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Public Sector Pensions - Are they really so bad?
grizzly1911
Posts: 9,965 Forumite
I personally don't have an interest in the public sector.
Are the pension arrangement really that overly generous for the average employee. I know there are headline examples that are bad but that is no different to any statistical pool.
My flimsy knowledge is primarily mainstream NHS but I am sure their are similarities throughout.
1.) It is a 50% final salary scheme - not the most generous type.
2.)They do contribute 6% of salary through to 10/11% in Police/Fire -reforms are asking for an increase in this.
3.)Many staff sre in below average poorly paid jobs and the the state would pick up pension/benefit top ups anyway
4.)Pension is just based on final salary it is also based on time in job - few get the full benefit
5.) The Governement actuarily spreads the risk over a large number of "guaranteed savers". Many will never claim and other will leave early and the deferred pension will wither.
6.)It is to be linked to CPI, the lowest rate usually against RPI/or average pay
7.)Basic pension (which they have contributed too also) takes up the basic tax allowance, at present, so tax will be payable on the pension paid.
8.)If they didn't contribute and relied on the state at the end the cost would be significantly more
9.) The NHS is pushing towards an average salary system form now on to remove the the final salary spike.
All in all for many average employees it isn't necessarily that big payout that is always portrayed. I accept that if you don't contribute to any scheme then it appears better than nothing.
Edit:- Whitehall Mandarins and MPs I accept are on the gravy train. Oh and MEPs....
Are the pension arrangement really that overly generous for the average employee. I know there are headline examples that are bad but that is no different to any statistical pool.
My flimsy knowledge is primarily mainstream NHS but I am sure their are similarities throughout.
1.) It is a 50% final salary scheme - not the most generous type.
2.)They do contribute 6% of salary through to 10/11% in Police/Fire -reforms are asking for an increase in this.
3.)Many staff sre in below average poorly paid jobs and the the state would pick up pension/benefit top ups anyway
4.)Pension is just based on final salary it is also based on time in job - few get the full benefit
5.) The Governement actuarily spreads the risk over a large number of "guaranteed savers". Many will never claim and other will leave early and the deferred pension will wither.
6.)It is to be linked to CPI, the lowest rate usually against RPI/or average pay
7.)Basic pension (which they have contributed too also) takes up the basic tax allowance, at present, so tax will be payable on the pension paid.
8.)If they didn't contribute and relied on the state at the end the cost would be significantly more
9.) The NHS is pushing towards an average salary system form now on to remove the the final salary spike.
All in all for many average employees it isn't necessarily that big payout that is always portrayed. I accept that if you don't contribute to any scheme then it appears better than nothing.
Edit:- Whitehall Mandarins and MPs I accept are on the gravy train. Oh and MEPs....
"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
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Comments
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grizzly1911 wrote: »All in all for many average employees it isn't necessarily that big payout that is always portrayed. I accept that if you don't contribute to any scheme then it appears better than nothing.
Dream on!
My wife is in the NHS scheme - the benefits vs. contributions are massive and I, in the private sector, couldn't even dream of getting anything like the return on investment required to match the benefits.
Don't be fooled by the size of the pension itself - it's the fact that they've cost next to nothing to fund that makes them a 'big payout'.0 -
Ok....
Getting someone else to pay for something that is your 'right'.
Is it really so bad?0 -
One of the problems when discussing the pension scheme, is alot of people decide that the pension scheme makes working in the public sector worthwhile.
There are a lot of things in the private sector which the majority of public sector employees forego.
Excluding teachers, and maybe some of the civil service, the majority of the public sector are on call 24/7, which includes christmas etc, for no extra pay.
No company cars (apart from the select few), no perks, no credit cards racking up points for airmiles which you can spend and claim back, no travel costs (I was surprised the other day when one of my colleagues in the private sector announced he actually gets his costs of travelling to work and back home reimbursed!!). No parking charges for working reimbursed. No bonuses, ever.
It's all pros and cons. The pension is pretty much the last pro the public sector employee has.0 -
basically the true cost of a final salary pension is about 20-25% of salary
in the public sector typical employee payments are round 6% so the employer is paying round 20% ish
whether that's 'affordable ' is a matter of opinion
in the past lots of public sector workers enjoyed all sorts of early retirement fiddles ; i.e. 'voluntary' redundancy with enhanced pension etc which added some major costs to the system0 -
Graham_Devon wrote: »One of the problems when discussing the pension scheme, is alot of people decide that the pension scheme makes working in the public sector worthwhile.
There are a lot of things in the private sector which the majority of public sector employees forego.
Excluding teachers, and maybe some of the civil service, the majority of the public sector are on call 24/7, which includes christmas etc, for no extra pay.
No company cars (apart from the select few), no perks, no credit cards racking up points for airmiles which you can spend and claim back, no travel costs (I was surprised the other day when one of my colleagues in the private sector announced he actually gets his costs of travelling to work and back home reimbursed!!). No parking charges for working reimbursed. No bonuses, ever.
It's all pros and cons. The pension is pretty much the last pro the public sector employee has.
Being almost unsackable and no reason to work hard, are two more obvious benifits.0 -
Being almost unsackable and no reason to work hard, are two more obvious benifits.
Dunno about that. Thats attitude. Not everyone working within the public sector has that attitude.
That attitude will also play out in the private sector.
True, there is more red tape within the public sector and loads of waste surrounding legislation, but thats not the public sector workers faults.
You can often find yourself waiting around for days for a decision with nothing to do inbetween. You still have to turn up for work. It's personally onie of my biggest frustrations. Of course, anyone from outside could point the finger (I'm not employed btw, Im self employed, not currently in the office).
The coalition and its NHS plans are doing the same now. Everyone was go go go and now everything has stopped. People don't know what they are doing. But they can't just go home. They have to wait and then proceed when they know whats happening. Outsiders then point the finger at these people awaiting the next instruction and accuse them of wasting tax payers money.0 -
Dream on!
My wife is in the NHS scheme - the benefits vs. contributions are massive and I, in the private sector, couldn't even dream of getting anything like the return on investment required to match the benefits.
Don't be fooled by the size of the pension itself - it's the fact that they've cost next to nothing to fund that makes them a 'big payout'.
Fair comment - but don't forget the compound return on contribution that would be expected/predicted out of a private fund which does narrow the gap.
The government did have the benefit of that money after all and interest rates have been double digit in the last 30/40 years?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Graham_Devon wrote: »Dunno about that. Thats attitude. Not everyone working within the public sector has that attitude.
That attitude will also play out in the private sector.
True, there is more red tape within the public sector and loads of waste surrounding legislation, but thats not the public sector workers faults.
Can we agree on the 'majority' ?0 -
Ah, the monthly vitriol thread.
<<<<<pulls up chair to watch the fireworks>>>>>It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
FWIW OP I think it is a valid & interesting question, & well posted, & worthy of debate. Unfortunately, debate isn't what you'll get here on this subject...It's getting harder & harder to keep the government in the manner to which they have become accustomed.0
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