Secret Steal Of Our NI Contributions

zagfles

BobQ wrote: »

By 2016 public sector workers will have had 2 years of pay freeze, three years of capped pay and not all of them get progression pay via guaranteed pay steps. Also they will have faced progressive pension contribution increases of 6% (varies with scheme) plus the 1.4% NI increase and a move to the less attractive career average schemes.

By then the question will not be is my pension a good deal (it clearly is and better than most people in the private sector). The question will be "Can I afford to keep paying into the scheme with my other financial commitments"?

Once the economy picks up, many of these will do what the Governmemt wants and move to different jobs in the private sector if they ever create an environment that enables them. The question will then be can we recruit nurses, teachers, scientists, from abroad since those we have invested effort to train them will have been working in car sales or financial services or whatever. Alternatively we will be paying more for private services or though public funded outsourcing contracts.

But all that is happening in the private sector too. Public sector average pay is higher than the private, as well as the pension being much better. Private sector average working hours are higher. "Guaranteed pay steps" are virtually unheard of in the private sector. And the NI increase only takes NI to the same level as those in private sector money purchase schemes.

I doubt we'll have a voluntary "brain drain" from the public sector.

grizzly1911

zagfles wrote: »

Public sector average pay is higher than the private, as well as the pension being much better. Private sector average working hours are higher. "Guaranteed pay steps" are virtually unheard of in the private sector.

I think you are making big assumptions with average pay and hours. Many lower paid roles have been taken out of the public sector and privatised leaving proportionally more skilled, qualified roles. Many in public sector roles also work long hours, shift patterns and flexible working on rolling work cycles.

Pay steps aren't guaranteed if you don't perform. The were used in big corporate companies. Where you have thousands of staff in set wage bands it enables the employer to recognise increased proficiency and experience whilst at the same time controlling the overall cost. There aren't unlimited steps in each grade range more like 5/6, once they have been exhausted that is it unless you are successful in gaining promotion. Free bargaining isn't available nor are discretionary bonuses and pay rates for individuals.

From the recent "noise" in the media it would appear those steps are being "abused" in the higher echelons to keep higher profile staff rather than lose them.

zagfles

grizzly1911 wrote: »

I think you are making big assumptions with average pay and hours. Many lower paid roles have been taken out of the public sector and privatised leaving proportionally more skilled, qualified roles. Many in public sector roles also work long hours, shift patterns and flexible working on rolling work cycles.

Indeed, but whatever the reasons for it, fact remains that on average public sector pay is higher and hours are lower than in the private. So someone in the public sector is a lot more likely to be able to afford a 1.4% increase in NI than someone in the private sector a 4.8% increase!

Overall, the proposed changes as a result of the single tier state pension are (relatively) hugely beneficial for public sector workers compared to private. I think in 30 years time there's going to be quite a divide amongst pensioners, with public sector pensioners far better off than private sector pensioners. Now it's probably about even, since private sector pay used to be higher and private sector pensions used to often be as good as public sector pensions.

grizzly1911

zagfles wrote: »

Indeed, but whatever the reasons for it, fact remains that on average public sector pay is higher and hours are lower than in the private. So someone in the public sector is a lot more likely to be able to afford a 1.4% increase in NI than someone in the private sector a 4.8% increase!

Overall, the proposed changes as a result of the single tier state pension are (relatively) hugely beneficial for public sector workers compared to private. I think in 30 years time there's going to be quite a divide amongst pensioners, with public sector pensioners far better off than private sector pensioners. Now it's probably about even, since private sector pay used to be higher and private sector pensions used to often be as good as public sector pensions.

Can you provide the proof for your claim that they are paid more for equivalent jobs and roles or that the private sector works longer hours?

I am not so sure that the disparity will be that large 30 years down the line because I am sure the public sector schemes will be forced down. If they exist at all, in anything like the current form for new entrants or if we will have a public sector as we know it.

For the average punter in the street, regardless of sector, I think the pension landscape will be much bleaker 30 years hence as I don't see the decline, over the last 30years, for the UK reversing in that time frame.

BobQ

zagfles wrote: »

Indeed, but whatever the reasons for it, fact remains that on average public sector pay is higher and hours are lower than in the private. So someone in the public sector is a lot more likely to be able to afford a 1.4% increase in NI than someone in the private sector a 4.8% increase!

You say "whatever the reason" as if it does not matter. Is it significant that the average salary in McDonalds was lower than the average in JP Morgan? Of course its not significant because the skill levels are very different and you would expect the averages to be different. The average is irrelevant, what matters is whether (for example) a nurse doing a similar job in public and private sectors is paid more or less. The profile of skills in the public sector is progressively changing due to the outsourcing of many of lower skilled jobs.

Overall, the proposed changes as a result of the single tier state pension are (relatively) hugely beneficial for public sector workers compared to private. I think in 30 years time there's going to be quite a divide amongst pensioners, with public sector pensioners far better off than private sector pensioners. Now it's probably about even, since private sector pay used to be higher and private sector pensions used to often be as good as public sector pensions.

I agree with the gist of this comment. But the real divide in the future will be between those who have a good occupational pension and those that do not. The haves will include the public sector (based on current policies) but the more professional/senior roles in the private sector still attract relatively good pensions.

The divide will be between these and those in low paid jobs who cannot afford a pension, many self employed who cannot afford a pension or choose not to have one, and those who have been out of work for long periods.

John_Pierpoint

zagfles wrote: »

The new single tier state pension is actually very good news for public sector employees. They'll pay a little more in NI, 1.4%, but they'll get a better state pension as a result which will be worth much more.

