Public Sector Pay Restraint Ending?

Tromking

HAMISH_MCTAVISH wrote: »

Which is true.

With a healthy dose of also trying to undermine Hammond's leadership chances when the Maybot is finally deactivated.

Of course not.
This is nothing other than the Brextremists trying to turn the Conservative party into BlueKip.

Hammond correctly pointed out that public service compensation including pensions is 10% higher on average than private sector equivalents. That is a fact.

The leaking of Hammond's comments were designed to embarrass, indicating to me at least of the political unsustainability of the Government's policy toward public sector pay.
You're right to flag up the absolute chaos within Government however.

chucknorris

Tromking wrote: »

Interesting if not surprising expose on the 'debate' within Cabinet on public sector pay. Although the leak is being reported as 5 cabinet ministers trying to undermine Hammond's stance on Brexit,I wonder if it's partly down to a sense of frustration amongst ministers that unless the purse strings are loosened then public services will suffer further. Although Hammond acknowledged the recruitment and retention issues with some roles, the term 'overpaid' is certainly a window on the Tory attitude to public service.

The value of pensions within a salary package can muddy the waters, it isn't as simple as overpaid or not. There are a number of issues:

- Many people are incapable of valuing DB pensions, so they can't easily compare different salary packages where one has a DC, and the other a DB pension.

- Pensions vary in perceived value, so it can be subjective, for example someone in their 40's who already owns a property that they are happy with, would probably value a pension more than someone in their 20's who is saving to buy a property.

Thrugelmir

Tromking wrote: »

The leaking of Hammond's comments were designed to embarrass, indicating to me at least of the political unsustainability of the Government's policy toward public sector pay.
You're right to flag up the absolute chaos within Government however.

Hammond's comments simply reflect what many people already know and think. Packages have to be viewed as a whole. Nor is there any entitlement to inflation linked pay.

antrobus

Thrugelmir wrote: »

Hammond's comments simply reflect what many people already know and think. Packages have to be viewed as a whole. Nor is there any entitlement to inflation linked pay.

Yes. What research there is indicates that public sector pay is higher than that in the private sector.

I believe that the IFS says it's 13% more. But only 3% more if you adjust for educational qualifications.

Of course, the public boys and girls will squeal that we don't get bonuses, or whatever. (Not that everyone in the private sector works for John Lewis.) And the private boys and girls will squeal that we don't get those 'gold plated pensions'. Which are, of course, quite significant. The liability now stands at about £1.3 trillion I think.

Which is to say, that comparing apples with oranges is a tricky exercise. But it is an inescapable fact that we have been running a fiscal deficit that is unsustainable. Pay restraint was, and is, therefore inevitable. It can't last forever, however. Whatever sector you are talking about, pay needs to be set at the level that attracts workers.

Silvertabby

Mr S and I are both retired public sector, and we do know the value of (and are extremely grateful for!) our pensions.

It's true that the average public sector worker's employer pays at least 18% into their DB pension scheme, whereas the average private sector's employor pays 8% (if that) into a DC scheme.

My proposal for current public sector workers would be :

A. Carry on as you are

B. Opt out of your DB pension scheme in return for a 10% pay rise and 8% employer contribution into a DC scheme.

I'd be very surprised if many people (once fully informed) went for option B.

Andy_L

Silvertabby wrote: »

Mr S and I are both retired public sector, and we do know the value of (and are extremely grateful for!) our pensions.

It's true that the average public sector worker's employer pays at least 18% into their DB pension scheme, whereas the average private sector's employor pays 8% (if that) into a DC scheme.

My proposal for current public sector workers would be :

A. Carry on as you are

B. Opt out of your DB pension scheme in return for a 10% pay rise and 8% employer contribution into a DC scheme.

I'd be very surprised if many people (once fully informed) went for option B.

18% + the current employees contribution, so 27.3% (in my case) available in my case for a mix of pension/ISA for retirement.

Safety from any CPI/RPI style retrospective changes to the scheme.
Lump sum at real rates rather than 12:1
Access to all the new pensions freedoms

Only downside I can see is that the 10% pay rise wouldn't be held separately as pension compensation but would be rapidly eroded by future pay rises as you're now "10% overpaid"

chucknorris

I believe that some PS DB may be fully funded (or so I have heard), but most are not, that is why the value of the pensions exceed the joint contributions, and thus becomes a burden on the (non PS employed) tax paying public.

Silvertabby

I believe that some PS DB may be fully funded (or so I have heard), but most are not, that is why the value of the pensions exceed the joint contributions, and thus becomes a burden on the (non PS employed) tax paying public.

AFAIK, only the LGPS is funded. Pensions for the NHS, Civil Service, Armed Forces, Police, etc etc are paid for out of general taxation.

Silvertabby

“ Mr S and I are both retired public sector, and we do know the value of (and are extremely grateful for!) our pensions.

It's true that the average public sector worker's employer pays at least 18% into their DB pension scheme, whereas the average private sector's employor pays 8% (if that) into a DC scheme.

My proposal for current public sector workers would be :

A. Carry on as you are

B. Opt out of your DB pension scheme in return for a 10% pay rise and 8% employer contribution into a DC scheme.

I'd be very surprised if many people (once fully informed) went for option B.
Originally posted by Silvertabby ”

Difficult to know but a significant number would probably go for the pay rise.

In our basic workplace pension employee pays 1% and the employer pays 3%. A number of (young) people opted out because they wanted to keep the 1% so much they were willing to give up 3% to do so.

Pensions is an area where it's difficult to give away 'free' money because so many don't how to value a future income stream vs a present income stream. Posted by ilovehouses

Then that's very sad - because a lot of these people will have nothing to live on in retirement but the single tier State pension (which has been set at just over the means test limit - so no more tasty extras).

How will they pay for their mobile phones and foreign holidays then?

I've always said that it shouldn't be possible to opt out of an occupational/workplace pension.

paparossco

Silvertabby wrote: »

AFAIK, only the LGPS is funded. Pensions for the NHS, Civil Service, Armed Forces, Police, etc etc are paid for out of general taxation.

True, but the NHS scheme has always delivered a 'profit' to the government even when it was 'final salary'. Now that it is a CARE scheme and with the increased staff contributions I assume this will at least continue along similar lines.