[Closed] Public Sector and their pensions

This whole debacle makes no sense at all. We have a high unemployment rate so the folks in charge decide to make those in employment work longer? Make them pay more into a pension to get less? Pay less to the unemployed who were probably part of the big plan (Child tax credits etc to encourage breeding) to increase payment to the Govt to fund pensions in the first place! And they think this will kick start the economy?

clubber - Member
oh god, no!

just look up TandemJeremy and half the threads he's been on to save having yet another unproductive discussion on this.

So has anyone changed their views yet?

Well it looks like anybody up here had better make alternative child care arrangements on the 28th of this month, as we are out again. 🙁

The circular 'arguments' of the present government are almost funny, but mostly make me despondent:
1) Country is skint, must make cost savings including on your salaries (frozen for minimum 3 years, falling relative to inflation) and your pensions.
2) You are all opposed to health & social care (and now possibly police) reforms because you are pissed off about your pensions, not because you are better qualified to comment or becuse you have a professional duty of care to raise concerns for the welfare of your [s]patients[/s] customers. Your arguments about [s]privatisation[/s] other reforms are considered null and void because we are in the fortuitous position of cutting your salaries and pensions at the same time.

What luck that they are able to argue these two things at the same time. 👿

juan - Member

the fiscal state of this country and its realistic economic growth prospects.

So basically people should pay more earn less because of somebody else's cockup?

I don't quite agree with that.

As I said at the beginning it's all a bit "me, me, me" when it comes to pensions...

billyboy - Member

A deal is a deal.
Posted 13 hours ago # Report-Post

As I said at the beginning it's all a bit "me, me, me" when it comes to pensions...

The money has gone somewhere, it has not just vaporised. It was the "me, me, me" of key people in banking and fincial services that created this situation, but I do not see this government or indeed other european ones doing much about chasing them. I don't even see our government [i]even trying to create the impression[/i] that they are chasing the 'right' people about this, instead they create 'bogeymen' out of certain groups of (but not all) public servants and chase them, using mis-representative pensions of cheif execs in local authorities and NHS rather than low paid teaching assistants, cleaners (yes our local authority and NHS trusts have not yet farmed all these out to private companies yet), hospital porters, health care assistants and so on.

I am aware that the frankly enormous military officers pensions would be very harsh to start with under their current ratio of home/war zone deployment, but FFS, even a symbolic commensurate reduction in MP's pensions would be a drop in the ocean financially, but give the impression to some more gullible voters that "we are in this together".

The money has gone somewhere, it has not just vaporised. It was the "me, me, me" of key people in banking and fincial services that created this situation,

Don Simon, no idea who you complain to. But if you had applied for and got a job where your lower wage (relative to qualifications, experience, responsibility and risk of someone ending up dead on your watch) was offset by your pension, retirement age and responsible employer with job security and good track record, you might have more chance of getting your 200k back. Except of course it would be less than 200k because you were doing it in the public sector. You might also have considered paying monthly into a trade union for support in that eventuality.

(edit: there is no NHS pension 'fund' invested anywhere, my pension deductions are spent within the overall health service budget and the budget also pays pensions of those currently in receipt of an nhs pension. Not sure about the teachers though.)

Since part of the problem is increasing life expectancy, and since "public sector workers aren't getting the deal they signed up to" should we not just kill public sector pensioners when they reach the life expectancy that was originally projected for them when they starting working? or at least stop paying pensions to them... 😀

[i]when you look at work of equal responsibility / skills / qualifications the private sector pays higher.[/i]
true that. 20k, a car and share options higher, in my case. But I knew that when I made the move and was happy with that trade-off. I assume most of us in the public sector *knew* that we'd be on comparatively lower pay when we made the choice.

Average public sector pensions are around £4000 pa

Is this correct?

Poly, you are Jeremy Clarkson, and I claim my £5.

