Local government pensions and the Tories

Andy_L

Former_Spice wrote: »

To suggest that it's guaranteed is ridiculous. Already been reduced by a quarter for those that ask for their money back at 60. This effects money already earnt and paid into the fund.

Only for service after 2008 though, prior service will not be reduced.

seven-day-weekend

CLAPTON wrote: »

you're more in cloud cuckoo land than up a mountain...

private sector spacial planning jobs are currently impossible to find and with lots of redundancies in the private sector.

I have not worked for five years. When I was actually working, private sector Planning jobs were better paid.

seven-day-weekend

Former_Spice wrote: »

Local government pensions average at £3800. Do you really think that is 'gold plated'?

My Local Governmant Pension is less than that.......

jem16

Tell me - if the public sector is that great a place to be with its "gold-plated" pensions why is everyone in the private sector not working in the public sector?

Leebobs

I've read this entire thread and there seems to be a lot of venom on both sides of the debate. This is likely to be a very emotive issue with one side claiming that "gold plated" pensions have got to stop and the other pointing out that certain Local Government Officers are paid substantially less than their private sector equivalent with the removal of the pension meaning that many would leave the Public Sector.

I should declare an interest at this stage, I am a current Local Government employee - however, I see myself leaving in the next 3-5 years to earn a higher salary. I also see myself as a conservative voter in the next election.

Lets start with some facts about Local Government pensions:
1. The average Local Government Pension is currently a little over £4,000.

2. The contribution rate for employees was 6% until April 2008 - it is now between 5.5% - 7.5%

3. On top of this there was an employers contribution rate of about 11% - I do not know what it is now but suspect it is around about the same.

I would agree with a number of the earlier comments that it is unlikely to be the case that the Conservatives will change the scheme for all current members. I think they would have to close it to all new staff (for which Unison would call strikes...) and then aim to stop future contributions into the scheme (replacing it with a defined contributions scheme) at some date in the future.

What's the problem???

Local Government Solicitors
Solicitors employed by my Council can expect to earn between £30k - £42k without going into middle management. If you factor in the pension benefit (this is a very rough and ready assessment) you are looking at £33k - £46k a year.

In the Private Sector, within the same legal area, the starting point is also about £30k, but the top end (without seeking partnership) is in the region of £55k - £70k.
Even factoring in the Pension benefits, most of the senior solicitors working in the Public Sector could make considerably more money if they were in the Public Sector.

The risk I think you run in cutting the pension benefits are two fold (at least in the short term):
1. Good experienced Local Government staff, with connections in the Private sector, will leave and will earn more money elsewhere.
2. You won't be able to attract the quality of staff into the Public Sector that you have now.

But Local Government pensions are only one of the Public Sector pension schemes.... what about
1. Police Officers
2. Teachers
3. Nurses
All of whom have equally (if not better) pension arrangements that Local Government Officers.

Leebobs

Qualcuno

A_Nice_Englishman wrote: »

The OP was talking about the Local Government Pension Scheme (LGPS). This is NOT unfunded. Local government employers and employees (yes, they pay towards their pensions) are putting enough money aside to meet future liabilities.

It is a common misconception that both employers and employees paying for the accruing pension rights is the difference between the funded and unfunded schemes. Unfortunately this is not the case - take the NHS pension scheme as an example.

Treasury pay the NHS Trusts who pay the NHS staff. The cost of accruing pension rights is about 20%. The employees pay a range of different contribution rates that average to about 6% and the the employers pay the balance of 14% of pensionable payroll. However, the problem is that rather than this money being invested in a fund, it is sent back to treasury, and rather than investing it they spend it! The NHS Trusts are in fact paying on the basis of establishing a 100% funded scheme, but it's government spending that has squandered the money.

DiggerUK

Freeing commerce, industry and banking from regulation, has been a vote winner for 30 years. On the promise that this would lead to greater wealth creation, and be followed by a "trickle down" of this wealth to benefit us all.
Instead there seems to be a Tsunami of poverty heading one way.

Now it is proposed that the bill for the blunders, by the masters of the universe, is the responsibility of those with public sector pensions.

If it is a vote winner, then there will be blood on the streets.

