'Like student protests today’s strikes boil down to ‘who pays?’ blog discussion

MatthewGaskin

The public sector workers might be more sympathetic if the MPs (who are also public sector workers, after all) didn't plan to keep their own even-more-outrageous pensions exactly as they are.

I know that changing the MP's pension rules wouldn't make a dent in the public finance debts but it would at least show that it's the same rule for everyone.

spikyone

MatthewGaskin wrote: »

The public sector workers might be more sympathetic if the MPs (who are also public sector workers, after all) didn't plan to keep their own even-more-outrageous pensions exactly as they are.

...and here is someone, as antonia1 says, using hearsay and cherry-picking to support the cause.

http://www.bbc.co.uk/news/uk-politics-13962454

In their coalition agreement, the Conservatives and Lib Dems agreed to "consult" with the Independent Parliamentary Standards Authority (Ipsa) about "how to move away from the generous final-salary pension system for MPs".
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...in the March budget Chancellor George Osborne said : "I believe this House should also recommend similar changes to the pensions of MPs."
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in July 2009, MPs agreed to increase their contribution rates and cap the amount the Exchequer contributes at 28.7%

That doesn't sound like a plan to keep things exactly as they are, and it seems that MPs have already taken a hit since the "credit-crunch".

Further to antonia1's post, speaking as an engineer I'd also point out that I don't have a union to hide behind. If I don't like changes to my pension, or don't get a big enough pay rise, the only thing I can do is look for a new job.

simongregson

As a teacher who knows a little about this...

In 2007 teachers and their unions entered a risk sharing agreement with the government whereby their pension scheme would be valued regularly and any required increase in contributions would come from teachers. Hutton has acknowledged that this has not been taken into account by the current government.

But the current government has cancelled the independent valuation and decided to impose an arbitary increase. You can only conclude that the independent valuation would have shown either no requirement for an increase or less increase than that which is proposed.

Secondly, I agree with the above posters - when I decided to become a teacher the generous pension was one factor that affected my decision. Teachers are already accepting a pay cut equivalent to around 5% this year with the current 2 year pay freeze and the high rate of inflation. I enjoy my job, but am wondering if it would have been a good idea to have chosen a different career - most of my university friends earn way more than I do and I really do wonder how the government will attract good graduates into teaching in the future.

Thirdly, as an unfunded scheme there is a real risk that teachers at the start of their career with the burden of debts from university will opt out of the scheme. This will cost the government more in the long run as the scheme is dependent on recruiting new teachers to pay the pensions of existing pensioners.

And fourthly - no one seems to mention the massive subsidy the private sector gets in effect because many who have made little pension provision will have to be provided with means tested benefits in retirement. Again, Hutton specifically says that this should not be about equality of misery or a race to the bottom.

As a member of a union who did not take strike action today, but may well if the government doesn't approach negotiation seriously I hope that the government will see sense. Everybody is aware that changes will have to be made to pension arrangements but it is unfair to impose them on workers who have based their retirement planning on their occupational pension scheme. Personally, I think that the solution would be a revised scheme for new members of the profession - people will know what they will get and can make the decision if teaching is the career for them. I don't think it would do wonders for recruitment, but at least it would be fair. The government should then use the valuation and risk sharing scheme that is already in place to assess a fair rate of employee contribution.

kevhoward1

Hi

Can anyone direct me in right direction to ask Martin for some advise on a fiance aggrement i had..

Behemoth

Having now become a success and a celeb Mr Lewis is being absorbed into the Establishment. Obviously independence is being replaced by political toadying. Is there a knighthood on the horizon?

pjcox2005

simongregson wrote: »

As a teacher who knows a little about this...

In 2007 teachers and their unions entered a risk sharing agreement with the government whereby their pension scheme would be valued regularly and any required increase in contributions would come from teachers. Hutton has acknowledged that this has not been taken into account by the current government.

But the current government has cancelled the independent valuation and decided to impose an arbitary increase. You can only conclude that the independent valuation would have shown either no requirement for an increase or less increase than that which is proposed.

Or perhaps they consider that the costs of carrying out a pension valuation which is a skilled but still subjective area for such a large workforce would outweight the benefit of accuracy against a reasonable estimate.

Secondly, I agree with the above posters - when I decided to become a teacher the generous pension was one factor that affected my decision. Teachers are already accepting a pay cut equivalent to around 5% this year with the current 2 year pay freeze and the high rate of inflation.

Both of these issues are present in the private sector where companies have closed defined benefit pension schemes to be replaced by defined contirbution, and have had pay freezes over the last 3 years and suffered the same rate of inflation.

I enjoy my job, but am wondering if it would have been a good idea to have chosen a different career - most of my university friends earn way more than I do and I really do wonder how the government will attract good graduates into teaching in the future.

And those jobs may have any number of reasons to be paid more e.g. less holiday, perhaps more pressure or restrictions on time, or simply they make money for their company. Teachers get paid an above average salary so there are still many professions with lower pay.

Thirdly, as an unfunded scheme there is a real risk that teachers at the start of their career with the burden of debts from university will opt out of the scheme. This will cost the government more in the long run as the scheme is dependent on recruiting new teachers to pay the pensions of existing pensioners.

Hence why perhaps the scheme should be changed to defined contribution so that people make their own choices to prepare for retirment with this contribution being matched by the Government to a certain level.

And fourthly - no one seems to mention the massive subsidy the private sector gets in effect because many who have made little pension provision will have to be provided with means tested benefits in retirement. Again, Hutton specifically says that this should not be about equality of misery or a race to the bottom.

