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.

Social worker here, who's had a pay freeze for years. My understanding has always been we have a lower rate of pay than the private sector but the trade of is we get a half decent pension IF WE MAKE IT! YABU OP

No, you're missing the point - final salary pensions are a thing of the past and have been for 20 years at least.

I’m sorry, have you seen public sector salary increases? On average they are below inflation increases and a real terms decrease. The private sector pays significantly more with bonuses and pay increased IME. Although I’m not comparing my post to a retail worker, for example, which may be the issue here - comparisons should be like for like.

You also misunderstand the public sector pension schemes if you think 20-30% is the real contribution to my pension, it isn’t. I pay significantly more for a 2.32% pension yearly addition. It’s peanuts. I also lose it all if I die early, my family don’t get a payout to the same I’ve put in.

@Monwmum

You do realise that public sector workers also pay tax?

Most public sector pensions were changed to career average in 2015 and these are much less generous. Also public sector employees typically pay a higher percentage of salary into a pension [6-9%] compared to private sector [4%]

i also think they will make pension changes. they are going to have to be very careful with it though. if you have severe staff shortages already, then pension changes are going to discourage newly qualified people from joining, and prompt existing staff to consider moving as there's no reason to hang on.

saw this at one of my first office jobs. they closed the final salary scheme to new joiners just before i started, so i missed it. then a couple of years later they changed it for existing staff. which caused a big flurry of resignations of middle aged staff who had only stayed because of the pension. that firm was known for lower pay but good benefits, so when the benefits were chipped away they upped and left to work for competitors for more money.

This post reminds me of the comments that pop up regularly of the Daily Mail comments section, where posters regularly like to rage against ‘lazy public sector workers’ and their ‘gold plated pensions’. They never seem to acknowledge how much lower the pay is compared to what you would get for the same roles in the private sector. I get paid just under £50k as an accountant (with management responsibilities) in the public sector. That is nowhere near what would get in the private sector. I work well above my contracted hours. Despite having young children, there have been numerous times when I have worked late into the evening, have got up at 4am to get deadlines done, worked weekends. Posts like this really p1ss me off to be honest. Maybe that was the intention.

Senior civil servants earn less than plumbers.

There are civil service roles for advertised for middle managers to lead institutional investor relationships on multi billion pound projects to be paid £53k at the moment. An electrician earns more. Builders in the SE earn more.

The pay is generally crap.

The problem with the public sector is a lot of the jobs are for doing things which are not required or are inefficient and could be removed if the system was reorganized and reorganization is expensive and difficult.

Let them have their pensions but be transparent about the cost.

The perception that all private employees have cushy pay rises and perks is a massive misconception. Current role multi national company avg about 2% pay rise and a bonus of 3% if we hit certain targets. Private health care have to pay for through salary sacrifice and it’s not really worth it for what you get and match up to 7% on pension. Old company one of the UKs biggest retailers and no pay rises unless someone was leaving or you made noises, no bonus, the basic pension employers have to give, got a discount but only really helpful if you want to buy branded clothes. My friend does a similar role both in facilities in public sector and is on way more money and a 25% pension

OP: Waaah it's not fair that the public sector get pay rises in line with inflation and final-salary based pensions
Public sector workers: Um...we haven't had either of those things for years.
OP: ...I think everyone is missing my point.

You are welcome to withhold my public sector pension but I will require:

• The return of all of the compulsory pension contributions which were taken out of my salary

• The return of all the employer pension contributions made on my behalf which said employer repeatedly used to justify the lower salary I earned in the public sector than the private sector (it was less than that differential)

• Compound interest on both these sums to compensate for the effect of inflation

This. Give me the going rate of an accountant at the same level in the private sector and then come back to me and ask me about slashing my pension.

Our council has cut their employers contribution supposedly for x years. I doubt we'll see it again going back up.

We get no benefits like my husband gets of health care, bonuses, Christmas gifts.

Yes & AA grade is only £1k less, it's hardly worth all the work to get promoted. Civil Service salaries are absolutely rubbish for the amount of work expected & all the crap you are expected to take. Anyone on AO grade would struggle to be able to get a big enough mortgage to buy a home, there are Civil Servants having to use foodbanks. A full time job should pay enough so you can afford a roof over your head, all the bills & have enough left to have some pleasure or life isn't worth living. AO grade pay in 2011 when I finished was just under £21k so in 14 years has only risen £2k, with inflation everything you need to live has gone up around 20% in that time, how are you supposed to afford to live? It's no wonder so many are either leaving or taking second jobs, you could work in Aldi & probably be better paid & less hassle.

