How big should my pension pot be ?

Perfect_Choice

I prefer to call it a revolution in the public sector profession, I can really see these employees in the public sector up in arms and destroying their profession. Where are they going to go? Into the private sector?!!

The issue as I see it is that we have a public funding liability which means salary based pensions are dead going forward. I would be fair and say that benefits to date should remain, just as final salary schemes in the private sector have been closed to new investors but remain there to fulfil their original obligations to date. I wouldn’t penalise public sector workers for the past, it is how we handle the future that matters and as I see it, the difference in income and benefits between private and public is now relatively insignificant (I am sure posters here could spend forever giving comparable examples to debate) such that pensions should be funded in the same manner across both sectors especially based on the same salary earning levels.

marklv

I have never disagreed that we need to think about how to reduce the pensions burden, but there are many ways to do that. Eliminating salary related pensions in the public sector is a knee jerk reaction; in recent years the government has already taken steps to make these schemes less expensive by introducing 'average salary' schemes in the civil service and elsewhere, and by moving the retirement age to 65. More needs to be done, and one option could be to ask employees to contribute a greater proportion of salary, but it needs careful study.

One of the problems is that there are several different schemes across the entire public sector, some much more generous than others. The first step is to have consistency throughout, and then to manage it in order to control the costs.

As I said I do not believe there is a need for the public sector to copy the private sector and only allow money purchase schemes. That is not the point - the issue is to allow the government better control over costs so that public sector pensions can be better budgeted for. Moreover, several blue chip organisations in the private sector still offer final salary schemes and will continue to do so for the foreseeable future, so all this compaining about public sector pensions is just sour grapes.

Perfect_Choice

Consistency agreed, but we have a current situation where only less than 10% of private sector pensions schemes allow new entrants into salary based schemes while in the public sector it is more likely the other way round. Certainly not sour grapes, lets get to a level playing field across both sectors first.

bendix

marklv wrote: »

Stop harping on like a windbag. You sound like an old LP record stuck in a groove and repeating the same part of the song over and over again. If you wish to destroy our education and health services that's up to you but people can decide for themselves.

Perhaps, but you still haven't justified why public sector employees deserve significantly better pension arrangements (paid for by taxpayers) than private sector employees.

You tried with the 'we earn less than you', but when that was refuted you passed onto bland generalisations about public sector going up in arms and the death of education.

When you can provide a justification why YOU can't take care of your own pension arrangements like everyone else has to, I'm prepared to listen.

Until then I can only put your obtuseness down to greed and your support for the current inequality down to to self-interest.

marklv

"Certainly not sour grapes, lets get to a level playing field across both sectors first."

Why? There isn't even a level playing field within the private sector or the public sector, as different organisations offer different salaries and benefits for the same type of job. By that logic, every job should have a nationally fixed salary and benefits package. Nonsense.

Perfect_Choice

A level playing field is certainly not implying a fixed benefit structure across every employer; that would certainly be nonsense. Businesses and organisations will have different schemes as they do in the private sector today.

But trying to say the major discrepancies across pension schemes are not worthy of change is equally nonsense, I feel you are trying to muddy the issue here.

The fact is that the final (and even average) salary pension scheme is a dying breed already within the private sector and I expect these schemes to be completely gone in the next 10 years. The equivalent is not affordable in the public sector and that will be ultimately forced on government as economic conditions dictate limiting public finances long term.

ninky_2

bendix wrote: »

mark, the older I get the more I understand the need to argue solely from one's own perspective.

and how many years of NI contribs have you made / invested in? could that possibly be influencing your argument?

bendix

ninky wrote: »

and how many years of NI contribs have you made / invested in? could that possibly be influencing your argument?

I'm not sure of your point ninky.

I won't be in the UK to take any state pension I might be eligible for, and while I understand it can be taken if I live overseas, I have absolutely no intention of claiming it.

I've made this point many times. I won't need it because I will have made ample provision privately. If I don't need it, it would be morally bankrupt of me to take it.

marklv

"But trying to say the major discrepancies across pension schemes are not worthy of change is equally nonsense, I feel you are trying to muddy the issue here."

No, not muddying the issue, because the pension plan is only one of several benefits that make up the whole of someone's total remuneration. The pension has a value - it could be worth 5% of pay, 10%, 15% or even 20%. You then add this value to the basic salary to come up with the total remuneration, but then you also need to include bonuses, holidays and other fringe benefits that make up the overall package. Therefore, what you are effectively saying, by advocating the end of salary related public sector pensions, is that all public sector staff should have pay cuts. I don't believe this is remotely acceptable, unless the actuarial value of the pension is replaced by an equivalent contribution to any future money purchase scheme. Most companies who formerly offered final salary pensions have done this, by maintaining their contributions while eliminating the risk of guaranteeing future pension benefits.

"The fact is that the final (and even average) salary pension scheme is a dying breed already within the private sector and I expect these schemes to be completely gone in the next 10 years. The equivalent is not affordable in the public sector and that will be ultimately forced on government as economic conditions dictate limiting public finances long term."

Crystal ball gazing is a dangerous game to play. I'm sure that there will still be private sector employers that will continue to offer final salary pensions - or salary related pensions of some kind. In the war for talent a good pension scheme is a useful weapon with which to attract high quality staff, and many of the blue chips that offer good schemes will continue to offer them. Furthermore, as I mentioned earlier, the key issue is not whether you receive a salary based pension or a defined contribution one, but the amount that the employer contributes on your behalf. The only difference is that with the defined contribution schemes the investment risk is borne by the employee and not the employer. If we are talking about moving the investment risk to the employee then - in principle - I will happily agree with you, but if we are suggesting that public sector employer pension contributions be reduced, then it is plainly unacceptable.

taktikback

I agree - this is a pointless argument - surely everyone is free to make their own choices based on what is on offer - private or public.

I have no problem with public sector workers getting generous pensions - that's what they signed up for - they don't have a god given right to keep them going forward - any more than I have to keep my job in the private sector (with its rubbish pension). The left wing/right wing ideology debate is interesting, but largely irrelevant - the UK isn't big enough to fight the influence of free market economics long term.

Ideally - we'd all get paid loads, have wonderful pensions and retire when we wanted to - life isn't like that. You get what you sign up for - if that changes, you make your decisions accordingly