To wonder about the impact of regional pay on pensions

[jinsei]

I understand the arguments in favour of regional pay. Obviously it costs more to live in some parts of the country, and civil servants in the south east are comparatively worse off. But when people retire, those with higher salaries in the SE will presumably have higher pensions, but will be free to move to a cheaper part of the country & therefore be much better off than their local counterparts.

Or would public sector pensions be adjusted according to your postcode?

Swings and roundabouts then really isn't it. As you rightly point out even given the weighting for London and the SE, public sector workers are comparatively worse off than their counterparts in other regions.

Unless you've been a Carer for years, then you get fuck all - just the minimum State Pension wherever you are.

What do you mean grey?

"free to move to a cheaper part of the country "

LOL. Everyone I hear from on MN tells me that this never happens ever and is a completely unrealistic proposition. No-one ever moves away from their family and, beyond London, 'there be dragons'.... so it's a non-issue.

Ah, are you saying that carers get fuck all? I think I misread your comment, as I thought you meant carers were the only ones who got pensions.

I moved from the SE to the midlands cogito. And my parents also retired from the SE to move further north.

There are lots of potential problems with regional pay when you think about it. If workers in the SE earn more, they may well pay higher costs for housing etc. But their properties will also be worth more, and so they may benefit from the capital if and when they come to sell up. I don't think there is any way of making this completely fair, is it?

is there

Of course I know it actually happens. The way I look at it is this. London weighting rarely makes up for the cost of living in London. People should be paid on merit and performance rather than it being too rigidly calculated on location, age or how long they've been in the job. If they're not happy with the salary they can always work harder, move to a different job or relocate. Suspect few people in the public sector walk away with exactly the same pension as anyone else.

But actually, mobility from the north to the south would be even less if there was regional pay, as those from the north on lower salaries than their southern counterparts would not necessarily be able to afford deposits on houses/rental properties etc. Surely it's much easier for those in London to move out, if they feel hard done by, than it is to go the other way. But often, people don't want to give up all the advantages that living in the capital city brings.

In an ideal world, yes, everyone would be paid according to merit, but who is going to judge how much each individual is worth? That will always be subjective by its very nature.

You seem to be arguing that everyone in the public sector should get exactly the same value of salary and pension based on some sort of yet-to-be-determined levelling factor that means no-one is materially any better off than anyone else at the end.... which is pie in the sky. Yes, if you make your entire career in Oldham and enjoy the low cost of living, when you retire, you're going to find it very tough to enjoy the same lifestyle in Bayswater for the same price. But that's just what everyone else does. It's called 'the real world'.

Cogito are you laughing at the idea of people not wanting to cut family and social ties? Have you ever done it?

I'm not arguing that at all cogito. But by trying to address perceived unfairness in one area, I think there is a danger of creating more unfairness elsewhere.

At the end of the day, people do choose to stay in London and the SE despite higher living costs, so presumably, they think it's worth the sacrifice.

Forget the ability to move to a cheaper area post-retirement. That's a red herring.

The key point is that 2 people doing exactly the same job and employed by the same employer, but living in different parts of the country get different rates for the job.

The job is not more difficult or challenging just because you live in a low cost area.

In some Govt Depts there nobody will be willing to move to a new (cheaper) area as they'll have to take a pay freeze (which would affect their eventual pension). So all.recruitment will be local and experience will not be transferable to different roles in different geographical areas,

Interestingly if I retire today I would end up with a higher pension than I would by continuing to work for the next 4 years. The reason is that pensions are uprated annually by CPI, but a pension drawn in 4 years time will be based on 2 (at least) years of frozen pay plus this possible regional pay 'freeze'. Even the additional pensionable years I would gain for working for the next 4 years dosen't make it worth staying.

Yes, I am aware that two people doing the same job will get differential rates of pay, and I am struggling to decide whether I think this is fair or not. I can see both sides of the coin.

However, while I can get my head around the idea that people with higher living costs might reasonably feel that they should be paid more, I don't really see why they should be entitled to accumulate greater wealth in the long term.

Also, taking money out of the pockets of civil servants in poorer areas will surely hit the private sector in those areas as well, as there won't be as much money going into the local economy. Seems very short-sighted to me.

