What is the justification for police and civil servants getting final salary pensions?

[ladykale]

Does anyone know?

Who is funding these generous pensions if they haven't put enough in all their life / value of investments isn't equal to the value of their pension??

I have several relatives working in the private sector who still have defined benefit pension schemes on par with or better than public sector pensions. (Also better salaries and other perks, like private medical etc.)

You do realise that they contribute themselves from their salary?

When I started working for Barclays in 1989 the ‘1964 pension scheme’ that I enrolled into was non contributory. I worked as a cashier for 12 years and when I’m 55/60 I can draw it. It’s only about £4k a year but cost me nothing. They stopped the non contributory pension after I left. Banker’s bonuses bother me more than someone receiving a pension that they’ve worked for.

I know a few police officers and they pay a lot into their pensions every month and some of them are considering stopping because they struggle to afford the contributions.

You do realise that they contribute themselves from their salary?

I think when people discuss pensions they are fully aware that employees contribute, the discussion is more centred around employer's contributions

Firstly final salary pensions no longer exist, it is now career average.

Secondly, hopefully you do realise that this doesn't mean you retire on the same average income as when you were working?

For every year worked the pension will be 1/49th of average salary. So unless someone works in public sector for 49 years i.e. starts at 18 and leaves at 67, they aren't going to get their average salary at the end.

If my health holds up and I make it to 67 I will have done 22 years in public sector and get a pension of 44% of my average salary. Sadly 6 years of those were in salaries of around £20k as I made initial progress, saw no future and then went back to £20k to retrain in a different field.

The pension is good, and guaranteed, and by good I mean I will survive and not be destitute in old age. As I was economically disadvantaged by raising kids alone, one of whom had various needs which meant I couldn't work full time until I was 45, I am very thankful to have it. But I would earn at least £5k more in the private sector.

I work very hard helping a large public sector organisation handle it's finances well so they can deliver a good public service with reduced funding, so I think I deserve to not be destitute in old age.

So you need to compare public sector pay with typical private sector professional roles, so the well paid career pathways into law, banking, accountancy, IT, pharmaceuticals etc.

I can see that at the very top of these professions pay will be much higher then public. However it's a bit of a myth that every well educated professional earns very well in the above roles apart from maybe tech. For every law graduate on 6 figs there's plenty experienced ones on 40/50k even in London. Part of this is because if how much salaries have been eroded since 08.

I work in finance & would typically earn 10-15k more in private but that would entail less holiday, more hours (my full time wk is shorter), more overtime, more stress & less generous pension. Also in this economic climate more security.

Final salary pensions were massively regressive. They favored the higher earners, who got disproportionately large pensions.
Lower earners tended to peak early and they stay on the same grade for the rest of their working life.

Higher earners would spend less time at their top grade but get a salary as if they had worked their entire career at that level.

I knew a guy who got a massive temporary promotion, doubled his salary, filling in for a year after a very Senior Manager left. He chose to retire during that year, meaning his pension was based on the higher salary he had worked for just months. That meant his yearly take home in pension was equivalent to his yearly working salary in his substantive post. Stuff like that just wasn’t fair.

And that's before bonuses

Many jobs in the private sector don't have bonuses & again the majority will receive 5/10% only if the company has performed well.

@QuintanaRoo what years is that based on? I can't see

www.bbc.co.uk/news/55089900.amp

We believe there is a strong case for reform of pensions across the public services. Police pensions, like others in the public service, will be based on a career average (CARE) scheme model in the future.
The current final salary police pension schemes will close from April 2015, with future accrual based on the new CARE model. Under the new arrangements, the Normal Pension Age for police officers will increase to age 60, compared to a Normal Pension Age for most public servants linked to state pension age (planned to rise in stages to 68).

From here https://www.gov.uk/guidance/police-pension-reform

The employer contributions reflect the liabilities of the pension scheme, a lot of which are from the days when final salary was the norm, not necessarily the benefit to the generation of today.

I contribute 10% to my public sector pension which is defined benefit as explained above. I contributed 6% of my salary to my private sector employer pension which was final salary.

Why not improve everyones pensions instead of wanting us all to have crap ones, reliant on the stock market?

I don't think most people realise that almost everyones pensions are tied to stock market/asset performances & even over a long period of time, these may well not perform very well.

There seems to be several threads on FS or CA pensions and criticising them but nothing on private company profits, thats all ok.

Nothing is stopping anyone in the private sector from applying for a public sector job. It's not a closed group.

Come join us!

there's plenty experienced ones on 40/50k even in London

£40-£50k would be extremely good pay for many public sector roles, especially in local authorities. You’d have to be quite senior and long serving to get that. And it varies by LA. I have earned over 10k a year less for the same grade and role by moving LA.

Many pensioners in the old government schemes are seeing their defined benefits eroded by inflation. For example,most electricity supply pensions went up 5% this month.

the justification was to attract a loyal workforce.
with a reduced bribe potential.

I’m a designer working in digital. My designer and developer colleagues and I could earn far, far more in the private sector. The pension (which isn’t as good as you seem to think) is one of the few things keeping us in the civil service.

op it’s the same as any pension scheme, some folks live longer and claim more than they put in, some folks live shorter. They also don’t have final any more. You appear confused?

Oh and a chunk of my salary is non-pensionable. I’m in a ‘market scarce’ role and receive a retention bonus but it doesn’t count towards my pension.

Retention allowance, sorry. Not a bonus, that was a bad choice of words.

I agree @carriedout
I'm noticing more and more on MN all the ranting Tory/Labour loving vs Tory/Labour hating posts. It's very irritating and they are appearing more and more - probably because of the elections next week. Goodness only knows how many there will be next year with the GE!!

Party activists from either side - please go out into your communities and campaign/doorstep in person rather than rant anonymously online. You'll get more engagement and respect. No one takes a blind bit of notice online.

I know it's harder, but from my experience the things worth doing in life are always hard work.

Second final salary pension rant in two days.
Are you a politician testing the water for a change? 🤣

But seriously, why look at it as something that people should no longer get rather than something that more people should get?

I've never understood that way of thinking.

You've got three hungry people. One of them has a slice of bread.
This attitude is the same as saying oh no why should you have a slice of bread when these two haven't? You must have it taken from you.

I would argue the better attitude is good, you should have a slice of bread. I'm happy that you do. Nobody should be hungry. How can we ensure these other 2 also get a slice of bread. What can we change to ensure everyone has the better option.

Teacher friends get them.

Only if they retired ages ago.
it was moved to an average of the final three years
it is now not even an average of that.