To think public sector pensions should be slashed?

[Monwmum]

I'm probably going to be slated for even suggesting it....but in the private sector, high percentage final salary pensions were phased out in the early 2000s because they are a money pit and unsustainable. They were continued in the public sector as a sweetener because (apparently) public sector jobs were lower paid.

This simply isn't the case anymore. After years of frozen pay or meagre 1 or 2% pay increases in much of the private sector versus mainly regular inflation based pay increases in the public sector, this gap has been reduced if not closed completely. However, public sector pensions are still getting contributions of the high 20% figures while private sector pensions range from 4% -10%.

Quite a difference! Am I being unreasonable to say this would be a good place to start saving some of our tax money? And before people start saying there would be outrage just remember this was done to every private sector employee in the early 2000s so it can be done.

I don't know why people think private sector jobs are well paid. Some might be but many in hospitality and retail are not.

DH works in hospitality in a low paid job with a whopping 3% pension contribution. I work for a charity where pay is also low and 3% pension contributions are also common.

“Regular inflation based pay rises in the public sector”????

Get fecked. I’m earning the equivalent of 80% of a decade ago due to zero or below-inflation pay rises.

My friend, a private sector solicitor, just had a 20% pay rise this year.

Literally the only thing keeping me in teaching (and believe me, you need teachers with my experience) is the pension. Which, having just checked my statement, currently accounts to a princely and generous GOLDEN PLATED £12k a year and a lump sum of about £30k IF I retire at the age of 67.

I’m mortgaged past retirement age, because it’s the only way I could afford the repayments.

FUCK OFF AND THEN FUCK OFF SOME MORE is my current thought on that.

I work for the CS and my pay is shite (not far off minimum wage) - and my job is quite highly skilled. The pension makes this crappily paid job worthwhile.

Quick google of Planning lawyer jobs not London 5 and 8 years PQE £100,000 plus package. Senior planning lawyer local government is on £45-50,000. If you look on public law jobs pretty much every council is trying to recruit this role, no wonder they can’t.

Just imagine, if the public sector, paid wages comparable to the private sector. So all those super bright, ambitious grads, who go off to Google/investment banks/magic circle law firms/build space rockets/find a cure for cancer, instead choose a CS career for a comparable salary, but they had to pay into their own DC pension scheme.

How much more efficient would our public services be, if a public sector career, offered exactly the same financial compensation as the private sector?

As a public sector worker and taxpayer, I don't agree that pensions are the biggest problem. The biggest waste is due to private businesses creaming off vast profits from publicly-funded education, health and care systems. The academy system, private care homes, and NHS-outsourced healthcare taking place in private hospitals all incur colossal expense. As a taxpayer, I also begrudge the billions spent on bailing out poorly-regulated banks, and the privatised utility and transport companies- all of these have paid massive dividends to shareholders but come begging to the government to actually fulfil their role.

Can you explain why a nurse who has saved lives for poor pay for 40 years should be expected to live in poverty as a pensioner, while the government pays the fat cat salaries of the bosses of failed privatised businesses?

Most solicitors earn far less than those in Magic Circle law firms. It’s not a reasonable
comparitor. I’m not saying that salaries shouldn’t be higher, but not Magic Circle level.

Experienced (including training junior devs) software developer in London - 38k (you always start on the bottom of the band). With the civil service pension this works out to about 49k total package.

The median software developer salary in London is 65k.

https://www.civilservicejobs.service.gov.uk/csr/index.cgi?SID=cGFnZWFjdGlvbj12aWV3dmFjYnlqb2JsaXN0JnVzZXJzZWFyY2hjb250ZXh0PTEwNTMzNDAwOCZzZWFyY2hwYWdlPTEmb3duZXJ0eXBlPWZhaXImcGFnZWNsYXNzPUpvYnMmb3duZXI9NTA3MDAwMCZzZWFyY2hzb3J0PXNjb3JlJmpvYmxpc3Rfdmlld192YWM9MTkyOTE0MCZyZXFzaWc9MTczMTYxODAyNi05ODQ4YjNiMGRhOTMyYzAxZTNkMjRkMDY5M2QzMzg2MDE1ZGM1MDk1

What a really depressing statistic.

