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 just did a quick annuity quote - assuming no major medical conditions, no annuity protection and no income paid to dependants/partners if you die, for an annuity of 19k p.a. which has inflation protection you need a pot of about 400k.

according to an article the graun published earlier this year, the average private pension pot for a woman of 67 in the uk, is 69k.

public sector pensions are good value which is why they are an important recruitment and retention tool. if you reduce their value then you would need to compensate by raising salaries and other benefits, to be comparable with the private sector.

No, as people have explained the local government scheme is fully funded by worker / employer. It is career average not final salary. I pay a monthly contribution directly so never see that in my bank account.

What do you expect though, if you only started working in your 40’s? You can’t expect a huge pension if you haven’t worked for a large portion of your life. I started working at 15. No gap years, no swanning around the world on travels, no luxury cars, no luxury holidays. Who was funding your lifestyle until aged 40? I left home at 18 and have had zero financial help since then, no benefits, no inheritance. I don’t mind this, I don’t from a family with any wealth. It is as it is, but I would have starved if I didn’t work so I find it a bit fucking rich having some green with envy keyboard warrior telling me that I am privileged because I have worked and get a below average salary pension. The world has gone fucking mad.
Check YOUR privilege.

@Butterworths says she only started earning well in her 40s,not that she didn't work. In many jobs people only start to earn reasonable money at that age. Part time work clearly doesn't help as that decreases the amount paid into the pension. ( which is why I always worked full time).

she said she didn't start earning well until her 40s - that reads to me as if she has worked prior to that but the roles were badly paid.

I've recently made the move from the private sector into the public sector. The pension is probably what retains most of the staff!

The offices and equipment are 80's throwback and I've not worked in a private office in many years that didn't provide breakfast, fruit, tea coffee, juice etc (I'm not saying the the Government should spend public funds on this, of course they shouldn't but it's all things that form part of the overall package)

In all my years working in the public sector, I never even got a cup of coffee provided by the employer. And we were specifically told that we could not accept gifts from customers. Anything they did want to give either had to be tactfully declined or regifted to a charity. Despite what people think bribery was not acceptable, and gifts, even after the event were considered likely to be bribes.

You need to reread what she wrote, and apologise, because that is not what she said.

She only started earning well in her 40s. That's pretty common tbh, in many professions.

This is the norm in many, many private sector workplaces. The vast majority of workers will not be receiving any customer gifts, I certainly don’t and never have. Even those that are received are subject to the UK anti bribery act so people are not getting extravagant gifts to make up for the lack of pension.

It’s typically only sales type roles that get this. We get tea/coffee/milk provided but this varies between employer and isn’t always standard. Hardly perk of the century even if it is!

Lots of private businesses don't provide the tea and coffee! There's often a employee kitty where people contribute a few quid a week for a jar of Nescafe etc. Not all private sector businesses are big flash offices and loads of perks... in fact, the vast majority are just run of the mill small/medium businesses. No bonuses, no free food or lunches, statutory min sick pay and statutory min annual leave.

Also, its standard not to accept gifts from customers or the like. We're explicitly not allowed to do this due to anti-corruption and anti-bribery legislation in various global jurisdictions.

Years of 1% pay increases, salary a smidgen above NMW and no final salary pension here, also no bonus, no private healthcare. So go away with your 'slashing'.

Job involves tasks which should be paid way above NMW. You're getting a bargain, mate.

People also seem to forget that many private companies didn’t offer a pension scheme or limited access to them until relatively recently. I worked part time from age 16 for seven years whilst I was at school/uni. I then had a series of fixed term contracts until I qualified into my profession at 29. The company I qualified with didn’t offer a pension until you had been there two years. So I was 31 before I had a pension.

And.... Then with the new IHT rules pensions will be treated differently. So the value of the remaining pension will be curtailed to a spouse and considerably curtailed to a child of an unmarried single person.

