To think public sector pensions should be slashed?

Really not sure how you think this works. I do know someone who was 25 years in the central CS culminating on about £30k

And a £30k per year annuity equates to around £750k saved from salary in a DC pension scheme. With index linking and options for widow/ widowers pensions etc you'd be looking at nearer £1m. Was this person you know paying £40k per year i.e. well over £3k per month from their salary in pension contributions over those 25 years? You don't seem to comprehend that the pensions being paid out of these DB schemes far exceed what the recipients are paying in. That's the problem.

Are public sector workers not paying taxes paying a huge lump into pension, more than private, a month? Maybe get off your high horse

As pension contributions are paid gross, you don't get taxed on that amount so the equivalent saving to net income is 20%. I thought that was made clear by the Hargreaves Lansdown quote above, it shows the overall effect of tax relief on pension contributions.

If there were no tax relief, then in the first example there would be another £9k pa paid to the government in income tax. Whichever way you look at it, the individual in that example is £9k a year better off (as long as it's put into a pension) and the government is £9k a year worse off.

So effectively tax relief on pensions means the government is giving you back that £9k that otherwise they would have taken, and putting it directly into your pension.

Oh dear. You don't understand tax relief do you? The Government isn't contributing anything to DC schemes. It is deferred tax. All pension contributions are taxed at the point of withdrawal and all contributions made gross in DC AND DB schemes.

Really not sure how you think this works. I do know someone who was 25 years in the central CS culminating on about £30k. They started when it WAS the "gold plated" scheme though of course that did get downgraded after a few years. She left about 10 years ago, and before a chunk of this goes to her ex-H the gross pa is around £15k which she gets half of. As she's still working, the entire amount is tax payable of course.

Also bear in mind that for people on DC schemes contributions are tax deductible up to a certain amount, so "tax payers money" IS contributing at least 20% towards those pensions as well e.g. it works out that for someone on the basic tax rate for every £80 you pay in, the governments tops that up by £20. You can pay up to £60k per year into a pension scheme before this benefit is removed (provided you don't earn less than that). Bearing in mind that to have that much money available to go into a pension you are likely on the higher tax rate. Things are different once you get a salary around the £200-260k mark, but below is a quote from Hargreaves Lansdown explaining how this works for earners below that rate.

"For example, if you wanted to use the full £60,000 pension annual allowance, and your employer paid in £15,000, you’d only need to pay in £36,000 and the rest (£9,000) would come from the (20%) basic-rate tax relief that you’d automatically get.
If you’re a higher-rate (40%) taxpayer, you could also claim up to £9,000 back through your tax return. This means the effective cost to you of a £45,000 pension contribution could be as little as £27,000."

So in the higher rate payer example above, the government is contributing £18k pa into your fund

And yet there's no rush of people trying to work in the public sector....

I actually DO work in the public sector.

Some people are capable of rational analysis of data and facts rather than their views being driven by entirely self-interested or ideological motivations.

And yet there's no rush of people trying to work in the public sector....

@messybutfun what do you mean, exactly?

The way these pension entitlements work is that the fraction of salary for the year goes into the scheme and is uprated with RPI usually for every year to calculate its "real terms" value for the final pension entitlement so it far outstrips the official inflation rate used for payrises/ quoted in Government figures these days which is usually CPI (and few people get a payrise even equating to that). As a result, the pension entitlements in most of these schemes get uprated far above salaries and this compounds, hence somebody earlier stating that a couple of years of work in admin for a public sector organisation now means they have pension entitlement which if multiplied up by the fraction of their earnings that went into the scheme for those years of work would have equated to a member of junior admin staff earning a £60k salary...

The uprating mechanism more than compensates for recent cost of living issues. Again, something completely unavailable to those in DC schemes who instead bear all of the political, investment, interest rate and inflation risks themselves and - far from an uprating guarantee - could get back less than they invested nominally, let alone in real terms! And then will have their individual savings of money from their own earnings which they've had to risk like this for decades with no taxpayer topping up to meet a guaranteed income level taxed at up to 70% if there is some left when they die to give to their children, thanks to Rachel Reeves.

You are forgetting 35 years‘ of cost of living increases. Even at only 2% a year your numbers are well short.

My OH didnt get final salary pension when he retired with state and his USS pension he is on half what he was earning when he was working University lecturer in stem subjects

Should have said - my figures are very rough so please no nit-picking, but they do show a differential of a whole order of magnitude.

