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Unacceptable pensions divide?

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  • cheerfulcat
    cheerfulcat Posts: 3,403 Forumite
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    Hereward wrote:
    Can I enquire to where you get your figures for Public Vs Private sector pay from? From what I can tell the majority of Public Servants earn less than most Private Sector workers. There may be a few senior positions that pay more in the Public Sector than in the Private Sector, but then if you compare Director's pay to that of shop floor workers you get the same results.
    ONS.
    conradmum wrote:
    I don't know what you mean by 'guaranteed'.
    Guaranteed in the sense that the scheme isn't going to go bust overnight, and it isn't reliant on stockmarket returns.
    If you are so irked by the apparently fantastic benefits that the public sector pensions pay do the sensible thing and go and work in the public sector yourself.
    I am not irked by the benefits as such, I am irked by the fact that a) I have to pay for them and b) the recipients don't seem to realise how good a deal they have compared to private sector employees ( not to mention the self-employed ).
    In fact, why aren't you?
    No need to get nasty. I prefer to work for myself.
    EdInvestor wrote:
    Not all public sector pension schemes are unfunded, though most are.This means that instead of having a pile of money invested to eventually pay out each pension, the scheme is operated on a "pay as you go" basis, where the working members' contributions pay the pensions of those who have retired.In theory this shouldn't cost the taxpayer anything as long as there are enough current employees vs retired ones.
    I'm sorry, Ed, this is pure fantasy. Public sector pensions are paid out of tax receipts - article. And here. Some local government schemes are partly equity backed but the taxpayer still contributes a fair whack.
    clairehi wrote:
    Well why dont you take a job in the public sector if its so wonderful, then you can retire at 60 too.

    I dont know why you waste your time being jealous of other people's situations. It has absolutely no bearing on your life whatsoever!
    It doesn't? What about all the tax I pay to fund public sector pensions? What about the huge hike in my rates ( from £900 p/a three years ago to £2600 next year ) to pay for council employees' wages and pensions? I'm not jealous, I'm resentful ( and I'm not the only one ).
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    here. Some local government schemes are partly equity backed but the taxpayer still contributes a fair whack.


    The link says 13bn is paid out in public sector pensions.So we need to check how much public sector employees pay in every year to these schemes.If there is a gap between the two figures, then the taxpayer pays.If the figures match there is no cost to the taxpayer. This is how "pay as you go" schemes work.

    It's the same with the state pension - those working pay into the NI fund, and the money is spent paying out state pensions to retirees.Hence all the fuss about there being lots of babyboomer pensioners in the future and not enough younger working people to pay for their pensions.

    AFAIK LA schemes are fully funded ( ie backed by real assets). Certainly the universities scheme is: last time I looked it was one of the few large final salary schemes with no deficit problem: very well run :).

    Here, if there is a funding gap/deficit, due to stockmarket crashes or actuarial mistakes, then the taxpayer will have to stump up.

    It's not immediately clear to me that "pay as you go" arrangements are always worse than funded schemes as far as the effect on the taxpayer is concerned.
    Trying to keep it simple...;)
  • clairehi
    clairehi Posts: 1,352 Forumite
    [QUOTE=cheerfulcatWhat_about_all_the_tax_I_pay_to_fund_public_sector_pensions?_What_about_the_huge_hike_in_my_rates_(_from_£900_p/a_three_years_ago_to_£2600_next_year_)_to_pay_for_council_employees'_wages_and_pensions?_I'm_not_jealous,_I'm_resentful_(_and_I'm_not_the_only_one_).[/QUOTE]

    Last time I checked, we all paid the same rates of income tax and council tax (I assume you are in NI if you are paying rates) whatever sector we work in.

    I repeat my question - why dont you go and work in the public sector, if its so wonderful?
  • cheerfulcat
    cheerfulcat Posts: 3,403 Forumite
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    Ed, go back and have a look at the links posted by RI. You might find this paper of interest as well. It is clear that public sector pensions are paid out of tax. Indeed, the situation is even worse; the current payments are being made out of borrowed money, which the taxpayer will have to repay.
    clairehi wrote:
    Last time I checked, we all paid the same rates of income tax and council tax (I assume you are in NI if you are paying rates) whatever sector we work in.
    You said
    I dont know why you waste your time being jealous of other people's situations. It has absolutely no bearing on your life whatsoever!
    To which I replied that rates ( and council tax ) have been increased to pay public sector pensions and wages - that does have a bearing on my life.