I’m in my 50s with a PhD. The only way I can make my £60k salary work is by compressing my full time hours into four days and consulting on the fifth.

And do you realise how much of a pot a DC pension member would need to build to buy a £12k a year annuity? It’s about £500k. That’s far beyond the reach of most private sector employees.

But that's the point. The public sector pension is basically deferred pay.

The private sector equivalent gets that money during their working life. The public sector person gets it after retirement.

They don’t get final salary pensions anymore. They’ve had a real terms pay decrease since 2010, year on year. My focus is on those who have enriched themselves in both the public and private sector over the last 14 years or so, and and remain unaccountable. Its really not the public sector workers, even with their pensions.

I agree, maybe I’ve gone too far there. But pay a salary such that for your average, law grad, weighing up private sector, where they might earn c.£70-80k, vs public sector where they might earn £40-£50k, but with a DB pension scheme. Take that incentive away. The system currently encourages our ‘best’ grads away from public sector - because they need money now, to buy a house etc.

And actually. If someone earning a career average of 65k saved 29% of their salary (the amount the civil service pay), which would bring them down to 46k so not far off the “total package” including pension of the civil servant. They would have £1.5m in their pot at the civil service retirement age (68).

This is very true and most young civil servants would choose higher salary now over better pension later. But no government will offer money now when it could be another future governments problem.

It's not about sectors being low paid though, the issue is the equivalence- would someone manging a production kitchen in a school earn a similar salary to someone in the private sector with the same overall level of responsibility- line management, team leadership etc- with an equivalent job probably being a canteen in a private sector workplace which serves 300 people a day and has a set menu of 3 or 4 different options to pick from?

Some sectors are lower paid than others, but the issue with the public sector can be that the equivalent job in the private sector can be much more lucrative, which is where the pension can help make things more equivalent.

I know that.
The point I’m making is that £81 a year is fuck all.

£6.75 a month

Can I ask where you are getting that figure from? My pension (DC) is forecast at £8,000 a year on a pot of £120,000 at retirement.

Is my pension provider just being incredibly optimistic?

I completely agree with you, but the private sector under this system, can spend the lot on fast cars and holidays should they choose. So when Gen X retire (which includes me) we’re the generation who lost private DB schemes to DC. There is an entire generation who haven’t built up their ‘pot’. They are going to cost an absolute fortune in pension credits etc when they suddenly hit retirement, realise their £100k retirement pot will buy them a £3k a year annuity and they are, for all intents and purposes, fucked. (Edit to add, I’m not pleading poverty, personally, I will be OK, but many, many of my generation won’t be). It’s a ticking time bomb.

I’m all for my millionaire parents and parents in law having their heating allowance removed. I thought it was means tested?

Public Sector workers also pay tax BTW.

Better still….original poster should apply for a public sector job!

I think people don't see the wastage that having uncompetitive salaries in the sector causes either- the private sector ends up stepping in and providing services to fill the gap -private sector organisations who exist to make a profit from the public sector on top of the higher salaries that their staff are paid.

For me that waste is far more criminal than giving people pensions which form a balanced part of the overall remuneration/benefits package.

I’m sure your not alone…lowish paid public sector workers are the backbone of the economy & keep our wheels in motion…thank you!

It isn't fuck all. At all. The old school, final salary pensions that don't really exist any more as they have become so expensive used 1/60.

In order to qualify for "full pension", which was two thirds salary, you'd only have to work for 33 years. So if you started work at 20, you'd have accrued a full pension at 53.

It’s not as simple as just ‘slashing’ them because unfortunately, with a couple of notable exceptions, most public sector pensions (including the TPS) are unfunded.

Today’s teachers are not contributing to their own pensions. They (and in the case of the ‘employer’ pension contributions, we, the taxpayer) are paying the pensions of all the teachers who are already retired. The employer contributions are huge - 28.68% on top of every new teacher salary, but they are not funding the teacher’s own pension.

These unfunded public sector pension schemes are effectively a giant Ponzi scheme - ‘fine’ as long as the economy is growing, but not so great and something of a ticking time bomb once the economy starts to shrink.