Subsidising those public sector pensions

[ViVienne]

some of us don't mind watching a scrap, but don't want to get involved! Best to let people just get things off their chest, have a good moan then get on with life.......even if I don't agree with the statement.

[Alane]

So you were self-employed and made provision for a private pension. You were made aware of the risks when you did so and you lost - if it had gone the other way would you now be offering to share the surplus with others? No, of course not. You made the wrong choice - live with it rather than becoming bitter and twisted because others made a better choice than you.

And before you ask - I had a pension with Equitable Life.

[Dog]

[quote user="Pudding"]

Looking at the viewing figures for this topic lots of readers it seems are keeping their heads down.

More ex public sector employees perhaps? 

 

[/quote]

 

I am absolutely with you on this one. I have raised the question before on this forum - but me thinks there are quite a few on this forum that have gold plated government pensions.

In the great depression I think it was the Geddes Act that cut public and the armed forces pensions and wages significantly to get the country back on its feet - the same needs to happen now to restore faith in the government.

 

 

[Helen]

Speaking as a current public sector employee, I entirely agree that the day has to come when the current disparities in pension provision will be addressed - it isn't sustainable or acceptable to have such a two tier system. 

But I don't see why people need to make snide remarks about those employees who, as other posters have said, made one career choice  whilst others made a different one. Like everyone else I know in my area of work,  I did not base my career choice on salary potential and pension benefits but on where I felt I could make the most contribution to society.  I feel no need to defend the terms and conditions that came with that job.

 

And what makes you think public sector employees and their families aren't suffering from the crunch? OH's redundancy and a failed pension mean that my salary is all we have now (or will do in the future).  With two teenagers to support as well, we don't exactly feel like we're in clover right now.

[chrisb]

[quote user="Dog"][quote user="Pudding"]

Looking at the viewing figures for this topic lots of readers it seems are keeping their heads down.

More ex public sector employees perhaps? 

 

[/quote]

 

I am absolutely with you on this one. I have raised the question before on this forum - but me thinks there are quite a few on this forum that have gold plated government pensions.

 

[/quote]

So what Dog? I expect there are quite a few on this forum who might have been bankers, shopkeepers even the odd writeer or two.

As usual you choose to lump people all together in a convenient target for your small minded vitriol.

It so happens that I got my annual pension forecast a couple of weeks back and anybody who saw that could by no stretch of the imagination use the ridiculous phrase (garnered I suspect from some pathetic compost-stirring rag) "gold plated".

In fact reading through it we realised that the only way I could have gained a significant amount from the pension fund would have been to die last year and collect the death benefit.

We used to have to attend school careers fairs to try and persuade kids to join our particular nook of the public service and when we told them that after they had gone to university and taken a post grad diploma they were likely to earn such and such an amount they would laugh in our faces and tell us that the bank on the next stand would pay them that much joining the staff at 16.

We chose to follow that career path anyway because it was what we wanted to do. So we signed up for it - including the CONTRIBUTORY pension arrangements - so is it any surprise that I for one regard people who had much higher incomes in the first place and now have the nerve to whinge and moan about my pension as hypocrites of the first order. In fact very much the modern day equivalent of 19th century landowners who would throw their elderly workers to the wolves (or the workhouse) as soon as they got too old to work.

[Dog]

I don't think I ever said getting the UK economy back on track was going to be a bed of roses for everyone.

The government spent the funny money from the good times on more and more civil servants that produce no wealth for the UK - but would increase Labour voters.

If UK collapses so will your pension 100%.

It's either some harsh cuts or increasing inflation to steal your pension in another way.

[ali-cat]

It's pretty obvious from this thread that some people are regretting the choices they made. The main word being choice. Everyone has the choice of deciding to go for a decent, well paid, enjoyable, rewarding job ..... or joining the Civil Service. I never complained when people discussed the much higher wages they received in the private sector for doing similar work or talked about their company cars etc. - because in my 30's I made the choice to join the Civil Service. Nor did I complain about my taxes going towards paying for Child Benefit, Unemployment Benefit or Housing Benefit, none of which I have ever claimed. I feel really sorry for anyone whose pension has been decimated but I certainly see no reason to have to apologise for being a civil servant who chose a 'safer' career, when others didn't.