    I repeat my question - why dont you go and work in the public sector, if its so wonderful?
    And I repeat my answer - because I prefer to work for myself.
  • jem16
    jem16 Posts: 19,642 Forumite
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    EdInvestor wrote:
    Am I right in thinking there is a new public sector deal where the retirement age moves from 60 to 65, but the pension scheme terms are improved from 1/80th to 1/60th, with no real net change in cost to the employer?

    I can only confirm this for Scottish Teachers but I imagine the English system is the same.

    As from April 2007 the retirement age moves to 65 for new entrants and it becomes a 1/60th scheme. For those already in the scheme it stays at 60 and 1/80ths scheme. For those already in the scheme but who then have a break of 5 years of more, they re-enter under the new scheme but benefits accrued under the old scheme would still be payable at age 60.
  • jem16
    jem16 Posts: 19,642 Forumite
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    To which I replied that rates ( and council tax ) have been increased to pay public sector pensions and wages - that does have a bearing on my life.

    Just the same as private sector wages/pensions have a bearing on my life - gas/electricity, food, housing etc. It's not limited to the public sector - it's life!

    And I repeat my answer - because I prefer to work for myself.

    "You pays your money, you takes your choice"
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    The problem affecting all pensions, is the move to the low inflation/ low interest rate environment.

    A fund of half a million pounds (yes 500k :eek: ) is now required to buy a bog standard index-linked pension income of a mere 20k a year for a 60 year old man - and that's without a spouse's pension.

    I mean that's NOT a luxury pension, it's less than the average wage.

    So of course the cost of public sector pensions (indeed all pensions) has ballooned.Pensions are now a luxury item.

    But do public sector workers really want to trade lower salaries now for gold plated future pensions these days ? Or would they prefer higher salaries now and smaller pensions later?

    Another part of the switch to low inflation and low interest rates has been the rapid rise in house prices. The result of the old fashioned public sector system is that employees may be in for a de luxe retirment, but right now, they can't afford to buy a house, because their pay is too low.

    The solution - as the paper CC posts above mentions - is to reorganise the public sector arrangements ( which were set up in the old high inflation/high interest rate days) so that the employees receive higher salaries now, and smaller pensions later.That would bring them into line with the private sector, which has been in the process of making this adjustment for some time.
    Trying to keep it simple...;)
  • cheerfulcat
    cheerfulcat Posts: 3,403 Forumite
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    jem16 wrote:
    Just the same as private sector wages/pensions have a bearing on my life - gas/electricity, food, housing etc. It's not limited to the public sector - it's life!
    Did you read the previous posts? I was responding to this -
    " I dont know why you waste your time being jealous of other people's situations. It has absolutely no bearing on your life whatsoever! " It clearly does have a bearing, as is acknowledged in almost every article linked to in this thread ( did anybody actually bother reading them? )

    I don't know why you are all getting so personal about this, it's perfectly clear that the present situation, with huge unfunded pension schemes paid for out of taxation, is unsustainable as well as unfair. But TBH I am more than a bit hacked off at being attacked so I will bow out at this stage and leave you all to it.
  • jem16
    jem16 Posts: 19,642 Forumite
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    Did you read the previous posts? I was responding to this -
    " I dont know why you waste your time being jealous of other people's situations. It has absolutely no bearing on your life whatsoever! " It clearly does have a bearing, as is acknowledged in almost every article linked to in this thread ( did anybody actually bother reading them? )

    I don't know why you are all getting so personal about this, it's perfectly clear that the present situation, with huge unfunded pension schemes paid for out of taxation, is unsustainable as well as unfair. But TBH I am more than a bit hacked off at being attacked so I will bow out at this stage and leave you all to it.

    Cheerfulcat

    My apologies if you felt my post was a personal attack on you.

    However I have to say that I found Post 36 rather personal where you stated;
    But you aren't employed by me. You are employed by the state, and I have to pay for it and yes, it does irk me that I may have to work into my 70s so that you can retire at 60.

    That comment provoked the above comment by conradmum to which you responded by saying it did have a bearing on your life. I then replied to that.

    So apologies for any offence - none was meant. I just wanted to point out that it's not my fault pensions are in such a mess.
  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
    But TBH I am more than a bit hacked off at being attacked

    cheerfulcat, I quite agree with you. I think the reason that those with copper bottomed public pensions attack you is sheer embarrassment. They know damn well how lucky they are and are terrified that one day the rest of us will notice.
    I used to think that good grammar is important, but now I know that good wine is importanter.
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