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.

Final salary pensions have already been phased out in most public jobs.

What you are asking for has been done.

What, and create a new bunch of people potentially being eligible for pension credit?

1/49 is an incredibly generous accrual rate.

There are also lots of people in the civil service who earn barely over minimum wage due to pay freezes and minimum wage rises. The salary for an AO graded role for example (administrative officer) is usually around the 23k mark

Building a large pension pot is future proofing pension fund. BT got caught out by this and upped their contributions to 10%

You would lose thousands of teachers as it’s the only thing keeping many of them there and we already have a crisis. My maths/computer science DH would move as he could earn more in industry:

Many private sector jobs command perks that do not exist in public sector such as bonuses, so that's another consideration.

The reason companies pay bonuses is because a one off bonus costs them less money that a payrise which, by the power of compound interest gives the employee far more money. And they don't need to pay employer pension contributions on a bonus. No numerate employee wants a bonus, they want basic salary increases.

Dunno anyone on a final salary pension, in many years

Fine by me, as long as I get salary of my job in the private sector, so that's about 3 x what I get as an NHS consultant

I don't think you understand how poor the pay is in the public sector?

Ask yourself why doesn't every university graduate dream of a public sector role? Then...there's your answer! The pension is only part of a whole package. A private sector worker could pay more into theirs to bring their levels up....and probably still take home more pay than a public sector worker!

Interesting thank you

YABU

The Civil Service is a career average pension now - final salary are pretty much obsolete. I think the 'generous' pension is a benefit for public services as they don't get the perks and salaries available in the private sector.

I'd rather stop subsidising the bar in Parliament

Meh, earning less than half total package INCLUDING pensions in my public sector role than my old private sector one.

How exactly are you planning to recruit outstanding doctors, nurses, teachers, police, judges, engineers, policy makers, c-suite level managers, trade negotiators (in the post brexit, Trumpian level shitshow that we inhabit) if not only do you want to pay them fuck all, slate them constantly then make sure they retire on a pittance?

My private sector contributions were MORE than my public sector ones, even though the percentage was much less. Because I earned so much more.

Good luck to you if you get sick but there’s no clever, highly trained ICU staff to look after you, because they’ve all been underpaid then poached to other countries who will respect them and pay them a generous multiple of what they get here!

(don’t work in healthcare myself but intense gratitude and respect to those who do).

Do you understand that public sector employees pay pension contributions from their wages as well as the employee contribution? Because the way you write your posts suggest that you think it’s all coming from ‘taxes’. Though I’m sure you’re just being goady 🙄

And as other people have said, final salary pensions have been phased out, public sector wages are generally lower than private sector wages, and you’re welcome to apply for a public sector job and get one of those cushy pensions you think we have.

Maybe I don't. I know a few people in public sector jobs who are paid equivalent to private sector. I also think many people who work in the public sector think private sector jobs are paid much better than they are. But I totally understand it is part of the package. It was just something that occurred to me as a large cost when we apparently have a huge black hole to fill

Teachers moved from final salary to career average some time ago.

The transitions for this are not quick, it started in 2012 and finally closed in 2022.
Multiple legal cases over it as well.

As the article states, most teachers are worse off under the career average system.

www.unbiased.co.uk/discover/pensions-retirement/starting-a-pension/teachers-pension-scheme-everything-you-need-to-know

If you are looking at saving the government money this is not a quick fix.

I don't think there are any final salary schemes left in the public sector but I could be wrong.

Some of the public sector schemes - eg Lgps - are funded schemes so the employer puts in money and the trustees hold assets just like a private sector pension. Cutting the pension of lgps who have paid into it would legally be on the same level as forcibly cutting a company pension - and it would have no impact on taxpayers money because it isn't immediate taxes that pay for it.

www.gov.uk/government/publications/academy-trust-financial-management-good-practice-guides/local-government-pension-scheme-lgps#:~:text=This%20means%20that%20members%20are,is%20a%20'funded'%20scheme.

Why not train to be a nurse and join the NHS pension if we have it so good...? Go on, we're desperate!!

You’re talking nonsense. Public sector pensions are no longer the great final salary schemes. I’m in HE - ours went years ago. All my younger colleagues are on career average. No retirement before 67.

DH is in the private sector. He has private health cover at his level, discounts on his firm’s goods(major retailer) and an annual bonus.

I've had one pay rise since 2010 that matched inflation. Otherwise lower than inflation or a pay freeze. The employer contribution is 5% so not out of step with private.

In my experience pay is a lot, lot less than private sector. My DH looked at a job going at our place, it was 30k less than he gets. Wanting the same experience, qualifications etc. Obviously no bonus or health care either. We get better holiday, more flexibility, but that's about it. Our offices are full of poorly paid women who stay for the flexibility (childcare), and are propped up by husbands in well paid private jobs.

We used to have greater job security but that's gone now too.

I don't think there's anyone left on final salary pensions. I joined the CS in 2004 and they were no longer available our department then, anyone who had one in the early 2000s retired a long time ago. My employer pays in but I have also been paying into my pension for 20 years now, hopefully meaning I will need no extra state support when I do retire.

Also for a lot of those years I was in the lowest band which had pay of a few pounds more than minimum wage so yes, the years of 1-2% pay rises were harsh. And my pension was cut!

Also, everyone in the public sector also pays tax.

You’re completely misinformed. Public sector pensions are no longer based on final salary, they were all changed years ago to save the tax payer money. We don’t get inflation-based pay increases either.

I think there needs to be a massive overhaul on public sector pay and benefits. The amount overpaid, underqualified management & senior management positions in all sectors is staggering, and I'm not talking nurses, doctors etc, the ones who we should be investing in. Its certainly still a job for life as you try and get rid of any underperformers, its almost impossible all the time the re-deployment strategy exists.

I work for the NHS and am not entitled to claim my DB pension until I reach state pension age. There is no chance I'll still be able to do the job I do now by my late 50s so I'll likely move down a grade and drop my hours. That's what my pension will be based on. Believe me, I won't be living the life of Riley when I finally retire at at least 67 (though I expect that to be pushed back). All the while my pay whilst not terrible is far from amazing now, no bonuses etc. So actually the vast majority of my contemporaries working in the private sector are in a better financial position than me and will continue to be when they retire.

I do find it odd when you see threads on MN encouraging people in their late 40s /50s to take NHS jobs "you'll get a greet pension". How much do you think they'll end up with on the most up to date pension scheme without a full 40yrs of service?!

Its already very hard to attract students to study as teachers and healthcare workers.
Same with Social workers, Council planners and building inspectors.

So whilst you might wish to get rid of these more generous pension schemes, the reality would mean higher salaries or even more staff shortages in the public sector.

Who would pay for that?

I know averages hide a multiple of sins but the average local government pension paid is £4400 p.a.

So the unfunded schemes (that are paid out of central government) are:

State pension
Civil servants (central not local)
Teachers
NHS
Fire service
Army
Police

www.actuaries.org/EVENTS/Seminars/Brighton/presentations/lewis.pdf

State pension dwarfs the rest.

Teaching and the NHS are notorious for their bad working conditions.