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.

And yes, people who pay a lot of tax in the UK (in some tax brackets they are paying the highest rates in the world for their level of earnings) are completely right to then be miffed at the third world level of services they receive in return. They pay more than those in Scandinavian countries and receive services worse than those in Albania. Of course they're not impressed, and rightly so.

opt out entirely and live off the rest of us just like public sector retirees do?

Do you just mean... retire?
You know on the pension that were offered and they have worked for?
Yeah I'm in this situation
40 years in public service-I got what was offered to me

No more no less

Why do you think others should continue to work really hard to pay pensions for you because you work hard, when they will never be able to earn such a pension themselves even if they contribute MORE than you to their pension?

Who is this aimed at?
Workers don't choose the scheme they are in, it's offered to them
Are you saying you would go no thanks then?

And yes, people who pay a lot of tax in the UK (in some tax brackets they are paying the highest rates in the world for their level of earnings) are completely right to then be miffed at the third world level of services they receive in return

Ah only people who pay lots of tax are entitled to a decent service?
The poor, average and disabled don't deserve it then?

Nice

These "third world levels of service" you're talking about - ever considered that maybe the staff are trying to do their very best, but are hampered by staff shortages and lack of funds?

I work in local government in a social care area that has statutory requirements on what we must do as a minimum. Case loads per front line worker are the highest they've ever been, and due to the peculiarities of the county we have much larger case loads proportionally than the rest of the UK. However our responsibilities have increased year on year, and local government funding has been cut year on year.

Turnover of front line staff is higher than it's ever been, and recruitment is getting harder all the time. Most teams are short at least one staff member, and one team is short 2 out of 8. But the majority of the candidates we get are sub-par for the requirements of the role, and there's virtually no chance of getting anyone experienced because the salary is so low for the work they need to do.

Then we look at the other types of cost cuts we deal with day to day. There was great rejoicing in our team the day another section moved into a different building and left behind a couple of boxes of envelopes, some note pads and folders - this meant we could save a few quid by postponing our next stationery order. Any and all resources are hoarded and carefully guarded; we need to lock away even such things as scissors, sellotape and staplers every night as otherwise they vanish - not to staff for personal use, but to other cash-strapped teams. We had to write a case for a purchase of around £20 the other week, because it isn't something that technically is defined as essential to our area but was very much needed due to a change in duties.

We have to rely on local charities to help us support vulnerable people with things like food boxes and hygiene supplies.

I got an approval email on Monday that one manager had sent at around 9pm Sunday night, and managers are regularly sending emails at 7pm as it will have been the first chance they get to sign off on expenditure as they are so overworked - and these aren't workaholics, they just don't have the time to do their jobs. I can get in at 8am and find a manager on a call already, and if it's my late day they are still there at 6pm despite their young families being at home waiting for them. Yes I know many people in the private sector also work all the hours in the day, but they tend to at least be remunerated at a much better rate.

Then add in the mental stress that working in the social care sector can have on the staff; the abuse and threats we can receive, the stresses of not being able to help as much as is needed

So please stop suggesting that public servants in the main don't earn our half decent pensions. Which, by the way, are being eroded with the increasingly popular method of awarding performance with one off awards rather than a salary increase - which of course doesn't count towards our pensions.

Excuse the rant - I had a particularly rough day yesterday with calls coming in from people in crisis e.g. due to delayed payments no food for them or the baby, someone suddenly made homeless sleeping rough on the streets in this weather, someone's room broken into in supposedly secure housing & possessions stolen etc. Then updating the calendars with yet another staff member off sick, plus trying to do my "day" job.....

Exactly @Allergictoironing

I know so many people working with double or triple the work load they should have. Working till they burnout and then others are more stretched.

It's hard to recruit because salaries are low (and noone seems to factor in the pension everyone is so envious of). And probably hard to recruit because of idiots who describe "all" public sector staff so negatively. There are so many brilliant and industrious people in the public sector organisations I have worked in (I have switched between private and public sectors several times in my career )

The thing is though - I work for one of the charities who you are increasingly having to rely on and we get similar rates of pay, just without the good pensions. We are also understaffed and overworked and are expected to pick up the slack in the public sector. I propose the pensions SHOULD be cut and the salaries increased. Then the public sector would be easier to compare to the private. And it would probably help recruitment.