Same old Tories, eh? :(

Regional pay already exists in the Ministry of Justice, and has done for some years. It's designed to save on the wage bills, but they never do the bleeding obvious and get rid of the overpaid and pointless managers who do nothing to contribute to the fundamental work of the justice system but just go to meetings and think up more and more bureaucratic nonsense. To cull management would result in enormous savings with no impact on the service offered by courts

Not just the Tories. Just heard Harriet Harperson on Sky News banging on about what a good idea regional pay was.

I don't really see why they should be entitled to accumulate greater wealth in the long term

Not sure what you mean.

Is it accumulating greater wealth at a cost to the public purse? Or just accummulating wealth per se? If it's the latter then regional pay is not going to address that. Anyone living in an area where house prices are increasing faster than elsewhere is also accummulating wealth which they would realise when they sold the house to move elsewhere. Not all those householders will be public/civil servants.

The real objective is to reduce the salary bill of the public sector. There are more effective ways of doing this - such as moving administrative staff out of London and saving their London Weighting Allowances and releasing Crown estate in the capital for development.

I don't know enough about it to know if they should really cull the management. Sometimes they may be doing valuable work even if it isn't seen by those lower down the hierarchy. However, I do think some senior managers in the public sector are massively overpaid. But then, I think that about senior managers in the private sector too.

Actually Cogito during the London discussions, you tend to get told that it's usually counterproductive to move away from London when looking for work, rather than it being counterproductive, ever. The four words 'when looking for work' are the most important ones in that sentence. OP is talking about retired people, those whose situation is the total opposite of a work seeker. If you don't need to look for work, of course it makes financial sense to move to a cheaper area where jobs are scarcer- albeit obviously there might be other reasons why it doesn't make sense eg closeness to relatives who can provide care etc.

Sorry wet - I know what I mean but not quite sure how to put it into words. I think I'm trying to say that it sounds fair to pay more to civil servants in London because their housing costs are higher, but this argument only really makes sense to me if people are renting. If they are paying off a higher mortgage, then they are accumulating that wealth and I therefore see no reason why they should get paid more just so that they can buy a more expensive property. Not sure if that's any clearer.

I would certainly support the idea of moving public sector jobs out of London. This seems like a very sensible suggestion.

I think the view on whether it is fair will depend on whether you see the value of remuneration as the figure of the pay cheque or the standard of living that figure buys you.

I think both are valid ways of looking at it - but the latter seems to be the one which carries the political weight at the moment. Ed Miliband supported it in January this year (when he spoke about regional rates for benefits) and he's on record with support for regional rates for minimum wage too.

I think the view on whether it is fair will depend on whether you see the value of remuneration as the figure of the pay cheque or the standard of living that figure buys you.

Edith, this is well put, and I agree that both points of view are valid. I just think the reality of implementing this idea will throw up many complications that might not get thought through in advance.

If the public sector workers in the poorer areas are paid less, they will have less money to spend, and the economy in those areas will get even worse.

Some public sector costs exist all over the country. Why should a teacher or a nurse working in the North East get paid significantly less than a teacher or a nurse working in Cambridge? (I don't disagree with London allowances)

We do need to take action to stop so much being in London- not everything that is there now needs to be. This massive overcentralisation doesn't benefit anybody, least of all Londoners. I know there are plenty of people who love it there and would never want to leave, but there are others who are only there because of work and would like to live elsewhere if they could. We need to look at moving as much of the public sector out as is feasible, and perhaps even consider tax breaks for businesses locating in areas of least employment.

If the public sector workers in the poorer areas are paid less, they will have less money to spend, and the economy in those areas will get even worse.

Yes, indeed, this is one of my concerns.

And yes, there is something inherently unfair about the idea of two people with the same experience & qualifications, doing the same job, getting paid at different rates because one has chosen to live in a more desirable location than the other.

I think wet's suggestion of moving jobs out of the south east is a much better one. People would then have more opportunities to relocate from London, and the government would save on wage bills. Certainly, some other countries are much less centralised than the UK. Perhaps we should move the whole capital?

yy to tax breaks for businesses which relocate to other areas. Another good idea.