Public sector - Pensions

[maisiejoe123]

AIBU - to get irritated by the public sector bleating that they are being picked on with regard to their final salary pension schemes and being asked to retire at 65 as opposed to 60.

Why are they any different from others? I would love to retire at 60 but my company has moved the retirement date to 65. The state pension age has also moved. I understand all of this and whilst I am not happy (dont want to chase my retirement!)I accept that things need to change.

And they plan to strike???

I agree with this eagerbeagle. It is more likely to be long term damage to the public sector, whereas in the private sector, any loss of conditions are more likely to be temporary. As I said earlier, many public sector workers cannot switch because their job only exists in state employment. It does not bode well for future recruitment though.

itsalarf - i can't see any private sector organisation suddenly opening a pension scheme. even if their employees can switch to another company - what would be the point, since practically no private sector company has pension schemes anyway?

No. I was thinking of general pay and conditions. Bit off topic. I'd forgotten we were specifically on pensions

dreamingofsun I don't believe that 'most private sector' co's don't have pension schemes. I know not all do and that alot of small employers don't. medium and large firms very often do have a pension scheme and I believe that changes are either already in place or are being discussed to make it mandatory for a employer to provide a pension scheme. Does anybody have any solid info re this?

But regardless, people who work in the private sector in comparable jobs to those in the public sector nearly always earn higher wages - fact - if their firm do not provide a pension then they should be opening a private pension and the additional money they earn could and should be used for that. I agree that the terms for private sector pension schemes are not always as generous, but the in large co pensions schemes they often are comparable.

eager excellent post

expat when you refer to the welfar budget you are confusing public sector pensions and state retirement pensions - the former do not come from the welfare budget but the latter do.

tazmosis - you are getting confused with a pension scheme that was introduced recently to replace the final salary schemes. This is based on what you pay in and how the stock market performs and is more expensive, with poorer returns and is more risky than final salary schemes as it relies on the stock market - its like a private pension scheme.

recent surveys that i read about all say that public sector workers get paid more for similar jobs than they would get in the private sector.

the question remains - should private sector workers be expected to fund public sector pension schemes that they cannot afford themselves? Should one sector of the population be allowed to retire significantly earlier than another? for me the obvious answer is no.

So you think that a nurse who starts her job in her early twenties, has chosen this as a career for life, takes the job with the knowledge that one of the aspects is that she will retire at 60, is being unreasonable for being made to work to 65? Rubbish! People take on jobs with the proviso that the terms and conditions are fundamentally the same . . . . And the shift the goalposts is unreasonable, especially as some public sector workers pay a hell of a lot into their pension and will lose money by staying on until 65. It is unfair.

However, I do think that all public sector workers should pay a fair proportion of their salary into the pension plans . . . The days of non contributory pensions are over. Some public sector workers pay none, and I think I heard that the police will have to pay 14% of their salary, which is a huge chunk.

And where are the rules changing for the two faced MPs?...

cookscleaner - why should the nurse be treated any differently to private sector workers? the engineers i work with who all do physical jobs are in exactly the same situation, as are many others in the private sector. I agree its not an ideal situation for anyone but in the private sector we have had to accpet this. Why should the private sector worker who's been forced to work longer for less pension then have to pay more tax to subsidise a public sector worker so they can retire early and not have their conditions changed?

as i understand it most public sector workers don't pay enough into their pensions - some may but most don't. yousay that 14% is a huge chunk, but in the company i work for we pay 8.5% and will retire at 63. And we have a pretty good pension by private sector standards - closed unfortunately to new employees.

i think that situation with MP's is changing according to the material i've been reading ref budget. and agree they should lead the way with cuts and show an example.

Generally public sector workers have it as part of their contract that they will retire at 60. My experience of private sector is that this is not part of their contract, but due to government guidelines. That is the difference. The job came with a 30 years service plan ..... Not anything else. Taking a private sector job, where the average person changes jobs every 5 years is different. They don't take a job with a 30 year plan.

Also you pay 8.5% and the police are about to pay 14%, up from 11% ... So they do pay more.

Private sector and public sector are different . . . I do not understand why you compare a nurses work and his/her physical exertions to that of an engineer. How much abuse and crap does an engineer get on an every day basis, say compared to a nurse or the police ... Not relevant but now is the comment about physical ability.

But public sector employees' pensions are guaranteed. Whether it's based on final salary or the average over the time of employment. There is no investment risk: any shortfall is made up by the former employer.

