Average civil servant earns less than a private sector worker

mrstinchcombe

princeofpounds wrote: »

Sigh. Did you ever stop to think that the concern being expressed over public sector pensions might be, in some small way, actually altruistic and not motivated by self-interest?

I can't speak for Old Slaphead, but I have a good enough career that I can aspire to provide for myself on a private basis at those kind of levels and I am mobile enough that I could easily enough head to another country to practice and avoid tax repercussions. I'm not trying to big myself up, I am trying to demonstrate that it is plain speaking when I say that the concern isn't for me, it's for all the normal working people of the next thirty years.

Well as long as you are ok then.

princeofpounds

But posters seem more concerned on how much others are paid, how much other peoples pensions are. Its sad

It wouldn't matter if we weren't directly paying for them. I only wish people were more interested in how public money were spent, because then less of it would be wasted.

I don't care what a plumber or a lorry driver or a footballer gets paid because no-one is forced, under threat of imprisonment, to pay for them.

princeofpounds

Well as long as you are ok then

Did you completely miss the point?

Mr_Matey

princeofpounds wrote: »

I don't think people ever realise how much index linked public sector pensions are worth.

Imagine an average civil servant retiring today.

Assume a retirement income of £14k (half the median quoted in the OP).

What kind of pension pot does that represent?

Annuity rates for this person and this type of pension are about 3%. So 14000/0.03 is the implied size of the pot.

Four hundred and sixty six thousand pounds

You've forgotten to take into account mortality rates. £460k would fund 33 years of £14k, but I don't think the life expectancy at 65 is 98!

Have a play with this website if you'd like to see how much such a pension annuity would cost. Due to differing mortality rates, it's different for males and females, smokers and non-smokers. You can even index to RPI.
http://www.fsa.gov.uk/tables

A few examples I've plugged in, all aged 65 to get around £14k p.a. indexed to RPI:
* Single male non-smoker - £330k
* Single male smoker aged 65 - £275k
* Single female non-smoker - £360k
* Single female smoker - £300k

Happy hunting!

dandy-candy

princeofpounds wrote: »

I don't think people ever realise how much index linked public sector pensions are worth.

Imagine an average civil servant retiring today.

Assume a retirement income of £14k (half the median quoted in the OP).

What kind of pension pot does that represent?

Annuity rates for this person and this type of pension are about 3%. So 14000/0.03 is the implied size of the pot.

Four hundred and sixty six thousand pounds

I'm really sorry if this is a dippy question to ask and i'm sure it's me who has got it wrong but I don't understand how these figures work?
If they get £14K a year pension, to have cost the public £466,000 would mean they draw their £14k pension for 40(ish) years? Surely people aren't likely to live for another 40 years after retirement age?

mrstinchcombe

princeofpounds wrote: »

Did you completely miss the point?

I think I must have, the very nature of public sector work means we will never have a choice, we need to pay people to perform these jobs. But people have issues that people in the public sector havent got the worse pensions and they arent on minimum wage, why should they be? You already outlined occupations where pay is higher than the public sector and there are many pensions that are better than public sector pensions (although less so nowadays).

You have suggested that your pay and pensions are far greater than public sector employees, give the public sector a break.

Old_Slaphead

I think the annuity rate would be nearer 4% meaning the 'notional' fund is maybe £300-350k

CS retires at 60 life expectancy 25 years. Also widowers pension at 50% would apply thereafter.....so 2 persons mortality needs to be considered before liability ceases.

Also index linking.

Figures seem to stack up on this basis

princeofpounds

You've forgotten to take into account mortality rates. £460k would fund 33 years of £14k, but I don't think the life expectancy at 65 is 98!

Have a play with this website if you'd like to see how much such a pension annuity would cost. Due to differing mortality rates, it's different for males and females, smokers and non-smokers. You can even index to RPI.

No, I took best buy annuity rates for a 60 year old non-smoker RPI linked.

The difference here is probably that I took 60 year olds and you took 65 year olds annunities. I believe the average age of retirement in the public sector is currently nearer to the former than the latter, though if anyone can find evidence to the contrary that's fair enough. It is still big money whether it is £350 or 450k.

Andy_L

dandy-candy wrote: »

I'm really sorry if this is a dippy question to ask and i'm sure it's me who has got it wrong but I don't understand how these figures work?
If they get £14K a year pension, to have cost the public £466,000 would mean they draw their £14k pension for 40(ish) years? Surely people aren't likely to live for another 40 years after retirement age?

That £14k pension will increase by RPI each year so you have to allow for that increasing cost

princeofpounds

I'm really sorry if this is a dippy question to ask and i'm sure it's me who has got it wrong but I don't understand how these figures work?
If they get £14K a year pension, to have cost the public £466,000 would mean they draw their £14k pension for 40(ish) years? Surely people aren't likely to live for another 40 years after retirement age?

466/14 = 33 years. Now it's true life expectancy is not 93, but at age 60 it is actually longer than the average 82 (because all the people who have died early have already died and wash out of the figures)

Plus they don't get 14k each year, they get 14k each year with increases for inflation.

Plus there has to be a profit and risk margin for financial institution providing the service.