😆

No, its wrong. He missed a naught off. And on the day they retire they get a solid gold Faberge pineapple and 2 swans. Except dinner ladies who get a special trophy a bit like the FA Cup, but the handles are made into the form of bingo wings

clubber - Member

So has anyone changed their views yet?

I've not changed by view, but when balloted last week on strike action i voted 'no' (which is a change).

For more info on public sector pemsions try reading here:

http://www.bbc.co.uk/news/business-10912958

this gives details on funding (or lack of) and pension averages.

Note that for 'unfunded' ones the money comes out of taxation.

Also FYI: for a private sector money purchase or defined benefit pension (where you contribute into your pot and your 'fund' is everything that you have put in [*and employer contributions if you're lucky]) that (IMHO) that a 'public sector' pension of £3100 would (for a 60 year old male) would require a pot of about £100,000 to get an equivalent deal. (*The later you take an annuity on your pot the higher amount per 100,000 you get)
http://www.annuitydiscount.co.uk/Annuity_Best_Rates_Table.htm

Zedsdead - Member

"Average public sector pensions are around £4000 pa "

Is this correct?

Thought I had better check - I got muddled with local authority

The Hutton report found the average pension payments - including workers and dependents - in 2009-10 were as follows:

Local government worker: £4,052
NHS worker: £7,234
Civil servant: £6,199
Teacher: £9,806
Member of armed forces: £7,722

However this is distorted by a small number on very high pensions. Senior military officers, senior civil servants, nhs consultants and senior managers

Five million employees working in the public sector qualify for pensions, including 1.3m in NHS, 1.6m in local government, 600,000 teachers, 600,000 civil servants, 200,000 in the armed forces, 150,000 police officers and 50,000 firefighters.
The mean average public sector pension is £7,000 [b]but the majority of public sector pensioners have pensions of less than £5,000[/b].

If you want a look at the argument and the figures from the other side have a look at the link. Its quite interesting how many myths are believed because they have been repeated so often

clubber - Member

So has anyone changed their views yet?

Is this correct?

It's certainly true of the local government scheme, which is funded too. That's the problem isn't it? Pension arrangments in the public sector are so varied that this sort of thread is pretty pointless. You wouldn't, for example, describe my pension terms as comparable with David Cameron's.

gusamc -

Note that for 'unfunded' ones the money comes out of taxation.

Not true one of the myths that become accepted

The NHS is unfunded and is [b]in surplus with more being paid in every year than comes out [/b]- millions more. Its not our fault that governments have spent this money not invested it for our future pensions.

Make them pay more into a pension to get less?

I wouldn't have a problem paying extra if the money goes into the "pension pot" however the gov have said that any extra we pay in will not go into our pension fund, it will be used to reduce the nations debt.

Thanks for the info TJ. I'm genuinley surprised that the majority of local government workers get so little. I'll lend them my support.

If we are quoting the Hutton report then I think this one sums up the reason why public sector workers are being asked to contribute more:

[i]John Hutton said, left as it is, the current system carries a financial risk which is outside the government’s control. It is a risk that a low growth economy, with ever-increasing pressure on the public purse, cannot afford to take.[/i]

The NHS is unfunded and is in surplus with more being paid in every year than comes out - millions more. Its not our fault that governments have spent this money not invested it for our future pensions.

TJ, you keep saying this but I'd really like to see proof - mainly because I can well believe it might be true - but from an independent source that I can actually believe. The links I've seen you post before are all from what I would consider biased sources.

The % of gdp that public sector pensions liabilities represent is due to fall not rise.

Its prefectly affordable and the pensions have been reviewed to make this so.

Read this for the view from the other side if you want an alternative to the relentless tory propaganda

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The NHS is unfunded and is in surplus with more being paid in every year than comes out

[b]at the moment[/b]

Zedsdead - you've been suckered, this statistic is trotted out all of the time, but is little value, bear in mind most people who work for an employer do not spend their whole working lives there. Many of the recipients of public sector pensions only receive a partial entitlement due to shorter service than required to earn the full pension. These drag the average down.

Its prefectly affordable and the pensions have been reviewed to make this so.