After many years working in the private sector I applied for the Civil Service because of the conditions & security it offered, taking a £4000 pay cut in the process. For the first 3 years of service, even after annual & performance pay rises, my wages still had to be stepped up because they would have been below the legal minimum wage. For me the lack of a decent salary was counterbalanced by the benefits that came along with the job i.e. working conditions, unlike my previous job where I had to cancel holidays at the last minute, due to lack of cover & the security of permanent employment, having been made redundant twice previously.

Scooby, I hardly think your husbands example is typical – with the average Civil Service pension being below £7000. From the figures you have quoted I presume he is in a top management post – which would equate to about 2% of the Civil Service work force. It would be like saying every bank clerk will receive the same redundancy package as “Fred the Shred”. He must also be a very lucky man to be able to wander in & out when he pleases – I can assure you that the other 98% (including presumably his own staff) would be sacked for doing the same.

I think it's sad that some people have to look for irrelevant scape goats rather than taking responsibility for their own decisions.

[Pudding]

A youngster embarking on a career choices, especially informed ones, must at the very least be daunting if not to say difficult. Additional pension provision was not a consideration as through their working lives they would pay their contributions and retire on a state pension. That was the promise, that was the Welfare State - and it is that provision that has not lived up to expectations.

Many are envious of public sector pensions - who would not be? but as said the recipients are hardly to blame.

The main beef is that in many cases along with tax payers, public sector pensions are subsidised by those whose private pensions have taken a hard knock and one that impacts on the governments ability to enhance the state pension - and it is this that needs to be looked at, and it is this debt that needs to be removed from existing and future generations.

 

 

 

[Ron Avery]

"The main beef is that in many cases along with tax payers, public sector pensions are subsidised".

How? I can assure you that you have not paid a penny towards my pension, I paid it and my employer paid it and my pension fund invested it sensibly, end of story.  If you follow your flawed logic then everybody who shops at M&S or Trescos is subsidising their staff's pensions.

 Be interested to know whether you live in France or the UK and if there are any other threads that you might like to contribute to, how is the blog going????[Www]

[Stan Streason]

Fair bit of vitreol on here all caused by people looking backwards.  Things are what they are and with so many changes in pension legislation even circumstances of people in the private sector differ.  Do you blame someone who purchased an index linked annuity when rates were better?  (Or chuckle at the person who had no option but to invest large funds into an annuity when rates were poor and it clearly was a poor investment decision).

My father worked for 40 years for Inner London Education Authority and we went without lots of frills growing up.  He married again after my mother died and my step mother has a full index linked pension of her own after over 35 years as a nurse.  Both in their eighties they are currently cruising around southern Africa.  They are fortunate to have lived long enough in retirement to really get the benefit (wheras my mother got no benefit at all).

I am self employed and my pension fund is made up of what I have saved myself. Its value is now about half of what it was 6 months ago but fortunately I do not have to cash it in yet and am using the opportunity to buy cheap.(Hoping it will go up in value).

The problem with government schemes is not with the people or even with the system which pays less now and gives better pension benefits, its all down to governments who have not funded them correctly and are now using taxpayers money to pay pension committments.

[Lotmontel]

I agree totally with ali-cat

[quote user="ali-cat"]It's pretty obvious from this thread that some people are regretting the choices they made. The main word being choice. Everyone has the choice of deciding to go for a decent, well paid, enjoyable, rewarding job ..... or joining the Civil Service. I never complained when people discussed the much higher wages they received in the private sector for doing similar work or talked about their company cars etc. [/quote]

I certainly never complain that my brother who works in the private sector earns considerably more than I did in the public sector (despite him having only done 3 years post-school education compared to my 8 years).   

[quote user="ali-cat"]After many years working in the private sector I applied for the Civil Service because of the conditions & security it offered, taking a £4000 pay cut in the process. [/quote]

I didn't choose to work in the NHS for the conditions & security, I gave up the opportunity of a lucrative career in law to retrain because I wanted to contribute something to society.  I actually found the conditions of employment in the NHS appalling - what perks?  The Final Salary Pension was possibly the only advantage, although that has to be off-set by the poor wages.  I also dispute that I didn't work as hard as those in the private sector.  As ali-cat said, the example of Scooby's husband cannot be generalised to the majority of Public Sector workers. 

By the time I get to pensionable age, Final Salary Pensions will be a distant memory, and I may then regret having chosen to work in the public sector in the first place.......... actually I won't because I will remember all the people whom I have helped along the way.  