Those would be the private sector workers that the are being encouraged to set up their own pension plan, and if they don't will receive a fairly small pension in comparison to the public sector workers.

As a member of a union who did not take strike action today, but may well if the government doesn't approach negotiation seriously I hope that the government will see sense. Everybody is aware that changes will have to be made to pension arrangements but it is unfair to impose them on workers who have based their retirement planning on their occupational pension scheme.

As mentioned above this has happened in private sector where companies fight to stay afloat as the money out is more than the money in....that would be the same as the Government.

Personally, I think that the solution would be a revised scheme for new members of the profession - people will know what they will get and can make the decision if teaching is the career for them. I don't think it would do wonders for recruitment, but at least it would be fair. The government should then use the valuation and risk sharing scheme that is already in place to assess a fair rate of employee contribution.

Or you just freeze the current scheme as it stands so those about to retire have what they expected, but those with still 30 years to go will have a good headstart and plenty of time to set up an effective defined contribution scheme.

anoneemouse

Well - for someone who says how impartial he is being in the article - then Martin Lewis is coming over as very biased indeed against public sector employees. All that talk of "insiders" and "outsiders".

Ooh....get them...those "insider" feather-bedded public sector peeps - ooh! ooh!

To me - the whole article comes over as written from a standpoint of "I know that the largest proportion of MSE readers are likely to be from the private sector - because thats where most jobs are these days. Therefore I will write an article pandering to their prejudices. I want to keep the majority of my readers on board after all. so - never mind fairness. Therefore I had better write an article in which I am in favour of the public sector employees having their pension cut, but I will try to have it both ways (ie by saying 'This isn't a biased article - honest guv'). That way I keep most of my readers happy".

It didn't work. Unfortunately for him, most public sector employees will indeed read this article as "Get them too - that should keep the rest of my readers happy".

JOHN1982

Martin wrote:

Some people struggle to get their brains around cash values once they reach the millions or billions. ... It may seem strange writing ‘just tens of millions’ but in context our government spends well over £600 billion in other words SIX HUNDRED THOUSAND MILLION a year of our money, so there is a need to get some perspective.

Oh God, thank you Martin, I think I love you a little bit! It infuriates me when the press drag up stories about the government "wasting" what they see as massive amounts of money, when as you say it's 'just tens of millions'.

I heard what I thought was quite a fair point the other day. With life expectancy ever increasing, the likelihood of more people living to see 100, or there abouts, is very real. If you work from the age of 15 through to 60, then your time in retirement is likely to equal, or even better, your time in employment. The state just can't fund that sort of maths now, or in the near future, without taking from elsewhere.

As the blog says, it's about competing interests. People know that there need to be drastic cuts ... but no-one wants them to alter their lifestyle.

danothy

anoneemouse wrote: »

Well - for someone who says how impartial he is being in the article - then Martin Lewis is coming over as very biased indeed against public sector employees. All that talk of "insiders" and "outsiders".

To me it comes across as an expression of his internal conflict on the matter. If all you see is an attack on the public sector then you missed the point that what he was saying applies to every public spending decision, not just this one. Talk of balance in the system is hardly biased and if you can only interpret comments on the issue that don't simply object to the cuts as being pro the cuts then that makes me think you might be the biased one.

JOHN1982 wrote: »

Oh God, thank you Martin, I think I love you a little bit! It infuriates me when the press drag up stories about the government "wasting" what they see as massive amounts of money, when as you say it's 'just tens of millions'.

I heard what I thought was quite a fair point the other day. With life expectancy ever increasing, the likelihood of more people living to see 100, or there abouts, is very real. If you work from the age of 15 through to 60, then your time in retirement is likely to equal, or even better, your time in employment. The state just can't fund that sort of maths now, or in the near future, without taking from elsewhere.

As the blog says, it's about competing interests. People know that there need to be drastic cuts ... but no-one wants them to alter their lifestyle.

Too true, I certainly wouldn't want my lifestyle altered, but I see that something has to give in the system somewhere, and I almost certainly couldn't come up with a good solution to the simple lack of money the nation seems to be suffering from, so I end up on the fence about spending cuts despite wanting to contribute to the debate.

DCodd

antonia1 wrote: »

The Hutton Report (based on proper analysis rather then hearsay and cherry-picking individual cases) found that there was no evidence that the public sector pay was lower to counterbalance excellent pensions.

Bear in mind that a fully qualified teacher will start on at least equivalent salary to an engineer, and the current pension system has been rated as equivalent to approximately 20% employer contribution. In engineering, employer contribution of 5% (in return for employee contributing 5%) would not be un-typical. Changing the teacher pension may be viewed as unfair to the teacher, but keeping the pension as it is may be viewed as unfair to the engineer.

Finally, private sector workers have also been (on the whole) undergoing a pay freeze in the face of high inflation for the past few years also, in many cases employees have chosen to take pay cuts rather than risk mass redundancies. Note the news today of the loss of 15,000 jobs at Lloyds Banking Group - these will not be the highly paid [STRIKE]gamblers[/STRIKE] bankers, but ordinary admin staff and the like. Times are tough for everybody, "insiders" and "outsiders" alike.

That is a little misleading, the contribution for the TPS (teachers pension) is actually 6% employee and 14.5% Employer and this was negotiated, in the past as a result of lower than private sector pay rises. The private sector does have the choice to negotiate lower pay rises in return for higher employer pension but has chosen not to.

Many in the public sector have had actual pay freezes and reduced hours, effectively giving them a pay cut to boot, my o/h got a pay rise of 1.5% a year ago but will not get to negotiate another for 4 years.