For those of us in the private sector with defined contribution pensions nothing is guaranteed. We rely on the underlying investments doing well and when it comes time to buy an annuity we are at the mercy of annuity rates. £100,000 now buys an awful lot less pension income than it did ten years ago. The stock market has gone nowhere for the past ten years.

I've been saying for the past twenty plus years that public sector pensions would implode and it looks as if the countdown has begun. When private sector workers see more and more of their taxes being used to subsidize public sector pensions that are way better than their own their will be blood on the streets.

cookscleaner - yes police pay more - currently 2.5% but they get to retire 13 years earlier - seems a good deal to me. I think you are wrong about the contractual situation - i think this is part of our contract and had to be renogotiated with the unions. Not sure where you get your facts from about people changing jobs every 5 years - this might be the case in some industries but not where i work.

I'm sure most private sector workers assumed they would have a pension - but that was before gordon b dessimated them. you are talking here about people's expectations when they joined a job 30 years previously - its unreasonable i think to imagine these won't change as the wider environment alters - private sector workers have had to adapt - despite not wanting to - so i still don't see why public sector workers think they should be any different.

in many areas our engineers have to go out in pairs for their safety. going down manholes in the freezing cold can't be great either. they are both physically demandang jobs.

tazmosis - it is true that most private sector employers don't provide a pension now. There is a proposal that employers will be forced to make contributions to an employee pension scheme from next year, but i don't think this has yet been introduced. The reason it's being proposed is because the whole concept that an employer has a duty to provide for their employees' retirement has withered away to almost nothing in the private sector. Some large companies still do - a hangover from the days when a full final salary non-contributory pension was the norm - but generally these are contributory defined contribution schemes, with as little employer contribution as they can get away with.

Pensions are still being used as way of retaining valuable employees, but mostly for the older worker at the top of an organisation to whom the pension benefit is more valuable than the younger worker. This is why you get obscene pension provision for senior management in both public and private sectors, but mostly this bears very little relation to what the average worker in either sector gets.

I hadn't really thought about how public sector workers are constrained in their choice of employer before - that's something I've learned from this thread. This, more than the 'wiping bottoms' argument (iykwim) is more compelling as a reason why public sector workers should get a reasonable level of contractual benefits - they can't shop around for a better employer in the same way that private sector workers can.

But at the end of the day, there's no mileage in comparing 'public' with 'private' - there's so much variation within each sector that the comparisons are utterly meaningless. Everyone should stop being so defensive and recognise that wherever you work, the lower paid are screwed by the ones at the top.

treats - agree some workers are constrained, but many can change to private sector if they wanted - eg teachers to trainers, admin staff, maintenance people, lawyers, accountants, IT, nurses to BUPA etc, doctors already do private work. in fact i can't think of that many that couldn't change to something similar ...police maybe.

why do you say that the lower paid are always screwed by the ones at the top? do you think everyone should earn the same amount, irrespective of training, responsibility, expertise etc?

No - I think that the senior management of any organisation are more likely to make decisions to suit themselves than people at the bottom of the organisation. It's very easy to convince yourself that awarding a higher pension pot to the chief executive in order to 'retain the best talent' is a higher priority than retaining frontline workers. Whatever industry you're in.

I'm not saying that everyone should earn the same - just that those at the bottom of the pile are disadvantaged regardless of whether they're in the public or the private sector.

There are very limited opportunities for most frontline staff to change employers. Yes, a general admin person, or accountant can move. However teachers, police, fire fighters, ambulance, not really. Teaching and training are not the same thing for example. Besides, do we really want people leaving these occupations in droves? I think for new entrants, the changes are necessary and fair enough. They can make an informed choice. For people with, say over 15 years service, retraining is a less realistic option.

dreamingof so if all public sector workers chose to go and work for the private sector -what would happen to public services?

Something alot of people on this thread are forgetting is that we need teachers, firefighters, paramedics, nurses, police, tax inspectors & collectors, jobcentre plus staff, Borders agency staff, British Embassy staff, social workers to name a handful of public sector jobs.

So as we need them, don't they deserve decent salaries and terms and conditions?

Or do they forfeit that right just because they are providing a public service.
If they do, what kind of public service do you want if you're only prepared to pay peanuts for it?

and don't you think the people in the jobs deserve to retire on a decent pension? If they don't get a decent pension, the welfare state ends up topping it up anyway - or should we go back to workhouses and people living on the streets?