I don't remember people complaining so much about the benefits(!) of Public Sector Workers when the Western World was in a boom situation.  Everyone, like ali-cat and me, had the choice.    

 

[woolybanana]

The pension I receive at present is a Belgian public sector one as I was a researcher and lecteur there for 13 or so years. What surprised me though was how much it is based on what seems a small number of years. how such a small country can afford such generousity I can't imagine, given that huge numbers of people are on the public payroll. They could actually manage with about half that number but then unemployment would get even higher. And many of those I saw were bone idle. Promotion was often through time served and not ability, thus the senior management levels contained much rubbish.

The problem however in this debate seems to be that public service workers get guaranteed and indexed pensions based on their final salaries whilst the private sector does not and that even if they have paid more into the pot they will inevitably be taking out a larger amount pro rata which is paid for by the taxpayer and that is not affordable.

By the way, the wages of middle management in the state sector in UK are above those of the private sector.

Ron, does Dog have a blog or is it you? If so, lets see it then.

[krusty]

[quote user="Stan Streason"]

 

Its value is now about half of what it was 6 months ago

[/quote]

How can you have lost so much in 6 months ?

I had £10 in the bank 6 months ago .........I can still go out and buy £10 worth of baked beans.[;-)]

[Pudding]

How do you think you pension is being sustained Ron?

The CBI reported some time ago that a £1 trillion debt has been racked up by public sector pensions, and if you do not want to take my word for it let me quote them - "Taxpayers who are struggling to build up their own personal pensions will be lumbered for decades by the cost of public sector workers on risk free pensions". And yes, I suppose we are subsidising M&S or Tesco's when we shop there - I'd not thought of that.

As my opening post said, I have now returned to the UK, and you'd be surprised at just how many contributions I've made to this excellent forum over the last 5 years.  And blog, what blog?

 

 

[Stan Streason]

[quote user="krusty"][quote user="Stan Streason"]

 

Its value is now about half of what it was 6 months ago

[/quote]

How can you have lost so much in 6 months ?

I had £10 in the bank 6 months ago .........I can still go out and buy £10 worth of baked beans.[;-)]

[/quote]

Its all in the small print....."the value of investments can go down as well as up" - and boy are they correct.  Wheras I could have turned my investments into cash and bought £10 of baked beans, if I do the same now it will only buy me about £5 worth.

Am currently buying as many baked beans as I can afford and hoping the inpending worldwide baked bean shortage will mean I can sell them for a lot more once I have cornered the market.

[Scooby]

[quote user="ali-cat"]It's pretty obvious from this thread that some people are regretting the choices they made. The main word being choice. Everyone has the choice of deciding to go for a decent, well paid, enjoyable, rewarding job ..... or joining the Civil Service. [/quote]

I worked in the public sector for the first few years of my career...and took a 60% pay cut to work in the private sector. So I can make a fair comparison - I've worked (and paid contributions) in both sectors.  The reason I left?  I worked in the same (very) specialist area as my husband and thus by continuing to work in that specialist area I would restrict his chances for promotion in the future.  I also got sick of the fact that promotion in the public sector was based on time served rather than contribution and saw many in posts that they should never have been promoted to - sitting comfortably with no risk of being fired until they drew their pension. The public sector attracts the 'moyen' just as much in the UK as it does in France. 

As for the comments re the quantum of pensions for public sector employees, the pension is 40 /80ths of final salary plus a lump sum of 3 times the pension.  Taking the OND technicians (basic grade) I referred to earlier, they will have completed 40 years service at 58 at which point (on current salary scales) they will receive a pension of at least £17,000 and a lump sum of £51,000.  A secretary: pension of £11,000, lump sum £33,00.  (Junior) ward clerk; pension £8,500 lump sum £25,500.  Have difficulty seeing where your figure of <£7,000 comes from Mark?  Not bad for next to no qualifications especially when you consider the 35 hour (rather than 37.5hr) working week and six weeks holiday etc. 

For good (like for like) private sector / public sector comparison how about looking at care assistants?  NHS employed care assistant are in a salaried role: work 35 hours per week, have 5 weeks holiday a year plus BH, paid sick leave, a salary of £16k, retirement at 55 (occupational pension at 55 of £7,800 with lump sum of £22,500).  Care assistant in private sector: hourly paid on minimum wage, typical role is 7 * 12 hour shifts over two weeks (4 days one week 3 the next) which equates to £11,500 p.a., statutory paid holidays only, no entitlement to sick pay other than SSP, retirement at 65 on baisc state pension.

