To think public sector DB pensions should be illegal

[OneAmberFinch]

Everyone seems to accept that it's obvious that the private sector, speaking very generally, pays better salaries in-year but the public sector makes up for it in excellent defined benefit (DB) pensions.

As in, you get a certain amount paid to you indefinitely, based on how many years of service, your level reached, average or final salary, etc.

Everyone acts like this is normal but it is actually insane!

Growing up in school I was always taught that it was a fundamental principle of a parliamentary democracy that one parliament cannot bind another. Parliament should be able to override anything a previous parliament did, so that voters always have the ability to change course democratically and nothing is locked in forever.

But having DB pensions for public sector workers is binding future parliaments into very large financial commitments that will leave them increasingly less wriggle room.

It would be one thing if they were defined contribution pots that were in each individual's name. That would operate independently and doesn't represent an obligation on future governments to pay out pensions out of future taxpayer money, maybe future taxpayers who have different priorities for what they want to spend the money on.

AIBU to think public sector salary culture should, if anything, be the reverse: high salaries now, because the government is legally not allowed to commit to future compensation in another government's name?

It seems there would be no way to ever reduce the size of the public sector.

The ever growing public sector, courtesy of Daily Mail headlines of the “most Civil Servants since x” etc (in the region of 550,000 these days having risen to fill the gaps of government shared across the EU)

They never mention the cuts from > 720,000 making the Civil Service 2/3rds of its previous scale

OP- LGPS is funded, with a net surplus...

You think I made up the idea that Parliament cannot bind its successors?

I'm up for it if you want a nuanced constitutional law debate about the limits of this in practice but a few people are acting like I just made this up out of my head...

No parliament can bind its successors … due to the parliamentary legislative process which already gets used to change pensions legislation

Or the fact one of the reasons the civil service needed to increase post 2020 was due to Brexit which decentralised many functions. Which the DM endorsed.

Similar for DH. He was an HEO in the civil service and retired after 35 years with a pension of around £15,000. He can hardly have a good life on that.

I imagine someone else may have replied already but in the LGPS at least, taking the pension before state retirement age would be heavily penalised and most pensions are not final salary but are career average.

It's not a huge pension. And it's paid for by a percentage of salary.

What contractual terms do you have?

I think there's a difference in spirit/scale between a huge multi-decade commitment, and something like "they have to pay out my 3 month notice period".

I'm fully aware that my proposal should involve higher in-year salaries, or equivalent cash into DC pensions.

Of course it still might not be directly comparable to the private sector. Depending on your specific role I assume there would be other factors such as expectations on hours, location, stability, cut-throatedness of environment, whatever that might mean there is still a gap to the private sector. Or might be more if it is a challenging role (e.g. private security guard vs police officer maybe has different levels of danger pay needed). But the overall comp you're receiving would be like-for-like to help you make your decision.

I have retired but I know what you mean. In fact though I was going by the value of my package quoted to me when I accepted the jobs.

Growing up in school I was always taught that it was a fundamental principle of a parliamentary democracy that one parliament cannot bind another.
You've misunderstood what this means, it seems you're confusing law with policy? Of course every government makes policy decisions that the subsequent governments are stuck with - look at Brexit!

Compare it to pre-WW2? It all depends on your comparison point doesn't it?

i think they mean how big a pension pot would you need to get a 12k annual pension. I imagine it would be around 200-300k?

I think you’re mixing up two different concepts here. DB pensions don’t “bind future parliaments” in the constitutional sense. Parliament can and does change public sector pension rules all the time - accrual rates, retirement ages, indexation, contribution levels, scheme structures. Nothing is legally locked in forever.

The reason DB pensions exist isn’t because governments are trying to commit future governments to anything, it’s because they’re part of the total compensation package for roles that historically had lower pay, high stress, and long‑term retention needs. Teaching, nursing, policing, firefighting, civil service… these aren’t jobs where people stay for the salary alone.

If you scrapped DB pensions tomorrow, you’d have to raise public sector salaries by 20–40% overnight to remain competitive. That would cost far more upfront than the current pension system does spread over decades. And you’d still have a recruitment crisis because people wouldn’t stay long enough to build experience.