Yet we expect the absolute very best out of public services. How the general public expects the very best candidates when they can earn 5 times that in the private sector, is beyond me. You’re recruiting someone using it as a stepping stone to move into a sector that values the ‘industry’ of the job and the prestige/ reputation, or someone who wants to go into politics.

I'm public sector, moved across from private sector, as it was better paid!

The pay is about 3k per annum more. I don't get a bonus or Christmas party etc. However my bonus was never more than 2.5k. I have flexible working, homeworking and less stress (no billing targets or timesheets).

I personally can't justify the public sector pensions.

There isn't the scope to work up the ladder the same as private, but I have a better work life balance, and I'm past caring.

@Monwmum you said: "However, public sector pensions are still getting contributions of the high 20% figures while private sector pensions range from 4% -10%."

I posted this on another thread last week, but I think it bears repeating as so many people don't understand how public sector pensions work (including lots of PS workers, and myself until quite recently!)

You cannot compare the high 20% employee contributions in the public sector to the 3-10% contributions in the private sector as they are going towards different things. Private sector contributions go directly into your pension 'pot' which is invested in the stock market. Individuals in public sector schemes don't have a pension pot.

The civil service contribution of 27% is going into the overall running of the entire scheme. It has no bearing on what the retiree ends up getting because they receive a career average (not final salary) based on set rates when they retire.

For example, on the 'Alpha' scheme, which all new civil servants join, you will have somewhere between 4.5-7.5% of your monthly salary taken out as a pension contribution. This contribution is used to purchase 2.32% of your salary every year and this accrues until you take your pension.

Let's say you earn £24k (£2k per month) and your contribution rate is 5% – that 5% (£100) buys you £46.40 (2.32% of your £2k salary) for your pension, or £556.80 over a year. If you work there for 20 years (assuming no pay rises/inflation for simplicity) you will have built up an annual pension of £11,136 (£556.80 x 20) which is paid out of the money built up by the employer contributions (27% in the civil service).

It is quite confusing as the media (Telegraph, I'm looking at you) conflate the public sector employer contribution and private sector contributions all the time - But they are chalk and cheese.

However, it is true to say the accrual rate is good and public sector pensions overall are good. They should be too, because the majority of public sector works earn well below what they could earn in the private sector, and the pension is recompense for that.

It's a very complex issue but does need to be looked at. The future pension liabilities are high. The IFS research indicates that low public sector earners opt out because they can't afford the personal contribution required. Some public sector workers may prefer to have a bigger salary now (due to housing/other costs). Moving between sectors can also be challenging

They they’ll need to increase wages. My husband makes just a little more than minimum wage, the pension is part of the package.

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.

I’ve worked in the public sector for years. My pay increases have been few and far between and they haven’t come close to keeping pace with inflation. I must be working for the wrong organisation.

Ok, if we peg public sector wage growth to private sector wage growth for the last 20 years. Public sector wage growth hasn't regularly tracked above private sector wage growth since the early days of austerity.

Like for everyone, public sector workers will take a job based on the full package. In the private sector that can be much more varied - I've had healthcare, offers of company cars, flexibility, and other aspects as part of my employment package. I've always negotiated my pension on taking a job as well as the other benefits.

For the public sector, the benefits are pretty thin on the ground apart from a very good pension and the potential for flexibility, depending on the sector and role. If you slash part of it, you'll need to make it up somewhere else or accept that you will get much less able people willing to do the jobs.

I don't know about other industries but the Civil Service pay software engineers drastically below private sector levels. Or any tech role, not just engineering. A quick skim over their job board shows me that the Head of IT at the Cabinet Office earns less than a junior I just placed (and not even at a FAANG).

Also remember that civil servants also make pension contributions of between 4.6% and 8% as part of being in the pension scheme. It's still excellent value but important to bear in mind the full picture.

Yeah, a race to the bottom is a great idea for working people. Are you a bot?

And you'll be complaining about inheritance tax and VAT on private schools with your next breath!