Indeed. The word "unaffordable" does not appear anywhere in the Hutton report.

My position is simple: if any of the schemes become unsustainable because we're living longer, then members of those schemes should pay more. But that's not what's happening.

clubber

This shows that this year the civil service pension scheme will be in deficit by £2.1bn; the teachers pension scheme in deficit by £3bn; the armed forces in deficit by £1.6bn; the judicial pension scheme will be balanced; [b]and the NHS pension scheme will be £1.8bn in profit[/b].

http://www.guardian.co.uk/politics/reality-check-with-polly-curtis/2011/nov/28/pensions-public-sector-pensions

three is a link to the numbers from the OBR there. that do you? Plenty more good numbers in there including this

I think all the unfunded schemes taken together have a global deficit of around £4bn a year – clearly a lot of money but it has to be looked at long-term. The amount in tax relief contributions for the 1% richest in the country – people earning £150,000 and up - on their pension contributions per annum was £10bn. That puts it in context.

TJ - can you point me in the direction of "Note that for 'unfunded' ones the money comes out of taxation." facts.

I made my statement because on the link http://www.bbc.co.uk/news/business-11446832 it states
"Is the scheme funded or unfunded?
Unfunded. It is paid for out of general taxation, not an underlying investment fund."

Regarding the 'paid in' if you are saying there is more tax paid in than pensions taken out I don't consider that fair as EVERYBODY pays tax but only cetain public sector pensions give it back to people. Could you clarify please as I'm trying to understand based on facts.

Ta, will have a read tonight.

gusamic follow the link.

In the NHS the workers pay pension contributions. This raises more each year than is paid out in benefits. This is a surplus - the NHS pension scheme is in surplus and has been for decades. this money has been spent as revenue by successive governemnts not invested. In future there may be a small deficit where contributions do not cover benefits but the scheme has already been revised to take account of this

NHS [b]pension contributions[/b] are greater than NHS pension benefits

NHS pension contributions are greater than NHS pension benefits

But no one in financial management looks at it in that way because future pensions can only be maintained if the workforce grows, if it shrinks they are not enough contributions to pay the pensions of existing pensioners, let alone the poor saps who are contributing. A ponzi scheme works on exactly the same basis. You have to look at the accruing liability and match the contributions to the liability, people contributing today are contributing to their future pensions not someone's existing pension. As there is no independent fund to do this, it is correct to say they are unfunded in general. (There may be specific schemes which are different but this covers the vast majority.)

Bear in mind the old National Coal Board Pension Scheme is one of the biggest funds in the country. If it had been run on the basis you are suggesting, there would be no contributions to pay the pensions.

If the NHS surplus had been invested not spent the fund would be the biggest in the world. So when times are good and contributions exceed liabilities its OK for the government to spend this but when a possible shortfall might acrue then benefits have to be cut? The workers don't get any of the surplus they have paid back?

Remember the scheme has already been revised in the light of this.

You have to look at the accruing liability and match the contributions to the liability, people contributing today are contributing to their future pensions not someone's existing pension.

this is just simply wrong. You cannot have it both ways.

The contributions don't pay for all the accruing benefits, the government make a theoretical contribution, it is all theoretical because there is no fund, they like many employers want to reduce this contribution in the future. It is no more complicated than that.

Zedsdead - Member
Average public sector pensions are around £4000 pa
Is this correct?

It is (reportedly*) the average pension paid by the public sector. However it is NOT the average pension paid by the public sector to a full time employee with 40 years of service.

So many people work for the public sector part time; not unexpectedly their pensions reflect this. Many people work for the public sector for only a small number of years; naturally they get lower pensions.

Currently depending on exactly which bit of the public sector you are in if you work for 40 years you might expect something like 1/2 - 2/3rds of your final salary (usually the highest of the last 3 years) as pension, for the rest of your life - plus a lump sum. So a minimum wage cleaner working 40 hours a week (£12.6k) who has been working all their adult life will retire on considerably more than the reported figure (£6300 p.a.) whilst an experienced band 6 nurse (£34k salary so outside London) retiring at 65 could have earned a pension of > £20k pa, plus a tax free lump sum**.