Don't forget that the majority of Public Sector workers earn low salaries and get low pensions - the average being around £7k I believe and that includes all the mega high earners - who have often been brought in from the private sector and tempted with a private sector type salaries.

in a way once the pension is gone it is a relief as it is the only thing holding some people to their public sector jobs. I might stop contributing to mine when the rate goes up - it's worth naff all anyway and I'd be better off claiming pension tax credit, having invested nothing in my pension all my working life, a la private sector. dh can leave his public sector job for a better paid private sector job in the future without us waving goodbye to the pension. Say goodbye to a lot of nurses heading off abroad and teachers going to the private sector and abroad

tazmosis - public sector workers deserve fair salaries and terms and conditions in the same way that private sector workers do. Its unfair for final salary pensions to be removed from one group of workers but expect them still to pay for this perk for public sector ones.

seems unrealistic that all public sector workers would move to private sector - especially since there are no longer any final pension schemes there anyway.

would you be prepared to pay significantly more for all the goods and services you buy from the private sector so the workers could all have better pensions? I remember reading somewhere that something like a quarter of my council tax goes on pensions. would you be prepared to pay 25% more for all your food so that workers in farms and supermarkets could get final salary pension schemes?

dreamingof your final question, yes and in fact I do, food is our second largest outgoing as I buy fair trade, free range and organic food as I believe it is ethically & enviromentally right.

Public sector salaries are actually lower than the private sector and the difference should have been invested in a pension scheme - the fact that succesive governments have failed to do this is hardly the fault of the public sector worker and they shouldn't be penalised for it.

It is about the differences between new workers and those who are established. Just because some people in the private sector have been unfairly treated, does not mean that everyone else must be also. There are plenty of people still doing well in the private sector. There are still plenty of new company cars, bonuses and pay rises (albeit small), certainly among my aquaintances. It was certainly not me receiving perks and bonuses during the last 15 years, it was some people in some private sector industries. I do not object to working a few more years, provided I am fit to do so. But, all higher contributions will do is either make sure I try to leave my job, which is stressful, or ensure I spend less in private sector industries. Either option is not a good long term one.

tazmosis - i think you misunderstood my question - which is if you think its so wrong for people not to have decent pension provision perhaps you should put your money where you mouth is and cough up 25% extra for your food bill so that supermarket workers and farmers in the uk can have final pensions. would you be prepared to pay 25% more than hyou currently do for your organic/free range stuff?

reprot after report recently says that whilst public sector workers used to earn less they now earn more than private sector.

itsalarf - i think you will find that the majority of workers in private sector have been 'unfairly treated' or at least have worse pension provision than public sector. it would make it less unfair if they didn't have to pay for public sector pensions as well. i'm a junior manager in a good company that wins awards for how it treats people, but i have not had a pay increase in line with inflation for around 8 years now (despite getting good appraisals) and i've been recently told that i've got to work another 3 years for less pension (and i still feel lucky).

i'm guessing you all work in the public sector and having your conditions reduced is not a nice thing. but i think you will get limited sympathy from a public that has had to cut its own cloth to fit the current economic situation.

if you compare like with like (eg qualifications/experience) then the public sector is not paid more than the private sector, it's just that a lot of the low qualification/experience jobs have been moved from the public to the private sector

don't forget also that the RBS etc now count on some reports on public sector pay - funnily enough their top workers earn quite a lot

of course, not everyone will move from the public to the private sector but it honestly does make it a lot easier to move if you know you're not losing a great deal on the pension. I know plenty of nurses and teachers who've emigrated in the last 2 years for a start. Also I look forward to us contributing slightly more to the pension and thus falling below the higher rate tax threshold and keeping our child benefit - that Gideon is soooooo cunning - cunning as a cunning fox

As mercibucket says, once adjustments are made for qualifications, wages in the public sector are not higher.

I did answer your question dreamingof - fairtrade goods are considerably more expensive than non fairtrade goods and I always buy fairtrade when it is available - so yes I would be prepared to pay 25% more and in fact do - when the opportunity presents itself. I believe we should pay a fair price for goods we buy - hence I am particular about where I shop and would prefer to buy one fairtraded T shirt at £10 than 10 priced at £1 each.

I believe that is fair and moral and I do put my money where my mouth is.

tazmosis - i always thought that fairtrade was to enable farmers abroad to get a decent living. didn't think it provided a final salary pension scheme for the shopworkers in the UK. food was just one example though as there's all the other services - nice to know you would be happy to pay 25% for goods and services provided by the private sector so they could get final salary pension schemes - but not convinced that the rest of the population would.

obviously all the surveys they've done recently are wrong then and the statiticians should all be sacked!

I can only assume you're being deliberately obtuse dreamingof and that you read The Daily Mail, The Daily Express or The Sun.