As an aside - the reason current tax payers are funding current public sector pensioners is that most public sector pension schemes are unfunded.  So the £1's you paid into your pension, Ron, don't exist any more - they were used to pay those drawing public sector pensions when you were working. 

[krusty]

Sorry Stan when I read "my pension fund is made up of what I have saved myself." I thought you meant savings.

Make sure you get the correct brand of beans ...........not all beans are equal .[Www]

[Patf]

I have a public sector pension and I'm very grateful for it, though it's nowhere near as high as others are quoting. I only paid in for 25 years.

My husband was always self employed, and he and his friends who all left school at 15 were making twice as much as me when we were working. (That's why I married him. [:D])

The problem is becoming more acute now that people are living longer.

[Scooby]

[quote user="ali-cat"]Nor did I complain about my taxes going towards paying for Child Benefit, Unemployment Benefit or Housing Benefit, [/quote]  But it has paid for your DLA / IB

[Gluestick]

Well, I did say I might come in and play later.............................

On this site a couple of years ago, I posted some stats which had emerged from an in-depth analysis I completed for another purpose.

They demonstrated quite unequivocally, that if one added unfunded Public Sector Pensions Cost to then extant government borrowing, then France was performing much better in terms of Debt: GDP: in fact the UK was at the bottom of the European league tables in this respect.

Some LA's are apprently needing to use > 40% of Council Tax and UBR to fund pensions.

Yes; the choice of Public v Private Sector was potentially a career decision for everone  and a personal matter. Agreed.

That said, since the bad old days of low pay: secure employment: nice, but miserly pension, things have moved on!

What must stick in the craw of many non-public sector workers was Government giving in to public sector unions some years back when the final salary index-linked retire at 60 deal was struck: when simultaneously, private sector workers must now continue until 67 and onwards.

I would also comment that the public sector has been rather relaxed over awarding early retirement on extremely generous terms on the basis of "Health".

For example, I know of one lady (In France), early retired on health grounds - back and hips you know - who after only circa 14-16 years, was awarded a very nice deal thank you very much: and yet still, despite such dreadful disability was able a couple of years ago to climb up and down ladders and paint the exterior of her house! Must be the air you know.

I would also comment that her appalling obesity must have contributed to her hip and back problems: in the World I inhabit, the old legal maxim Volenti Non Fit Injuria rather springs to mind: i.e. you cannot gain compensation for injuries you cause and create to yourself.

I also know of a fireman (Ooops! Firefighter of course!) who managed to achieve early retirement, on the basis that he fell over a pew in a church on duty: back again you know.

Yet still now manages to race bangers; run his car breakdown lorry: and his scrapyard and is always lifting and straining heavy weights.

Hoses are obviously different.

Perhaps the question we ought all to be asking, private sector and public, is how long will such pensions manage to be paid?

With the failure this week for Treasury to successfully auction off its first round of Gilts and a probable need for government to escalate PSBR (Public Sector Borrowing Requirement) to a probable £250 Billion during the next year; Britain about to be downgraded from AAA as a credit risk; global capital markets now viewing the UK as a Sub Prime risk, it is pretty obvious that government must soon dramatically savage its profligate spending.

Indeed, the IMF would insist upon this as a condition of its assistance: and a visit from IMF Inspectors cannot now be far away, now the EU have refused to give Brown's insane fiscal stimulus plans the time of day: and Mervyn King has also distanced himself from the sanity of government's fiscal strategy: if one can dignify it with that word!

Private sector funds managers have also seen their holdings savaged as capital values continue to diminish: additionally, the so-called Black Hole in pensions now exceeds £100 billion and is rapidly growing: and at a time when corporate profits are plunging in majority.

Sadly for some time, I have been forecasting that Equitable Life would be only the first to renege on their pension payment commitments: realistically, we can anticipate both private and public pensions shrinking: by this I mean those in force now, not future settlements.

I can also see the government's Pension Guarantee Fund being in severe trouble: as was the US equivalent after steel and airline corporations went South.

