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.

That may well be so, but lets up the salaries first shall we?

Because the history of pension reform in the UK is the pension goes down and the salary stays the same....

& a big adv of higher pensions is that this keeps older people warm and healthier off benefits of any kind and in the event of death, will assist the surviving partner too.

Don’t worry….my NHS Trust is about to make 100s of people in support services redundant. It’s only us actual workers that are going to lose our careers, security, future financial stability and continuous service benefits when we get thrown on the scrap heap. 21 years loyal service means nothing apparently. All the managers will be fine - there just won’t be anyone to do the actual work. So yeah, some of your taxpayer money will be saved there.

I have a private DB pension. My employer pays 14.5% on top of my 10% which is a lot but colleagues in other companies are paid more so the whole package isn't better. Couldn't you pay more into your pension?

That may well be so, but lets up the salaries first shall we?

Obviously that would be pointless. Salaries rise sustainably once there are productivity increases, hence the UK having no real-terms pay growth for over a decade now. If you raise salaries with no underlying productivity gains then you simply generate inflation that cancels out the increase. This is basic stuff. This is why economic reform is needed, so it is possible for living standards to rise.

I pay plenty into my pension, because I can afford to and I’m knowledgable about pensions. I’m talking about those who aren’t so lucky and need helping/incentivising.

You realise that that would just mean that the skilled public sector workers who have the option to do so will leave?

If the pension is slashed without any corresponding salary increase, the public sector will lose the majority of its skilled professionals.

That means solicitors, accountants, tax specialists, planning specialists, data analysts, engineers, scientists, doctors etc... Those skills are in really high demand, so they'll have no difficulty moving into the private sector, or abroad.

I wouldn't worry too much. Public sector pensions are linked to the ever increasing state retirement age.

I doubt most of them will be paying out for very long.

You realise that that would just mean that the skilled public sector workers who have the option to do so will leave?

If the pension is slashed without any corresponding salary increase, the public sector will lose the majority of its skilled professionals.

Have you actually read any of my posts? I haven't suggested that should happen. Quite the opposite.

This whole discussion reminds me a lot of the kinds of comments that are always made when state pensions are discussed. People say "I paid in!" without doing any of the maths.

For example, a full time job on minimum wage is roughly £24k per year now. If we presumed somebody earned that throughout their 35 qualifying years their national insurance contributions at current rates of NI (higher than they used to be decades ago) are £76.20 per month (assuming no student loan or pension contribution at all, which would make this even lower). Over 35 years that equates to total NI payments of £32k. Yet they believe they have "paid for" a pension of over £12k per year for 20 years or more, that is guaranteed and not just index-linked but has the triple lock (the actual value of such an annuity is over ten times the contributions they have made over their lifetime).

The average full time salary in the UK is now roughly £37k. Using the same parameters that means a maximum NI contribution of just £162 per month. Over 35 years this is £68k of contributions. Again, a tiny fraction of the value of the state pension they receive (which it would cost roughly £300k to purchase). But rather than gratitude at other taxpayers subsidising this there is endless complaining.

And that's before you even look at those who worked part time or barely worked at all. The bottom line is that most people in the UK pay nowhere near enough tax to fund the services they expect to receive. It is not possible to fund these things unless that changes. Meanwhile the low and middle earners who are significantly underpaying in comparison to most other European countries don't feel they can't afford higher tax rates because living standards in the UK have stagnated because productivity is dire so salaries have had no significant real-terms increase in decades. Yet people just argue about what they're "entitled" to and won't engage with any possible solutions to actually fix that problem.

Well actually I agree. Although I think the salary should raise at the same time. Then at least we wouldn't have people complaining that public sector is low paid and strikes would hopefully be less of a thing.
FWIW I work for a charity. So worst of both worlds. Crap pay, crap pension. Gah

Nothing more to be said really. Reducing everyone to the lowest possible level doesn’t seem a brilliant idea.

They should be cut. It’s a huge Ponzi scheme. Starmer even has his own statutory instrument to protect his huge pension.

And you propose to fund this how exactly?

I agree.

On top of final salary pension scheme dropped, there's no lump sum either. Earning are around 10-15% less in the public sector than private. Reality is that the overall package is similar probably, just private pays more in salary, which in turn could be put in to a pension.

You have to remember, many public sector workers earn around £25-30K a year. I would (someone can say of they know an accurate figure) guess that outside of teachers, fire service, nurses, and look at council workers, probably 65%-70% of public sector workers earn less than the average salary

This!
I worked in the public sector and in 6 years got either zero or under 2%
I'm now in the private sector 6% this year, 8.5% last year with no fight or strike action.

If you cut the pension I might as well move into the private sector where I’d get a higher salary. hardly anybody is on final salary now. The McCloud judgment means a few more have got it back for a few more years but it is predominantly career average now.

And we do pay in. My contribution is about 10%, can’t change that unless I opt out entirely. Increases have mostly been unfounded for the last decade

You’re comparing apples and pears. Your husband is extremely fortunate to take a 6.5% wage increase each year, trust me that is not common practice.

my salary has only increased at 2.5 per year so whilst I accept better than some public sectors I don’t have the benefit of a increased pension either.

agree given public sector is funded by tax payer and apparently there’s huge holes it does need looking at. But why would they vote against their own pockets.

As a former state school teacher I would have left the state actor if the pension I was promised when I started teaching was changed in a negative way - and either gone abroad or into the private school sector. And yes, as someone with good qualifications (2 degrees, one from Oxbridge) I could have done that. And I'm sure many other teachers with good qualifications would have done the same (or left teaching altogether), and the quality of the teaching pool applying to state schools would have been less competitive (and some might say less strong).

You need to know how final salary pensions work to understand the contributions needed. Changes would need to be carefully handled due to employment and contract law, it's just not that simple unfortunately. Perhaps the Chancellor needs to understand basic economics, instead of charging the every change they want to make ?

I get 1/49th of my salary added to my pension each year. I'm on course to retire at 67 with a pension of £12k. Please feel free to slash it from bare bones to arse end of nothing.

A lot of people stay in public sector (despite the wage gap with private) because of the pension, good holidays and job protection. You start slashing those and there will be a mass exodus, leaving public sector services in a worse position than before. I work with both public and private, so have a good visibility of both. As an example, I earn £90k and my equivalent in public sector earns £50k.

Meh I'm projected to get just under £18k when I retire at 67 and that's including my state pension. I pay in 5% of my 31k salary, employer pays 7%.
Yes I'm degree educated in a specialist role but it's the charity sector. So I'd quite like private AND public to stop fighting and start looking out for us 3rd sector workers!

As pp have said generally staff are making much higher contributions than the bare minimum in private sector and paid less to compensate.

Reduce them and I would assume packages would need to be reviewed.

They are a valuable and good benefit.