Another idea for those looking for a vote winner would be to argue that all those in private pension schemes should have a special tax on their pensions introduced. I'm sure Fred Goodwin would vote for that.

seagull112

Former_Spice wrote: »

They ARE funded. The 6-7.5% taken out of employees salaries goes into a fund to pay for it along with (sometimes) an employer contribution. Should local government employees lose the five figure sums that have already earnt and paid into a fund?

QUOTE: from The Mail Online (today)

"On average, public sector workers contribute just six per cent of their pay towards their pension, the report said.

To pay the full price of their pension, they would have to put 48 per cent of their wages into a pension pot.

At present, the shortfall of 42 per cent is made up with 'employer contributions' which come from the taxpayer (14 per cent), while 28 per cent is supplied by the Treasury from current taxation."

seagull112

Leebobs wrote: »

I've read this entire thread and there seems to be a lot of venom on both sides of the debate. This is likely to be a very emotive issue with one side claiming that "gold plated" pensions have got to stop and the other pointing out that certain Local Government Officers are paid substantially less than their private sector equivalent with the removal of the pension meaning that many would leave the Public Sector.

I should declare an interest at this stage, I am a current Local Government employee - however, I see myself leaving in the next 3-5 years to earn a higher salary. I also see myself as a conservative voter in the next election.

Lets start with some facts about Local Government pensions:
1. The average Local Government Pension is currently a little over £4,000.

2. The contribution rate for employees was 6% until April 2008 - it is now between 5.5% - 7.5%

3. On top of this there was an employers contribution rate of about 11% - I do not know what it is now but suspect it is around about the same.

I would agree with a number of the earlier comments that it is unlikely to be the case that the Conservatives will change the scheme for all current members. I think they would have to close it to all new staff (for which Unison would call strikes...) and then aim to stop future contributions into the scheme (replacing it with a defined contributions scheme) at some date in the future.

What's the problem???

Local Government Solicitors
Solicitors employed by my Council can expect to earn between £30k - £42k without going into middle management. If you factor in the pension benefit (this is a very rough and ready assessment) you are looking at £33k - £46k a year.

In the Private Sector, within the same legal area, the starting point is also about £30k, but the top end (without seeking partnership) is in the region of £55k - £70k.
Even factoring in the Pension benefits, most of the senior solicitors working in the Public Sector could make considerably more money if they were in the Public Sector.

The risk I think you run in cutting the pension benefits are two fold (at least in the short term):
1. Good experienced Local Government staff, with connections in the Private sector, will leave and will earn more money elsewhere.
2. You won't be able to attract the quality of staff into the Public Sector that you have now.

But Local Government pensions are only one of the Public Sector pension schemes.... what about
1. Police Officers
2. Teachers
3. Nurses
All of whom have equally (if not better) pension arrangements that Local Government Officers.

Leebobs

Hi Leebobs ... it's very likely that, as is common in the Public Sector, you plan to take early retirement & pick up your public sector pension (which will be unaffected by any future earnings in the Private Sector) before 'leaving to earn a higher salary'. However, if this is not the case you might be wise to to read a report (recently covered in the Financial Times) by John Hawksworth, head of macroeconomics at PwC.

The survey modelled the likely earnings and savings patterns of two men who entered the job market in 1981 at age 21 .... the 'Tortoise' (Civil Servant) & the 'Hare' (City Middle Manager), and concludes that the 'tortoise' ends up sitting on a far bigger wealth cushion than the private sector worker.

The key differentiator is the final salary pension which gives the 'tortoise' a much higher income in retirement than that of the hare and which more than offsets the benefits of the 'hare's' higher income for much of his working life. This is in addition to the protection that government workers have even in severe downturns.

The report concludes that the analysis underscores the need for measures to iron out differences between the outlook for workers in the public and private sectors - not simply as a matter of basic fairness but also to ease the burden on the nation's finances.

seagull112

jem16 wrote: »

Tell me - if the public sector is that great a place to be with its "gold-plated" pensions why is everyone in the private sector not working in the public sector?

What an odd question!

If every member of the population was employed in the Public Sector, who would create the wealth the pay for their salaries & pensions?

Regardless of government, a society cannot be prosperous without an effective private sector.