I didn't say I didn't work until my 40s! I've worked full time since I was 20 but in not well paid jobs with poor (or zero) pension provisions. Your pension is really unusually good, that's what you seem to be missing.

good point. to get the best annuity rate i didn't tick the quote options to pay out on death, or to provide any kind of guarantee period. most people would want this and if so, they'd need to accept a lower amount or forgo index linking, or save up a bigger pot to compensate.

Public workers get terrible salaries . The only thing going for these jobs is the pension. Cut that and watch everyone leave.

I left the public sector a couple of years ago after working for over 8 years and recieving a total of 2% pay rise in the entire time I was there. The pension was the only thing keeping me going as that was a career average DB scheme set at 1/65th . However the year after I joined that was changed to 1/95th for all new employees which made it worse that most private sector pensions as the salary was over 20k a year more in private, plus at least inflationary pay rises every year. That said I'm actually shifting again to a university in the new year which puts me back on a DB scheme, but the uni pays market rates for jobs and does give a pay rise every year.

I have just 'cashed in' my final salary NHS pension at 55.
Just to really piss you off ...the lump sum was MASSIVE.
Cheers.

A lot of people seem to miss that public sector employees also pay into their pensions and the contribution rates can be high. In the LGPS employee contribution rates range between 5.5 to 12.5% depending on salary. Police officers pay between 11 to 15.05% depending on salary and scheme. Teachers pay between 7.4 and 11.7% depending on pay. In most cases they cannot pay less than this if they want to be in the scheme (although some schemes do have some options to pay less and get a lower pension).

I suspect many private sector employees don’t pay anywhere like those contribution levels into their pensions. If they did it would go some way to making up the disparity (although I do recognise that the difference in employer contributions is hard to make up).

I suspect many private sector employees don’t pay anywhere like those contribution levels into their pensions. If they did it would go some way to making up the disparity (although I do recognise that the difference in employer contributions is hard to make up)

This is definitely true. I pay about 25% of my salary at the moment and my employer pays less than 1%. But I am free to work in the public sector if I wanted to obviously. In my case the deal is worse overall even taking my woeful pension into account.

I don’t think anyone’s missed that?

It’s the massive “employer” contributions and income guarantee that people think is unfair, which you simply don’t get in the private sector. 5-12.5% is absolutely paltry in comparison to what a private sector employee would need to pay in, I know many people who pay in 15-20% to secure their retirement as they have no other choice. The legal employer contribution is 3% on £6-50k, i.e. it’s capped at £1,320 a year. Some employers voluntarily add more but the majority do not.

Even if someone with a DC scheme had the same levels of contributions as a percentage of salary (both employee and employer) and earned an identical amount a DB scheme still provides a pension far in excess of that which person with the DC scheme could purchase having contribute exactly the same amount, especially not with the index linking. That is the point that many people don't appear to be grasping.

The taxpayer is paying the excess for the unfunded public sector DB scheme recipients i.e. millions of people who could not possibly obtain such a generous pension being forced to pay higher taxes to fund that generosity to others: a regressive policy.

If working in the public sector is so marvellous makes you wonder why those in the private sector don't move then.

Well, explain that to the 10s of 1000s of people who leave sectors like Health and Education each year because the pay is shit and the workloads are too high?

If the state doesn't top up the pension, then they will have to top up the salaries etc.

Someone i know recently left her Band 6 NHS front line position to go into the private sector, she has increased her pay by 50%.... true, a lower pension but she needs the money now, not when she is 67 & wont get hit for £1200 per year parking either or for that matter get hit.....

If the state doesn't top up the pension, then they will have to top up the salaries etc.

Yes, I said that myself in an earlier comment as well. We need a workable economic model and tax system so that productivity rises and salaries increase in real-terms for both public and private sector employees so that they are in line with international rates in comparable countries. However, part of the changes that need to be made is reforming the public sector pension model because it is unsustainable.