To think public sector pensions should be slashed?

A few little factoids that people seem to have forgotten, or have been mentioned and ignored...

Pot size of a DC pension isn't just how much you paid into it - there's growth, compound interest etc to consider so you don't have to have paid IN £500k to have a pot worth that.

A DB pension paying a decent % of peanuts is still peanuts.

Those complaining that the new IHT laws (which I personally disagree with) mean that IHT will have to be paid on the remainder of the DC pension pot - at least there's a remainder of the pot to inherit! If I die only a year after retiring with a DB pension that's it - nothing to anyone.

The proposed 4 day week isn't suggesting a cut from 5 to 4 "normal" 7.5-8 hours working days, it's proposing that people work a compressed hours 4 day week - same number of hours squished into fewer days. So 4 x 10 hour days rather than 5 x 8 hour days. Same amount of work for the same salary, not less!

I received an almost half decent pay rise last year in my Local Government job. This was because there is one grade below me (mostly apprentices) and they needed a decent rise to bring them up to the new minimum wage, so they had to raise ours by a slightly smaller percentage to keep any differential at all between someone with 40 odd years of experience handling multiple types of tasks in a day and £10's of thousands per week with all the necessary checks & balances, and an apprentice in their first job with 1 day per week dedicated to their training & qualifications. I earn a whole £800 a year more than them! They will have to do that again next year when the new minimum wage cuts in, as the current bottom grade salary is again below the proposed min wage.

Then after 3 years of "exceptional" or "Outstanding" reports, I may be up for a rise of around £500 a year. Of course anyone getting any reports better than "needs improvement" will get the same, as that's the only equivalent of performance pay we have.

@Wooky073 be aware that your teacher's pension is a defined benefit scheme which is based on service and earnings, so the amount you will get is known. In a SIPP your pot is based on how much you pay in, and the growth comes from compound interest and investment gains.

The SIPP may be showing more of a gain, but it is higher risk because it's not guaranteed and your pot is subject to how the market performs. Someone I worked with was planning to retire at the end of 2022 but ended up delaying her retirement because her pension pot value was badly impacted by the Liz Truss debacle.

A defined benefit scheme is valuable because you definitely know how much you are getting, you don't need to worry about your pension being devalued if the stock market takes a hit, plus a teacher's pension will uplift every year in line with the CPI. Whereas with a private pension you'd need to be very careful with investment choices if you were planning to draw-down, to make sure you don't run out of money or not have enough to live on due to inflation rises. You can purchase an annuity to counter that risk, but it costs more to inflation proof your monthly income.

My private SIPP is performing way better than my teachers pension and LGPS pension within the short time I have been putting money into it.

Which is a strong argument for changing public sector pensions to DC schemes. You'll still get the benefit of higher employer contributions than the private sector but your pot is your pot alone and the public sector isn't having to find the money for unfunded liabilities in DB schemes.

But surely the main difference is between defined contribution and defines benefit?