The govt have already said they won't reduce pension accrual for public sector schemes to make up for the increased employer NI contributions, so for just 1.4% extra they get better occupational pensions than almost anyone else plus the same state pension as those who don't have such generous schemes.

zagfles wrote: »

Yes. Also, in a contracted out scheme currently the employee gets a 1.4% NI rebate and the employer gets 3.4%. For private sector contracted out schemes, there will be legislation enabling schemes to reduce benefits or increase the employee contribution, to make up for the employer's loss of the 3.4% rebate, so private sector employees will face a 4.8% increase in NI plus contributions (or a loss in scheme benefits of the same value).

But for public sector schemes the govt have announced there'll be no loss in benefits or additional contributions to reflect the loss of the employer's NI rebate. So they'll get the bigger pension for a mere 1.4% extra NI, a bargain! For someone on an average salary it'll cost £280 a year to get £1924 more in state pension, if they've got enough years left of their working life to build the full amount - if not it'll be less but they won't be paying the £280 extra for as many years so it'll still be a bargain.

Anyone who leaves a public sector scheme because of this NI increase wants their head examining.

vivatifosi wrote: »

I work for a real local authority in the real world. I can't with 100% certainty say that some authorities don't have vans with qualified librarians on board, but I know that many don't. I also doubt that the drivers earn anywhere near £32k. For good measure, I should add that many LA's have also introduced performance related increments that have to be earned and aren't just awarded. For that matter, I know an awful lot of qualified librarians with degrees and masters in the subject who would love to earn £32k. It isn't a profession to enter if you want a high salary.

Trivial question from one who tried and failed to get a part time library job. Are librarians allowed to do a short course and then drive the van themselves (or possibly vice versa if we want to de skill the job)?.
Obviously the job requires an amount of back-bone on the part of a sole "librarian"; my local library offers good training, as they frequently have to summons a "noddy" copper to assist their free service of babysitting feral teenagers.

Back to the main point:

I have read all of the "orange" with green diagrams publication that accompanies the budget - all the way to the forecasts at the back, where the effect of such things as freezing of the IHT allowance is tabled.

I was not looking for the effect on future pensions [see below] but in passing there was a a table of future expenditure. It showed against unfunded pensions for public workers. a large sum more or less doubling in the next few years.
So what is the reason:
Perhaps millions of baby boomers are retiring?
Perhaps those who have retired are all living to 100?
Perhaps departments are achieving the head count chop by dumping the expensive time servers onto the pension fund?
Could it be that the pension scheme is a damned good one that an impoverished indebted nation is having trouble meeting? !!!!
(In the private sector it could be that the directors had fiddled the scheme, so that while culling the proles and their contributions, they had enhanced the pensions of those at the top. Just in case the firm is taken over and it is their turn next?).

John

[I was trying to find out what was happening to the 10% income tax band. Was Gideon simply thumbing his nose at the opposition or has he abolished it as redundant, now that we will all be getting the first £10k tax free? Any ideas Jennifer_Jane ?]

John_Pierpoint

While writing this we have had "B@lls" on to say in effect. What a failure. If I can get the public to trust me, we are home and dry.
Now "Gideon" is doing the man of reason act, without quite resorting to Churchill's "blood, sweat and tears" - it seems he is sending out cheques post dated to the day before the penalty is imposed.
[I managed to get away with that when given a parking fine]

When are we going to get the UKIP shadow chancellor interviewed - probably studying the secrets of 1930's Germany ? Time for a bit of nation building?

Moby

BobQ wrote: »

By 2016 public sector workers will have had 2 years of pay freeze, three years of capped pay and not all of them get progression pay via guaranteed pay steps. Also they will have faced progressive pension contribution increases of 6% (varies with scheme) plus the 1.4% NI increase and a move to the less attractive career average schemes.

By then the question will not be is my pension a good deal (it clearly is and better than most people in the private sector). The question will be "Can I afford to keep paying into the scheme with my other financial commitments"?

Once the economy picks up, many of these will do what the Governmemt wants and move to different jobs in the private sector if they ever create an environment that enables them. The question will then be can we recruit nurses, teachers, scientists, from abroad since those we have invested effort to train them will have been working in car sales or financial services or whatever. Alternatively we will be paying more for private services or though public funded outsourcing contracts.

Excellent post.

sharnad

BobQ wrote: »

By 2016 public sector workers will have had 2 years of pay freeze, three years of capped pay and not all of them get progression pay via guaranteed pay steps. Also they will have faced progressive pension contribution increases of 6% (varies with scheme) plus the 1.4% NI increase and a move to the less attractive career average schemes.

By then the question will not be is my pension a good deal (it clearly is and better than most people in the private sector). The question will be "Can I afford to keep paying into the scheme with my other financial commitments"?

Once the economy picks up, many of these will do what the Governmemt wants and move to different jobs in the private sector if they ever create an environment that enables them. The question will then be can we recruit nurses, teachers, scientists, from abroad since those we have invested effort to train them will have been working in car sales or financial services or whatever. Alternatively we will be paying more for private services or though public funded outsourcing contracts.

Pay freeze started three years ago so by 2016 it would be six years with no progession

The 250 given by the goverment to low earnings due to the pay freeze has been cut

zagfles

BobQ wrote: »

You say "whatever the reason" as if it does not matter. Is it significant that the average salary in McDonalds was lower than the average in JP Morgan?

It doesn't matter, in the context of what we're discussing in this thread. This isn't a discussion about whether the public sector deserves to be paid more or not, it's a discussion about the state pension changes and the affordability of a 1.4% NI hike, compared to 4.8% in the private sector.

In the same way as you could argue that a 1.4% pay cut to a JP Morgan employee was more affordable than a 4.8% pay cut to a McDonalds employee. Whether the JP Morgan employee deserves higher pay is completely irrelavent to the affordability of the pay cut.