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?

The 65 yr old, if they didn't have the pension, would have to claim a whole host of benefits so it would cost the public purse more.

@Papyrophile your situation seems a long way from a discussion about whether public sector defined benefit pensions should be illegal, tbh. And a bit beyond my ken. I'm no financial or pensions expert, I just try to get my head around the basics of economics. I don't know which politician "rewrote the rules", but it sounds like your tenant who "wrecked the building" is responsible for at least some of your loss. It does sound pretty risky, funding a business from your pension plan, but I've never run a business - and almost certainly couldn't - so I can't really comment.
A public sector job with a DB pension is a safer bet on the face of it, but the industry I was in made a lot of people redundant over the years so it's not all plain sailing. Job losses hit colleagues of mine who worked hard & were good at what they did; the decisions are taken way above your head & have nothing to do with your personal performance.

it is just wrong to imply that this is paid for by private sector workers! Public sector workers pay tax too! (I’m a private sector worker btw).

This sums it up perfectly. I think my NHS pension looks pretty shit considering I’ll have paid in approx 40 years of contributions when I finally retire. Successive governments have fucked with it. DH has a much better private pension which I’d receive if he died, on the other hand if I were to die he’d receive a paltry amount from mine. The whole gold plated thing is a huge myth.

The advantge of being self employed is that only you control your position. So you can make the best decisions , obviously within the rules, that deliver the results you want. I do not have to consider anyone outside my immediate family or their interests when I review where we stand on our pension. Right now, we have taken our 25% lump sum and given it to our one child, to buy a house, outright. While we still expect one of us to live another seven years.

I really would not want to be an employee. I didn't like it in the 1980s and I haven't been employed since then. But I also was very good at what I did, and the work kept coming in.

It’s not the same for all occupational schemes. Most private sector schemes are now DC, so there’s just a pot of money available at retirement for the individual, with no guarantee as to the amount and no ongoing liability for the employer.

I didn't much like being an employee either. 😆
But I didn't have a Plan B. 🤷🏻‍♂️

There is no ongoing tax payer liability to private sector pension funds because the tax payer is not the employer

For public sector pensions the tax payer is indirectly the employer
Whether it’s DC or DB. For it to be DC the tax payer would actually have to pay up front to pay into public sector pension funds

The state pension is a tax payer (and individual NI contribution) funded DB pension

Public sector pensions are tax payer (as employer contribution) and individual (as employee contribution) funded DB pensions

Both the state pension and public sector pension contributions go to funding current claimants, and have the promise of getting your own pension paid at a later date

Public Sector pension DBs are not a set amount like the state pension, but a calculated valuation based on the number of years and levels of contributions, this is therefore similar to private sector pensions in the sense that there is an assumed equivalent pot. Even though the “employers contribution” never existed and the “employees countribution” was paid
to other people instead of into an actual pension fund

To create equivalent pension funds the tax payer would suddenly need to reach into deep pockets to find the money to put into individuals funds

@Tomikka not disagreeing with any of that. I would just add - because the OP is floating the idea that public sector DB pensions should be declared ILLEGAL because in some way they're unfair on people with private pensions - that the government does support private pensions through tax relief on contributions - about £60bn this year. I feel there's a bit of an anti-public sector sentiment in the thread, as if private sector employees "pay for themselves" while public sector workers are on a gravy train. I wouldn't dispute that public sector DB pensions can be more generous - and less risky. But private pension funds are doing ok. Very difficult to assess the average growth of pension funds, but someone's had a go:
"the performance of default funds of the UK's biggest DC workplace pension providers averaged a 9.3% annualised return for young savers over the last five years. Young savers are defined as those 30 years from the state pension age. Pre-retirement pots, defined as those within five years of state pension age, achieved a 6.1% annualised return."
[ https://freetrade.io ]

Definitely an anti civil servant thread than actually about pensions

I have no problem with civil servants. I have known many in almost 50 years of adult life, and they range from brilliant to uninspired. But the remaining index-linked DB pensions are something of an anomaly, although I make an exception for ex-military, mainly because I am privileged to know several ex bomb disposal operators who put their lives on the line every working day, in Northern Ireland mostly. Anyone who walks towards a 200lb explosive device in a heavy soiled stinking shared suit to take that apart safely deserves public gratitude and a solid pension.

I work in public sector (joining over 15 years ago). I don't get a DB pension , it is DC. If you are lucky enough to have been in public sector for decades then you may have DB pension but most are not doing it any more and have moved over to DC.

Look at the military pensions if you thr public sector ones rile you op.
My husbsnd is early 50s and been in receipt of his immediate raf pension for a few years. Its on pa with the average wage and increases at age 55 and SPA.

This.
I have a high/top band.
I paid a LOT of contributions as did my employer ( GP practice) towards my final salary pension. I claimed it last year- now only work PT and continue to contribute towards my other NHS pension.
If you're jealous you know what to do/.