Yes but civil servants do have to contribute towards that on top of the employer contributions. Between 4.6% and 8.05% depending on their salary (higher salaries pay more).

Considering that if it was cash it would grow as an investment I think the calculation is a bit off. Even so, it’s still one of the best pensions on offer (albeit offered alongside much lower salaries than you would get for similar roles in private sector).

Spouses get 50% if the civil servant dies but then kids don’t inherit anything (unless they took a cash lump sum to reduce their monthly amount).

That would be the case only if they had spent the entirety of those 35 years on £43k or the equivalent - remember it's career average. Much more likely that they had spent the majority of the time in lower grades, say 10-15 years in the equivalent at today's rate of £25k so accruing around £500 a year, and another 10-15 years at a today's rate of £30-35k so around £700-750 a year. Also bear in mind that the recipient is paying at least half of the contributions.

Then factor in that to get a pot of £750k you don't have to put £750k in due to typical growth and compound interest (as I noted above) - I've run the pension shortfall calculators and you're talking about an equivalent yearly contribution to your DC pot, employers and employees contributions combined, of nearer £7500pa.

So all in all, the actual salary differential is £4k a year or less.

I should note that I worked for some years as a pensions administrator often working with DB pension transfers into DC pensions.

Public sector had years and years of zero inflation or only 1%. Public sector pay is far lower
than private.public sector have also paid into their pension and deserve the pension they have paid into.

I don't know why anyone would buy an annunity. I worked out I would only get my money's worth if I live until Iam about 90. I will just keep the money in savings and gradually use it.

not unless you want an even bigger shortage of teachers, drs, nurses etc. they don’t get bonuses- so they need some motivation! Also private sector pay on average has gone up higher as a percentage than public sector pay. You sound like you want all the benefits of nhs , education etc but not to pay the price tag. Yes salty

Yes, and it's only this generous level of pension that just about makes the hefty salary cut (compared to what I could very easily get in the private sector) worth it to me

And tbh it makes sense, it means at least a slice of the population is well provided for in old age. Would be daft for the govt to cut pensions and pay bigger salaries only to have to support some of their employees with benefits once they were old /frail

If we are looking for more spending money for the government, I think more can be done to get taxes from those who are paid in company shares and they then cash in with no profit on sale so no tax.

There are different schemes but any shares we've received from our employers as part of our overall compensation package have been subject to income tax at our highest rate if they've vested (as the various conditions have been met).

There's then been capital gains tax if you hang onto the shares, sell them and make a profit beyond the vesting price.

Wow. So one year of that pension entitlement is actually worth around £25-30k (the cost to buy it). So including that the actual whole remuneration package is £68-73k but quoted as being paid £43k. And this is the slimmed down, not-as-generous as previously version.

So after 35 years of service that's a £35k pension which - with those terms - would require a DC fund of £875k-£1.05m to purchase as an annuity (with current rates that are more generous than at any time jn the last two decades...).

Actually, I am getting my pension schemes mixed up - in the latest Cicil Service scheme a salary of £43,000 will give you £1,000 annual pension, index linked, guaranteed for life and with a survivors pension.

YABU One of the reasons I took a job in the public sector was because of the pension (which is a long, long way from being a final salary pension!) I could have earned more in the private sector. Dont shaft public sector workers - there are few enough people working in the public sector as it is.

If we are looking for more spending money for the government, I think more can be done to get taxes from those who are paid in company shares and they then cash in with no profit on sale so no tax. Similar for all those who register as a company and get paid to an outside/tax beneficial country...still too much of this going on. There are many pensioners who have worked all their life who cannot make ends meet now.

To be fair, 54k is a pretty high salary for civil service. Thats a grade 7 salary and the vast majority are below grade 7.

Thanks interesting to see this. Maybe the issue is that I’m talking about jobs / careers with salaries of around £30k and thst was a few years ago. So average career calculations are not great. Plus for a female you have the other factors of needing time off and to go part time to raise children (or pay for childcare at extortionate rates or a bit of both). All impacting on pension.

@Wooky073 I would be interested in how you compare this.
Let‘s take a civil servant on a £54k salary, because it‘s easy to show. For every year on that salary they will be entitled to a guaranteed inflation proved £1000 annual pension with a survivor‘s pension.
The notional value they put on this £1k annual pension is £20k.
£20k may be enough to buy a single life level annuity of £1000 depending on age and health. If you want any of the other bells and whistles you are probably looking at less than half of that so would need a pot twice as large. Unlikely you will achieve this with the same contributions.