Don't forget public sector workers also qualify for normal state pension benefits. Oh - and the public sector pensions are index linked wheras private sector ones often are not.

* as TJ reports its not even true for most sections of the public sector.

** NHS pensions have undergone various reforms - and so this assumes they are on the "latest" version...

this is just simply wrong. You cannot have it both ways.

Maybe I am, but then so would every pension fund manager in the world, so I think that it unlikely. If you want to get a basic understanding of pensions you could read FRS 17 which deals with how company's account for their liabilities or some of the Institute of Actuaries material.

No mefty - you have a basic lack of understanding of how the NHS pension works.

This years contributions fund this years benefits. You claimed this

You have to look at the accruing liability and match the contributions to the liability, people contributing today are contributing to their future pensions not someone's existing pension.

So to summarise your statement as I understand it, TJ, it's affordable now but may or may not be in the future, depending on whether the parameters change? Doesn't that put the current contributors at risk of not getting what they were told they would get?

Your other point being that if the current surplus was invested (rather than spent by the government), then that could cover the potential shortfall.

Right?

I have, I used to have a certain amount of support for the public workers, that was until they all became selfish whingebags who want the whole world to feel sorry for them,

Politics of envy.

I used to wonder if I'd done the right thing going for lower wages, no company car, no gym membership, no perks, no work funded [s]holidays[/s] conferences, accounting for every last minute of my work time (I certainly wouldn't dream of the taxpayer paying for me to post on STW during work time: I am on a day off today 'cos I did nights all weekend). But I used to remind myself that the retirement age, pension, yearly 'cost of living' small percentage pay rise every April, and relative job security was worth it in the long run, and that the extra few hundred quid a year in union membership would also help keep this up.

Don Simon, I am sorry you had such a shite time with your last employer but you could have considered making the short term sacrifice in terms of salary, benefits and working conditions for a long term security of a pension and an employer who gives you a pay rise when they said they would and pays a bit less but pays you on time.

and then go on strike the very moment anyone looks at them in the wrong way.

The strike last November was the first time the NHS have been out on strike since lord knows when. Easily 25 years (someone mentioned it in the last argu-thread about pensions iirc). If it makes you feel better, I happened to be on a rostered day off that day and still went out on the demo and rally.

Pretty much clubber - apart from the NHS scheme has been changed already to reflect people living longer and tomake it sustainable and if the surplus had been invested it would mean huge surpluses for ever. the NHS pension fund would be the biggest in the world

the NHS pension fund would be the biggest in the world

I hear that in the voice of Brian Blessed 🙂

You say it's been changed to be sustainable, but surely that's only based on assumptions on how much is going to be paid in each year since there's no effective fund pot, just money in and out each year.

No TJ you are showing a basic lack of understanding of how accountable pensions work in the real world.

I'd agree that public sector pensions are being messed around with on a whim by the politicians under the current arrangements and it's not clear (to me) whether there is any basis for what they are doing.

If it was up to me all benefits accrued under the current arrangements would be ring fenced and would continue to be paid by the tax payer. I would however shut the existing schemes to new employees at the very least and preferably all employees (as has happened in the private sector) and start the new scheme on a sustainable funded basis separate from political interference. It should also take a lot of the arguments away, the employee and the employer put money into the fund, it's invested, the employee gets and annuity based on the pot at the end of service.

At the moment the public sector wants it's cake and eat it. They don't want to increase contributions and they want decent guaranteed pensions. The main loser in that scenario is the tax payer who gets to foot the bill if it all goes pear shaped.

The current unfunded schemes aren't sustainable without continued underwriting from the government. If the government was happy to underwrite all pensions on the same basis I'd go for that (i.e. the usual comment about bringing private sector pensions up to the same standard as the public sector rather than the other way around).

Politics of envy.