Also worth remembering: private sector DB schemes didn’t disappear because they were “insane”, they disappeared because private companies can go bust, can’t pool risk across millions of workers, and don’t have the ability to borrow cheaply or tax. The government can, which is why DB is still viable in the public sector.

You’re not unreasonable to question sustainability, lots of economists do, but the idea that DB pensions are unconstitutional or somehow illegal in principle doesn’t really hold. They’re just one way of structuring pay, and if you remove them, you’d have to replace them with something much more expensive in the short term.

In other words: it’s not that DB pensions bind future parliaments. It’s that they’re the only way to make public sector pay workable without blowing the annual budget.

Mine is a big pension if I make it to 67 -40yrs service. 250k lump sum, 35k a year ish. I do pay £400 plus probably more towards it.

I suggest you take a basic macro economics course.

Of course government spending can move up or down according to circumstances. Just think of the billions spent during the pandemic.

You really don’t understand any of this.

I'm not sure what your point is?

Brexit happened because of this principle. There isn't an overriding constitutional law that says, say, once we join an international agreement we're never allowed to leave it (or likewise once we leave, we're never allowed to rejoin).

Obviously actions all have consequences, and the choice Labour today faces is made in the context of what happened before. For example, the EU being pissed off and not wanting to negotiate a good deal. But that's a bit of a different point.

Now that you mention that though, I wonder why no-one has pointed out to me that my thread title doesn't make sense if I'm so committed to parliamentary sovereignty: what would it mean to make DB pensions indefinitely "illegal"? :)

What don't I understand?

Their flexibility is less if they have billions of locked-in commitments. I and most people in this thread consider pension promises to be locked-in commitments. Do you disagree?

And how recently? This sounds like a. A-level politics student who's just done her first class

Leaving the EU was a policy choice. The costs of leaving are massive, those costs are a factor for subsequent governments. A future government could change the policy going forwards, but can never undo the past.

Offering DB pensions is also a policy choice. A future government can change the policy going forwards but can never undo the past.

There is no difference - every government is stuck with the past policy decisions of every previous government.

You have misunderstood what 'binding a future parliament' means - it means today's government can't say 'no one can ever change the law/policy in future'. A future government can change the pensions policy. They are not bound.

Christ OP - do you work in the public sector ? Perhaps I am a bit biased having worked in social care and / or the NHS for 28 years in front line jobs .
The wages for the responsibilities and stress involved are really very poor. And now you think it should be illegal for the public sector workers to have a reasonable ( not amazing ) pension .....
Whatever the answer is to the financial pressures facing this country i feel extremely doubtful that this would be any kind of solution.
We do need social workers, fire fighters, nurses and teachers and the like. They are kind of important and it would seem a bad idea to make these already very tough jobs even less rewarding and viable .

Every government is locked into all sorts of commitments, how could they not be?

These locked in commitments (Public sector pensions) have been around for I'd guess at least 80+ years. Since the 90's most.public sector pensions have been "reformed" (a.k.a. reduced). Is there something other than envy that means they are now unaffordable.

Basically a government can find the money when it needs to and it can stop finding the money if it wants.

Why don’t you ask why Tory governments have continued to pay pensions but decided to cut funding to education, local government, defence and the health service?

I appreciate the distinction you're making. I think it's reasonable to challenge the link. (I'm not sure I'd use the terms policy and law to make the distinction though? I think you're saying that it's not a breach of parliamentary sovereignty because that only applies to making new laws, i.e. new contributions going forward, and the debts of previous govts including DB pension commitments should be seen more as "this is the environment we find ourselves in", similar to "we are currently in an awkward relationship with the EU after the last government did Brexit". I can see the argument for that.)

I think what I'm arguing is something closer to, do we believe that parliamentary sovereignty is a good thing? Do we think it leads to a stable and well-functioning society?

If we do, should we not apply similar logic to large, far-reaching financial commitments which unnecessarily tie up huge portions of the government budget and are in practice impossible to back out of?

If given the choice between two financially-equal compensation plans, governments should favour the one which has the payout today. The only way this is not equal, i.e. the only way it would be better for the government to prefer paying deferred comp, is if they're borrowing from the future and hoping that they can find the money from somewhere.

This should be seen as contrary to good governance, irresponsible shepherding of the country, etc.