The problem you get though is that pensions and salary come from completely different budgets. My salary is paid by my employer, but my pension is paid by LGPS. My employer has a very tight fixed budget, and all areas that can be cut are being cut though obviously statutory responsibilities can't be. So where would the extra come from for increased salaries? Our lowest grades are pennies only above minimum wage so have to be increased every year to stay at that level when the minimum goes up, the differential between grades is being reduced every year because they just don't have enough money and are in a large amount of debt anyway.

Then you get all the residents whinging about cuts to things like the arts or why the grass in the parks is only being cut fortnightly rather than weekly, but ask them where they would make cuts instead (e.g. roads, social care, infrastructure) they come up blank.

You can propose all you like but the reality is that cutting the pensions of those already paying into the scheme would be illegal.
We already had The McCloud judgement which is taking millions to fix
The only way is to change the terms of those starting but if pay and pensions are low then all our services would collapse if people look at the terms and can earn a similar amount/ pension in a less taxing environment.

Fight for better private pensions, not decimating public ones

Agree.
To me it makes sense that at least public sector employees shouldnt have to rely on government help when they retire, it's a sensible approach when the govt is paying someone's wages.
They could pay people less, but would have to pay much higher salaries to compensate

Apologies it has cost 17 billion to remedy!

I don't see that the Gov would risk another disaster like that.

The amount of money that's being used to support public sector pensions is insane. If you think of the pot you would have to save in order to get the pensions you do you just wouldn't be able to do it. Ever.

The equiv of a public sector pension of £20,000 a year for 30 years would be a pot of £600,000 or £20,000 a year being saved (including potential growth of course but still. And this, as has been stated is tax payers money.

And I love all the arguments saying "it's not a race to the bottom" too. You know that this is one of the argument's that is being used against the introduction of VAT on school fees? Oh and school fees are not paid for by the state. They are paid for by people like me, who also pay for the state education system too but just don't use it. And of course, we all want all education to be good but state education just tends to not be, especially where we are. So make that better. As it's not a race to the bottom.

Tier
Pensionable pay (tier thresholds from 1 April 2024)
Contribution rate from 1 April 2024 based on actual pensionable pay
1
£0 to £13,259
5.2%
2
£13,260 to £26,831
6.5%
3
£26,832 to £32,691
8.3%
4
£32,692 to £49,078
9.8%
5
£49,079 to £62,924
10.7%
6
£62,925 and above
12.5%

Hoardasauruskaren, well said. I don't know how old the OPis, but if she gets her way there will be no bloody nurses to look after her in her twilight years cos the pays crap and she's slashed their pensions. She needs to change herself if she's not happy with her current financial setup. Not whine about other people's.

DB schemes have changed multiple times over the decades. McCloud related to specific discrimination during the last change - it depended on your age whether you moved into the new scheme or stayed in the old one.
More changes are inevitable particularly for unfunded schemes. This time they will know to apply it to everyone equally.
It will not change historic entitlements - it will only apply going forward.

Indeed
I was replying to the Op and others who want pensions cut-immediately.
While there will be filtered changes inevitably Ops suggestion of cutting them would be illegal

You'll have been gutted to read the UCL research on the relative GCSE performance of state and private students.

Don't want to hijack the thread into yet another private school VAT one but the conflation of a contractual benefit - often in lieu of higher pay - with whether a certain product/service should be taxed is beyond tenuous.

For starters, your argument is based on the idea that public sector pensions are all taxpayers' money - and in a sense they are, in the same way that public sector salaries are taxpayers' money, because that's how we fund public services. Schemes like the LGPS are fully funded, others are not and are going to be very bumpy in terms of overall costs as reforms feed through, pension ages rise etc. We won't see the real impacts of the reforms of the 2010s for many years.

But you also seem to miss the point that to get a pension, public sector workers also have to contribute. Now for most those contributions don't go into their own pension pot but go into general revenue and help pay for those already paying pensions. But as others have pointed out, those contributions are often not insignificant and while the employer contribution is excellent and better than anything I've had in the private sector, it is generally compensating for a lower salary. Comparing my public and private sector roles, I've been able to pay the equivalent into my pension and still come out ahead financially, the salary was that much higher.

If you feel public sector pensions should be closer to private sector levels, I assume you're also of the view that salaries should do likewise? Would be fiscally crippling while the current pension liabilities work their way through the system and you're paying much higher salaries for the current workforce, but in 40 or 50 years you'd start to see... a return to where we are now in overall spending terms.