I worked for many years for the ambulance service which was low paid for the work done, night shifts and late shifts disruptive to my family and friends and myself, bad for my physical and mental health with the stress. It had a decent pension though I didnt appreciate that at the age I was. After one horrible experience of xmas at work I decided to leave and went to the private sector. I was better paid, had better perks and better working conditions with financial bonuses at various points. Though the pension was lame. Then I gained additional qualifications (at my own expense) and went to work in local government for 8 years. That was better paid but that was due to going in at a higher level due to my new qualifications which I was now in debt for with student loans. I spent years paying off the student loans. I went into local gov just as austerity hit. So pay was frozen for many years and even when increases were made they were tiny - like 0.something percent. But the terms and conditions of employment were good - eg a decent pension and decent sick pay. and allegedly job security. But within less than 2 years austerity git - there were a series of restructures and everyone put on notice of redundancy dept by dept in attempts to make savings and become 'Leaner'. The previous employment contracts were made redundant - if you wanted one of the 'new' roles in the new structure you had to accept the new employment contract - which didnt pay short term sick pay and I think had longer hours and more generic roles so people had to work across roles as they got rid of job. Pay was still frozen or minute increases. We were doing more for less basically. But at least there was
decent pension. I left when the new contracts were coming in and went into higher educaton. My LGPS deferred pension is still there but isnt looking like it will be giving me a great pension. I transferred in my NHS pension. I now have a teachers pension but that has been slashed recently now career average so they can pay out less and the slashing of the pension benefits is one of the reasons for recent strikes. In a nutshell I spent my life working in stressful jobs as a public servant supporting the needs of others. It was not well paid, sometimes it involved long and unsociable hours impacint family life, they were not cushy jobs, they were hard work, not well paid and I now have poor health and dont know how I will continue to work until the age of 67 or 68. My pension forecasts are quite depressingly low and I now am putting what I can afford into a private SIPP to try and top up my pension. So I am wondering where this image of amazing pensions the OP believes exists is hiding? Although the employer topped up more than private pensions, how the pension fund managers then invested that money has been really poor so the performance of public pension funds vs private is vastly different. My private SIPP is performing way better than my teachers pension and LGPS pension within the short time I have been putting money into it. So your views are based on an outsiders perspective and that they are great pensions is a total myth (sadly).

https://www.bbc.co.uk/news/55089900.amp

@Monwmum
I'm not going to slate you at all. But I will point out that your post is just factually incorrect. This is from the ONS.

"Pensions should be slashed"

Op, how old are you & how many years have you worked ?

Woul you like your pension to be slashed ?

To everyone saying private sector have had better pay rises, better benefits etc , this isn’t the case for everyone. I haven’t had a pay rise since around 2015, only ever had private medical in one job I had. I’m now being made redundant from my current job and struggling to find a new one.

I agree it’s not a race to the bottom, but don’t assume everyone in private sector is on really cushy packages either.

This is typical of how people think these days. Instead of campaigning for better wages and pensions, they moan at people better off than them or on benefits.

The sick leave entitlement keeping people in Civil Service jobs is a scandal too. Someone I know in the Hone Office vetinerary inspection dept is really milking it along with several others on that dept - and hanging on for redundancy whilst bleating at the measly 100k payout they will receive..

I've never worked anywhere that awards long service with anything other than a quick announcement in a team meeting.

My benefits now are good, but most of the firms I worked at previously, who were small to medium size, only offered stat mat and sick pay. The employer contribution to a pension, when they were obliged to offer it, was the legal minimum.

None of that changes the point that the public sector would struggle even worse to recruit and retain if the pension was reduced, without any commensurate change to salary.

You say that maternity leave pay is awful in the public sector. I think you will find that it’s usually better than the private sector. I only had statutory maternity pay in my private sector role whilst my two friends in the public sector who were on mat leave at the same as me had enhanced pay.

I worked in a front office investment banking job when I went on maternity leave. My maternity pay was the statutory six weeks. That's it, hardly generous. I also work very hard in my private sector role. Last week I worked from 7am to midnight, then on my day off, and I won't get extra pay for doing this.

It may not be a front line job like a nurse or teacher but it's still for the public good. I work in investing which underpins pension funds and supports retail investors to manage their money more effectively. Arguably just as much of a contributor to the quality of people's retirements as some public sector roles. The financial services sector is one of the main contributors to GDP and pays an awful lot in the way of taxes to support the public sector.

No one is saying that public sector workers shouldn't have employer pension contributions. But the unfunded liabilities can't be ignored for ever and I don't think public money should be used to plug an ever-growing gap. My preference would be an uplift in contributions to DC schemes, and a salary increase if needed, but draw a line on funding DB schemes before the demographic timebomb of an ageing population gets any more expensive to plug.