Right now, it is a common demand "For government to provide extra financing and funds": this now even extends to Tata Motors (which is bloody Indian!) demanding that government lend them £500 million to "Save Jaguar Landrover"!

Well, government are going to experience a long period, starting very soon, when they simply will not have either the spare cash or the necessary borrowing capacity: anymore than they will enjoy enough of their rapidly shrinking tax revenues to afford massively increased debt service.

 

 

[ali-cat]

[quote user="Scooby"][quote user="ali-cat"]Nor did I complain about my taxes going towards paying for Child Benefit, Unemployment Benefit or Housing Benefit, [/quote]  But it has paid for your DLA / IB
[/quote]

I have benefited from many things, paid for by everyone by their taxes & have never said otherwise. I have been in hospital many times, visited the dentist regularly & I'm pretty sure I've driven down roads where pot holes have recently been refilled by tax payers money. The fact is we all pay taxes but don't choose where they go. But I still don't complain & whine that my taxes go towards something that doesn't affect me.

As for the figures you quoted earlier. Brilliant pensions ... if you are able to serve the full 40 years & are on the top step on the salary scale. Most don't, therefore their pension at retirement age is greatly reduced. The maximum wage for an Administrative Assistant is at present £15,115 which certainly wouldn't quite give the “gold-plated” pension some people like to go on about, regardless of length of service, would it?

As for leaving your old post to help your husband promotion chances, the length of service in the Civil Service has absolutely nothing to do with chances of promotion - & I'm sorry, that if in hindsight, you now think of it as a bad career move.

[Scooby]

[quote user="ali-cat"]

As for the figures you quoted earlier. Brilliant pensions ... if you are able to serve the full 40 years. Most don't, therefore their pension at retirement age is greatly reduced.

[/quote]

I agree - as Gluestick pointed out there are an awful lot of public sector workers that retire early (on enhanced, if not always full, pensions) due to 'ill health' and so don't complete their full 40 years service.  Bad backs, stress etc etc....  Like, Gluestick I can quote a long list!  On the other hand I have difficulty thinking of many that have done that in the private sector.  The woman who sits next to me has an inoperable tumour in her spine and has been on slow dose chemo for five years - but the only time she misses from work is time actually spent at hospital.  She was even back into work two days after brain surgery (complication of her illness).  My line manager, again, has cancer and the only time he has missed over the last three years has been for treatment.  He finished a combined course of radio / chemo last week and will be back to work by the end of the month. A girl I work with broke her arm a few weeks ago, after a fall - she was back in work the same afternoon, typing with her left hand. I have a genetic condition with secondary arthritis (onset at the grand old age of 18).  I have had more reconstructive surgeries / fusions than I care to think about but have never been on benefits, long trm sick nor would I try and go for early retirement (despite the protestations of my GP / ortho surgeon).  Kinda makes the 'bad back / stress' brigade sound a sad bunch.  The public sector culture encourages a 'moyen' and an 'it's my right' attitude hence the level of both sickness in the public sector and the number taking early retirement due to 'ill health'.

Putting aside the issue of leaving due to ill health.  Private sector workers are having to work to 65 / 67 before they claim their pension (which in my case means 50 years of service).  At this point they get a fraction of the pension of those who retired after 40 year service on a public sector pension and they have a shorter remaining life span to claim  Why on earth then should your statement make me feel sorry for public sector employs???  Your comments just serve to emphasise the inequalities and highlight the 'sicky' culture in the public sector.  

[andybear]

Just to rub salt into the wounds of the poor unfortunats who chose to follow a career in the private sector where they could sit safely behind their desks and never be threatened, shot at, abused or be expected to put their lives on the line for others - I had a letter today informing my pension has increased by2% ! 

[Tony F Dordogne]

What amazes me is that this argument still rages.  For goodness sake, we all made decisions about our working careers and as a result, some of us benefited better than others but that's life.

Getting personal or making derogatory comments, veiled or otherwise, achieves nothing.

So some people have done better than others in their careers or in their pension rights - well, that' as is often said, is life.  Some you win and some you loose.

[Scooby]

It's not about the choice that was made, it's about the sustainability going forwards.  The disparity is becoming obscene and, with its current levels of debt the government cannot afford to continue to pay public sector pensions (future or those already in payment) at the current level.  IB payments are already being (rightly) challenged, it's only a matter of time before pensions reach the top of the agenda.