To say - public sector workers pay tax

[woundedplacerias]

Sorry, that's it. It's a taat and I'm tired and have had but ffs - public sector workers and tax payers are not two discrete groups.

dodo I accept ze challenge!!

Have to go to work now but will get back to you with a final salary/defined contribution examplar this evening!

A poster upthread said that they'd like to see key public sector workers being exempt from income tax.

Personally I think that's a terrible idea precisely because of the attitude that many people have towards public sector workers. Can you imagine the vitriol that would be directed towards these people if not only were they being paid from the public purse but they weren't being taxed?

In the same way I'm suspicious of the creeping up and up of the personal tax free allowance. The government dress it up as a great benevolent gesture towards the poorly paid but in actual fact there is a creeping sentiment of labelling the low paid as non contributors and freeloaders.

Adner , what makes you think I will get a final salary pension ? Lots of people working in the public sector no longer get this , as I am sure you will be pleased to hear .

Not read the full thread
However it always irks me that the assumption is that pensioners do not pay tax - the state pension which is a contributary benefit is taxable unlike tax credits and some other benefits. So everyone who has some kind of income that is not a tax-free benefit pays tax including those on generous final salary pensions.

I'm public sector and I don't mind people telling me they pay my wages- as they technically do if they are paying tax themselves.

I do get frustrated with some of my colleagues who have a 'that's not my role attitude'. In my view, if you work for a big public sector organisation then you need to take some responsibility for areas other than your own- not going to sort the bins yourself of course, but by putting them in touch with the right person.

I've worked for the same centre Govt Dept for 16 years and some of the calls I get are surprising ( and nothing to do with my job) but I see it as my responsibility to help them as I'm the face (or the voice) of the Department.

Final salary pension? I wish.

I've also worked in both.

The public sector has better benefits to attract workers. That's all there is to it. It's not an attractive place to work for the brightest minds and highest achieving people. The sector needs to attract them somehow. See also: charities which pay high wages to senior staff. These people are not going to work there otherwise. There are some exceptions (medicine and to some extent teaching and policing are more vocations or "callings") but generally, the back bone of the back office don't want to work in the public sector if not attracted by benefits.

However. My problem with the public sector was wastage. Particularly in civil service and local authorities (have consulted for both) the number of people taken on for jobs which Come with very few duties; the number of managers and so on. It simply wasn't challenging and also attracted people who didn't want to do anything. In the meantime, critical services which require specific skill (such as social services) were massively under resourced and in every division you had a few people taking on the work of many. It was usually due to poor management.

However the private sector doesn't always have much going for it - treating staff with utter complacency, expecting them to work far in excess of their contracted hours and so on.

Both sides have their issues

I worked in public sector for a short time and it was the lack of work ethic that shocked me. My team could have run effectively with half the number.

Jobs were also over-graded. So you had qualified accountants in roles that would be unqualified accounts assistants in the public sector. (A couple admitted that they hated it but moved to public sector after having children because of the low expectations and flexi time.)

And, as said before, the amount of "it's not my job" was unbelievable.

A lot of good people came from outside and left in the short time I was there. It becomes draining after a while.

I haven't assumed you are getting a final salary pension, nor am I pleased to hear that you are not frumpet.

I'm also not anti- public sector - I worked in the public sector for nearly 15 years. I'm simply pointing out that historically the pay off was a better pension and there are still a large number of DB public sector pension members/beneficiaries, even though, sadly, you are not amongst them.

For those who ARE members of public sector DB schemes they often underestimate the value of their schemes, especially in comparison to DC schemes, that is all.

Ah don't mind me Adner just being grumpy to the wrong person , sorry ! Not sure what a DB or DC scheme is though ?

frumpet Defined benefit (DB) is where the scheme promises to pay a certain level of pension eg 1/60th of salary per year of service etc. Includes final salary and career average. The employee contribution is set but the employer rate/cost to the state varies depending on how much the scheme is expected to cost and how well funded it is. So the employer or the state takes on the risks of poor investment return, people living longer than expected etc. The cost of these schemes is high currently - employer contributions of 40% or more of salary are common.

Defined contribution (DC) means the employee and employer contribution rate is set and the employee just gets whatever pension their fund can buy. No guarantees and all the risks fall on the employee. Contribution rates into these schemes vary but they are way way below the amounts into DB schemes which is a big problem. There's a huge social timebomb ahead when more people retire from these schemes on inadequate pensions.

DB schemes are a massive pyramid scheme. There's a thread about 350k people a year coming into the country. We probably need double that, all of them taxpayers if we're going to afford the pensions... exponential population growth or pension reform... not an easy choice really.

This is VERY VERY approximate, so any actuaries out there please overlook any accuracies. There are a huge number of variables and I have used fairly optimistic growth figures for the personal pension fund.

Personal pension plan:
Based on 50% spouse's pension, 20 years contributions of 10% of earnings of £36,000 (so £3,000 p.a.) at Age 65 could produce £100,000 for a cautious investor. Depending on male/female and including escalation (to compare with indexed public sector pensions) this could produce an income of £3,100 p.a. Approx.

Final salary (DC) public sector pension:
50% spouse's pension usually included, 20 years service in 1/60th scheme with employee contributions of £3,000 p.a. Could produce an income in excess of £12,000 p.a.

if anything, my figures probably underestimate the gap between the two types of pension. So, for example, I have assumed 10% public sector employee contributions which is on the high side.

*inaccuracies!

I work in the public sector and I think the real scandal is the consistent tolerance and acceptance of people who are absolutely useless at their jobs. Performance management is near non-exisistent so people are allowed to plod along doing very little work and the small amount of work they do produce is usually of a very poor quality.

how does a social worker contribute to GDP in their role though? They spend their wages and consume other, commercial, services which does generate GDP, but as there isn't any commercial output from social work (or nursing/teaching/policing etc)

How does a hairdresser contribute to GDP? Or a masseuse? I think there is an idea that economic output must mean tangible products, but a lot of output in a modern economy is services.

I think if someone does work that someone is willing to pay for, their output is part of GDP. So I would say nursing, teaching and policing are part of GDP. The taxpayer is willing to pay for social work to be done, so social work is part of GDP. (In fact I don't think work needs to be explicitly paid for to be part of GDP. If slavery existed, the value generated by the work of unpaid slaves would be part of GDP.)

In fact medicine and and education are excellent areas to think about. A school or hospital could be entirely private sector operations, or entirely public sector. If they pass from one to the other overnight, with absolutely nothing about their day-to-day operations changing, does that mean they have suddenly started/stopped contributing to GDP?

I don't understand the spouses 50% bit , what does that mean ? Also the 20yrs bit , surely that is more likely to be 30 yrs minimum ? Looking at people around me who are looking to retire , they started paying into the pension at 17 and are looking to retire at 55 , they then come back and work PT in the service .

frumpet

DB (final salary) schemes include pension income @ either 50% - or less usually 2/3rds- for a surviving spouse so I have included this in the personal pension calculations to be sure of comparing like for like.

The maths works out the same - just bigger numbers - whether it is 10 years service or 40 years. I chose 20 simply because if you choose a smaller starting point the difference in the results is generally more accurate. As time goes by, all the different variables mean that the approximations become wild guesses, in terms of the monetary figures.

The principle still holds good though. As you can see, quite a difference between the two! Hope that makes sense.

To be fair, a social worker in their job isn't contributing to GDP. But plenty of jobs don't, it's no measure of anything