Unacceptable pensions divide?

djohn2002uk

cheerfulcat wrote:

ONS.

Guaranteed in the sense that the scheme isn't going to go bust overnight, and it isn't reliant on stockmarket returns.

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 ).
No need to get nasty. I prefer to work for myself.

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.

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 ).

And I as an ex Civil Servant, am resentful of all the tax dodges self employed people enjoy. So don't give us the rubbish about the amount of tax that you pay towards civil service pensions, when people on PAYE pay a lot more. And the %age of your tax that goes towards civil service pensions is very low. The %age of tax I pay to make up for that lost via self employment is probably far higher.

deadparrot

Admittedly I've ony skipped through the posts, but I certainly read lots of posts about the top end earners, ie MPs, middle earner, ie Teachers, I see no reason why discussing bottom end unslilled minimum wage earners in both sectors isn't relevant to this thread?

Quote:
then shouldn't there be two minimum wages? one for private and one for public?

On second thoughts don't bother starting another thread as it will be a complete waste of time.

Well duh, read the rest of the paragraph before jumping on your high horse.

ReportInvestor

Two minimum wages would not be allowed under EU Law. It's as simple as that. Duh.

But I'll certainly contribute when you start your new thread on the minimum wage.

Good luck with it.

Meanwhile, back on topic........

deadparrot

I'm not a lawyer, so wouldn't no, but you should of noticed I immediatly dismissed it as a possiblity for other reasons.

Minimum wage eliminaties any argument about differential pay scales at the bottom end, no comparing oranges and apples down here, so as a random example, probably millions more, how can a sorting office worker in the post office justify a better pension deal then someone doing the same job for DHL?

novice-saver

seven-day-weekend wrote:

I am in the Local Government Pension Scheme (deferred pension because no longer working).

The earliest I can take my pension is at 60. If I do this I lose about a third of both the lump sum and the annual pension (sorry, I can't find the exact figures). The normal retirement age is 65.

My husband has lost a quarter of his teacher's pension by taking it five years early.

I'm sorry to hear that.

I can't find both the places I had looked, and my mind does play tricks these days... but here's an extract from LGPS

"* If you will be age 60 or over by 31 March 2016 and choose to retire before age 65, then, provided you satisfy the 85-year rule when you start to draw your pension, the benefits you build up to 31 March 2016 will not be reduced."

The 85 year rule applies if age plus contribution years = 85 or more.

My interpretation of that for me at 54 years old and 30 odd worked would mean no reduction, if I was in that scheme.

Obviously not all would have sufficient years service to qualify.

dunstonh

And I as an ex Civil Servant, am resentful of all the tax dodges self employed people enjoy.

As a self employed individual, I am resentful of that lovely, not paid for, final salary pension

Actually i'm not. Govt workers tend to be lower paid and the pension is something that makes up for it. A progressive move to 65 would be common sense but it should be aimed at those further away and new employees. Certain jobs should be lower retirement age due to their nature.

And the %age of your tax that goes towards civil service pensions is very low. The %age of tax I pay to make up for that lost via self employment is probably far higher.

Whilst knocking the self employed, it should be noted that self employed individuals get a lower state pension as there is no SERPS/S2P. That can be another £5k a year lost.

Small companies can also employee individuals allowing them to pay tax and national insurance as well as employers national insurance. Therefore increasing the income for the Govt.

Last I heard was that the civil service pensions (all Govt funded versions) accounts for one fifth of the "state" pension payments. This figure is expected to rise.

ReportInvestor

Can I just say that we can all do without the sleights against teachers or any other public sector workers. I looked up ill health / unemployment insurance cover for a teacher friend of mine and found the rates to be astronomical - nearly up their with builders - and for good reason. Let's stick to the pension facts else the thread will just degenerate into an uninformative slanging match.

seven-day-weekend wrote:

My husband has lost a quarter of his teacher's pension by taking it five years early.

novice-saver wrote:

I'm sorry to hear that.

I can't agree with n-s's sincerely meant comment, I'm afraid .

In this comparison I am assuming that s-d-w has excluded the years her husband would have accrued by working to 60. i.e. I assume that if he had 32/80ths of final salary by 55 that his pension at 55 was based on 24/80 salary.

A private sector worker who retired at 55 with similar benefits (RPI linked pension & 50% pension to surviving partner [In point of fact the Teachers' Scheme provides generous additional family benefits prior to this as well] would have been significantly worse off retiring @ 55.

His pension fund would have missed out on 40% growth (assuming 7% growth pa).

And his annuity would also have bought 12% less pension at 55 than at 60 according to figures from today's FSA tables.

All this means that a private sector worker in a defined contribution scheme would have been around 34% worse off than if they had retired at 55 rather than 60

Has the taxpayer has effectively been funding these teacher early retirements to date?

Or maybe the early retirement terms have been recently tightened up?

djohn2002uk

dunstonh wrote:

As a self employed individual, I am resentful of that lovely, not paid for, final salary pension

Actually i'm not. Govt workers tend to be lower paid and the pension is something that makes up for it. A progressive move to 65 would be common sense but it should be aimed at those further away and new employees. Certain jobs should be lower retirement age due to their nature.

The first paragraph I don't understand because a fair chunk of my wages was taken every month as pension contributions.
The second paragraph I totally agree with. Don't know if I would had I still been employed though.
And let's not forget one of the biggest points that should be made here. The majority of civil servants do not get in 40 years sevice to achieve half pay as a pension. Lot's are like me who only got in slightly over half of that to go alongside an Electricity Board pension of 50p/month so I need my SRP the same as most non Civil Servants.
I would also suggest that just as most contributers here think that they pay for the pensions of Civil Servants, they also pay for the pensions of everyone else indirectly.

ReportInvestor

djohn2002uk wrote:

The first paragraph I don't understand because a fair chunk of my wages was taken every month as pension contributions.

This is part of the conceptual problem. There is no entitlement to anything in the private sector just because money is taken out of your wages.

You have a defined benefit scheme. You pay your contributions but the taxpayer takes all the investment risk and the interest rate risk.

In the private sector where the majority have a defined contribution scheme the investment risk and interest rate risk falls on the individual worker.

Let's take an extreme example.

If the UK was Germany in 1922 prior to the hyperinflation the pensions of pubic sector workers would be guaranteed .

The pensions of most current private sector workers would be worth £0 .

djohn2002uk

ReportInvestor wrote:

Let's take an extreme example.

If the UK was Germany in 1922 prior to the hyperinflation the pensions of pubic sector workers would be guaranteed .

The pensions of most current private sector workers would be worth £0 .

Like you said, an extreme example and hardly relevant today.