'sorry, we fucked up' or 'actually we owe you some compensation for our extremely crap advice and rubbish sums'. Oh no, it's all 'you, little person, you MUST pay more in order to retire on tuppence ha'penny'.

[Lexilicious]

The announcement today was the proposed new contributions to take effect from next April - so closer to Mowlem's (b) example. The figure may change after consultation but unlikely, so the media have reported it as "that's what it's going to be"

I have worked 8 years in central government. I am reasonably well paid but I am underworked. Therefore I feel embarrassingly overpaid. The pay is right for my grade IF my grade was given the same challenges and authority and autonomy as I would have had five years ago, however, some strange things have happened where we have micromanagers above us and all decisions are being made (sometimes badly) at much higher levels than before. If I was being employed to my full abilities I would be paid far less than I could by comparison to a private sector job, but it's difficult to identify a straight comparison with one of those - and of course the job security and pension security (which is another matter from the pension value) are unquantifiable.

[EdithWeston]

The "pensions holiday" was a response to the underpinning pensions funds being too big for the anticipated demands on them, as determined by the funds/companies. And that was in the days of final salary pensions! It was short term, and it meant that contributors got one or two years where they did not pay in.

It wasn't a Government decision or action - it was done by large companies with their own pensions schemes backed by private funds. And it occurred only briefly, during 80s, and funds were in good health before, during and after this (for a decade or so)

Then came this change in taxation. Most people didn't comment about it - a dividend tax sounded like something that would hit only fat cat shareholders. Those who did spot the huge detriment to the average private sector worker didn't get much airtime, and there was no realisation of the impact.

After this tax was implemented, came the plummeting in value to the underpinning funds, and we've all seen the result of this in terms of pensions becoming unaffordable, so less generous. This is one of the clearest cause-and-effects ever.

BTW - I shall treasure you comment about the 80s being a time of anti-banker Government, when they successfully cut any part of the City down to size.

[CogitoErgoSometimes]

I was interested if anyone had looked at the specific amounts that would apply to them. Will you be paying £20/month extra? £100? £400? Is is it going to break the bank or is it less than you thought?

[BeingAMumIsFun]

Most of these workers will get a £5-£7k pension and are not on great salaries and are contributing their Tax, NI and a decent amount to their pensions.

I am proud to live in a country that has always provided a fair share towards pensions for the workers who dedicate their lives to the service of the people.

I work in the private sector and have no pension (but I certainly don't grudge my taxes being used towards pension provision for nurses, teachers, the police, the firemen, the street cleaners, the social workers that are the backbone of our country)

I want a government that will force the private companies to give the workers the same proportion of profits to workers pensions as company directors receive - to ensure my children don't have to give me extra state benefits to cover the gap in income in my pension years - just because company directors took all the money for themselves.

Boots paid their workers a final salary pension for years - then overseas investors took it over and robbed the workers of their pensions. As a result Boots have increased their profits (and the pension pots of the directors). Boots can still afford to pay the pensions but have just chosen not to which means my grandchildren and great grandchildren will have to provide for the Boots pensioners. Why should Boots not pay any more? It is wrong that only company directors get a pension and workers don't.

[TartyDoris]

Governments can't force private companies to do anything, they'll just outsource the jobs.

I think some people have to wake up the fact that the kind of retirements the baby boombers will enjoy are not feasible in the long term. People retiring at 60 and living for 30 more years just doesn't add up.

[edam]

Edith - what on earth are you on about?

[niceguy2]

EvieS. I understand why you may feel "sick of the private sector bleating..." but at the same time I get tired of many public sector workers simply not understanding mathematics. With the teachers pensions, they simply have an unaffordable pension scheme. In other words they pay in way less than they take out. And who are they expecting to pay for that? Well the taxpayer. And who are the taxpayers? Ultimately the private sector. Yes yes, I know public sector staff pay tax too but guess who they get their money from to pay tax.....yes...the private sector.

I don't mean to "bleat", i really don't. But when you want more of my cash and my childrens cash to pay for something you can't otherwise afford, well guess what...I feel like I should have a say in that.

And as for sticking up for our private sector pensions? I don't recall the unions threatening to strike when Gordon Brown taxed dividends on private sector pension funds? Nor did I hear of any unions even calling a ballot in solidarity when all our final salary pensions were being closed down.

So forgive me if I don't like the idea of having overly generous public sector pension which the nation cannot afford, off the back of taxes we can ill afford to waste.

[piebaldpony]

From reading some of the posts it is clear that some of you don't realise that NHS/Teachers/Civil Service schemes are unfunded schemes. There is no pension fund as such - contributions are paid to the government, not put into a pension fund (the exception is the LGPS which is funded). Although it should be possible to value the liabilities in each public sector scheme it is not possible to then compare those liabilites to the assets in the schemes as the schemes don't have any assets. I find it incredibly disingenuous of the Unions to say that the NHS pension fund can afford to pay all pensions when the scheme doesn't have any money to pay pensions from.

I appreciate that anyone like Viva who is expecting a pension of around £7K per annum isn't going to be living the high life but as those of us in the private sector need about £100K to buy each £5K of pension it seems to me that public sector workers get a very good deal on pensions.

[VivaLeBeaver]

That's interesting piebald and i didn't know that. So do the unions mean that current nhs staff pay more in pension contributions a year than is paid out in nhs pensions? Because if that's the case, even if it's an unfunded scheme surely it's a good argument that it is a viable scheme?

As for private pensions. I used to be in the private sector and had a better pension than my nhs ones so it's not all private pension schemes where you need 100k to get a 5k pension. My private pension is currently valued at just over 1k a year and I only paid into it for 5 years so nothing like 100k went into it. I kind of wish I'd stayed there now.

[EdithWeston]

Edam: just pointing out oddities in previous posts.