People can't seem to grasp that it's the equivalent of making them pay back part of their salary for every year they'be been earning.

@JassyRadlett Not really cos life isn’t just about academics. It’s about life skills. You will be gutted to know you can have unsuccessful geniuses. So I pay for much, much more than academics. But that’s the thing isn’t it I am ensuring my kids can look beyond the blinkers. Worth every penny.

And as for pensions, the LGs is not fully funded. My DP worked in LG almost 2 decades ago for a short time and the pension he will get from that is a proper sum of money. And then if he dies before me I still get a good chunk of money. It’s stupid. And if I look at the amount I have to put in to my pensions as someone who runs my own business it is incomparable.

I would be happy for you in the public sector to be paid what someone does in the private sector. Then you might have to be judged by productivity, which is still going down in the state sector by all accounts, just like you do in the private sector. Again if my business doesn’t make money by adding value we don’t get paid. That’s the risk you take in the private sector. That’s why the rewards tend to be bigger.

The Canadian model is right. Let the pension plan be run by professionals who can actually make money to fund it. Of course, there is always then the uproar that pension plans like that invest in infrastructure but it works. They make the pension plan work. Bring it on and something I hope the Labour Party really do fully embrace. They have started by combining the local council pensions to work towards it. Good on them. And then then let those who achieve those targets feast on the profits of their labour too as they been productive members of society guaranteeing a good future for those within the plan. Much better than the nonsense pyramid scheme we have now.

It simply isn't all tax payers money though.

Some of the money is employee contributions

Chunks of the public sector are cost neutral or income generating - I bring in far more income than my salary and pension contributions cost.

And the pension funds themselves invest to generate money

Exactly. Attempts to cut it retrospectively always fail.

They can cut it going forward, but they have to balance that against how much extra salary they would have to pay to retain /attract people.

I'm quite happy to go to a more private sector pension model -but would want the triple salary I could get in the private sector.

Oh dear, your biases are showing - along with your reading comprehension and understanding of productivity - a lot of productivity isn't down to the individual. Funny how investment affects productivity. There are definitely systems in the public sector that desperately need reform to improve productivity but the trope of "public sector workers are lazy/useless" is a bit silly.

Like I said, I'm currently in the private sector, so I'm not "you in the public sector". I get paid a lot better for easier, less stressful work, easier targets to meet (I've worked across public, private and third sectors and have always been judged on my productivity) and fewer hours. It's a delight from a work/life balance and financial point of view but a lot less interesting and fulfilling. I'd quite like to return to the public sector at some point for the right role but the sums don't really work for the family at the moment.

We'll have to agree to disagree that state schools "aren't great" at turning out rounded individuals - despite being privately educated myself, I've been pleasantly surprised and impressed by the breadth and quality of what my son's big standard comp are able to deliver on a shoestring and with a very mixed intake.

Most people don’t live 30 years after retirement. It's only 15 years on average at the moment so that would be 300,000. I have saved that much in my private sector pension. I am not highly paid but after paying quite high amounts for 40 years it adds up.

@JassyRadlett Yes indeed. The ONS report and the Treasury figures are indeed biased.

https://www.charles-stanley.co.uk/insights/commentary/the-public-sector-productivity-problem

"If the public sector had matched the private sector and grown productivity by 2% up to the banking crash and then by, say, 0.5% thereafter the overall productivity figures would look a lot better and public services would be more affordable. If the productivity rate had been a sustained 1% a year we would get 31% more service for the same money, after 27 years. Even at 0.5% per annum we would get 14%. In practice governments would have shared those gains between providing more service and spending less. ....

The Treasury estimate the cost of the lost productivity since 2019 at £20bn a year. If you apply the latest ONS figure of 6.5% loss on one fifth of the economy, you come out with a larger figure of around £30bn. This is extra cost that must be raised as borrowings or recouped by higher taxes as the government seeks to get to a balanced position for revenue compared to current public spending".

You'd expect 3x the salary of the private sector to get the same type of pension the rest of us get??

No she’s saying she would earn 3x her current salary if she moved to the private sector. Same is true for me.

I actually SHOULD move to the public sector really. I'd get a similar salary but better pension (by far!!) there is no private sector equivalent to what I do as far as I know (charity) the only thing that puts me off is the ridiculous level of box ticking and red tape in the public sector.