Never in all my time in a private office did we get more than a paper cup of tap water, and we were measured on productivity on a weekly basis.
Leaving teaching, the NHS, the police service annd other public-facing workers out of it, public services are generally declining in timeliness, quality and productivity. WFH has been a skiver’s charity while they all stick stuff onto their ‘to do’ lists and tell you about in a self-righteous manner as tho’ they’re overworked and not cutting the lawn, getting the horses out and going out for coffee. These people are taking the mickey and treating with contempt not only their fellow public service workers such as nurses who can’t WFH but also the girls on the tills at Tesco who slogged away throughout the pandemic. Then at the end of it they get a gold-plated pension the rest of us can only dream of (£18k keeps being quoted; I wish). If you ask about measures of productivity in a FIO after months procrastination re a decision/action you get a gobblydegook, civil servant speak and largely meaningless response.

Yes SMP, SSP, 22 days holiday, 5% employer pension contributions - which has just gone up to 7% after 5 years service. £30,500 salary for a central London job. Regular overtime without pay That's what I get.
Charity sector. It's crap.

You say that maternity leave pay is awful in the public sector. I think you will find that it’s usually better than the private sector. I only had statutory maternity pay in my private sector role whilst my two friends in the public sector who were on mat leave at the same as me had enhanced pay. It’s not just mat pay, sick pay is another issue. My friend who works in the public sector was shocked at my sick pay entitlement - one month discretionary so my employer can decide whether to pay it or not as it’s non-contractual. Plenty of people in the private sector only get SSP.

People have explained that Local Government Scheme is fully funded from employee / employer contributions and has been for many years.

You do understand that most public sector pay is wholly funded by taxes?
I am not saying that the pension benefits should be cut.
A fair system would be for everyone to pay the same proportion in pension contributions and get the same company contributions with the government providing a career average State Pension.
It would mean that no-one has their own pension pots unless of course they want to save extra.
This would also allow Rachel Reeves to invest the funds whichever way she sees fit.
There is a problem though that a large number of schemes use current contributions to fund current pensioners and are not actually building up pots (NHS). This pyramid scheme will eventually need to be cross subsidised from other taxes.

I'm a civil servant. Our pensions are not that great.
Until this year I hadn't had a decent pay rose and even then, I still haven't received it yet. Its also only backdated to Jul not April.
I work bloody hard for the pittance I get. Unfortunately too old to go into private sector plus actually I do like my job.
If you are so concerned, and I note you don't tell us where you work.....if you do work at all, get a job as a CS and then tell us again what fantastic pensions we get.

Public sector employees are often going above and beyond to serve the taxpayer, usually at the employees own expense. There is often no overtime payment but ofc the overtime still happens and no fat bonuses or other employer perks!

Im the same - pay 11% of my wages into pension. Right now I’ve opted out as maternity leave pay is awful in the public sector and I get the 11% in wages. So the only way to cut my pension to save money for the tax payers would be to reduce my already low wages so I couldn’t pay as much in. There would be riots 😂

Also if I die before pension my husband will get a hundred thousand. But I’ve already paid more than that into my pension so the tax payers would get a right to take my pension pot. My parents work in the private sector and I’ll inherit the value of their pension,

Yes.... And with the shitty new IHT pension hit for DC pensions, your £5k will be fine .. but if you are retiring at 55 and in good health etc then that's worth a DC pot of £110k (approx)... Which gets added to estate for inheritance tax which severely reduces value that DC peeps have saved whilst leaving team DB sitting pretty (as usual)

We pay a massive percentage into them, they aren't just a free good

If you take away my pension then you’ll need to pay me the same as the private sector, so I’ll take that 40K+ pay rise thanks.

seriously, nothing stopping you getting a job in the public sector if you want is there? No need to be jealous …

The government is going to add 6000 teacher by charging VAT on school fees. I’m not complaining about that. Where do they expect to get 6000 teachers from when they are missing target recruitment by 80% in shortage subject areas in secondary schools. Perhaps more pay might increase recruitment?