Gold plated public sector pensions

fred246

Those with Defined Benefit pensions know exactly what the deal is when they work for that employer. Those with Defined Contributions know that there is an unknown element. It might work out better or worse than Defined Benefit. One thing for certain is that if Defined Contributions had produced greater pensions they would all be pooling the cash for re-distribution to help those on lesser Defined Benefit pensions.

cfw1994

bostonerimus wrote: »

The rate of change in life expectancy has decreased for females since 1950 and for males it's close to the historical average.

Where are you getting this information from? Sounds....er.....untrue to me!

It appears to be plateauing now, but has certainly been rising for the past few decades, not decreasing!
http://theconversation.com/life-expectancy-in-britain-has-fallen-so-much-that-a-million-years-of-life-could-disappear-by-2058-why-88063, or https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/articles/howhaslifeexpectancychangedovertime/2015-09-09 for source data....

ex-pat_scot

andy001 wrote: »

busy_dad, you're spot on...
It is still a great pension and you're not getting it for free..Pay in public sector is low compared with private sector and bonuses..

K6CHRIS- true.


Employee contribution has gone up, admin fees gone up too.. retirement age gone up..
Slowly It's been tinkered so people won't realise what they are losing.. my 2 cents

Whilst I am not terribly political on this subject, the "..Pay in public sector is low compared with private sector" is still not true.


There was a £3,000 gulf in 2011. Whilst this has narrowed in recent years, public sector pay remains above that of the private sector.


https://www.bbc.co.uk/news/uk-politics-40480766

As others note - you can vote with your feet.

kidmugsy

I don't know what the figures are for the UK but in the US the last analysis I saw said that the low-skilled get more pay (or probably "compensation" i.e. pay & perks) from the Federal government than from the private sector, and the highly-skilled get less.

In the UK surely there are parts of the country where the pay of government employees is pretty good by local standards? Add the value of the pensions and it might be distinctly superior.

uk1

I think we tend to skirt around the issue and conflate different issues.

Yes, pensions in the public sector are a part of the reward package but the question is whether the majority feel it fair. Of course those receiving it are protective of it and most of them will think it fair. I think most others feel that the imbalance between what the public sector get and the private sector get by way of pensions is unbalanced and the cost to those that do not have them represents an unfairness.

It seems to me that the reason why it is so is not the question of needing to offer the pensions to attract the right people but simply because once a benefit is given it cannot easily be taken back again and it is there because no government has had the courage to do so, and not that it remains because "it is fair".

And whereas individual companies in the private sector can and will adjust pensions based on the single criteria of affordability and therefore because they have to to adjust to survive, the employer in the public sector doesn't have the stomach or courage to take the steps required to redress what many see as an unfair imbalance because it is easier instead to raise taxes today rather than the terrible disruption and political chaos that confrontation will cause and instead kick the problem down the road for our children and grandchildren to deal with. So in a way we are stuck with it not because it is fair but because of the implied threat of chaos that doing something about it would cause. In a sense we are forced into compliciyt because of the perception of blackmail.

The imbalance is also a part of not confronting other issues. For example low pay in some part of public services. Some think that the pension offsets that unfairness. But that isn't so because much of public sector at the top seems overpaid and much at the bottom seems under-paid. So it perpetuates another unfairness. I think most people that might think that public sector pensions are unfair might also feel that nurses pay is unfair for example. But not addressing either isn't the answer to either.

IMHO.

p00hsticks

cfw1994 wrote: »

Where are you getting this information from? Sounds....er.....untrue to me!

It appears to be plateauing now, but has certainly been rising for the past few decades, not decreasing!

bostonerimus didn't say that life expectancy was decreasing, he said that the rate of change of life expectancy was decreasing - which is the same as saying it's plateauing !

AlanP_2

One of the main problems with all this is that there isn't "a public sector pension", there are a number of schemes for different parts of the public sector, all with their own Ts&Cs.

Lumping them all together may help with a headline but isn't really very useful.

Stopping, or leaving, a running PS DB scheme isn't straightforwards for those associated employers with the LGPS, a funded scheme.

Two examples I am aware of. One non-LG organisation that had a LGPS scheme running when it was setup and staff TUPEd into it was considering hiring new staff on a separate DC scheme as the employer contribution was deemed to be higher than they could afford. LGPS Scheme Admin / Actuaries gave them projections for how much their contribution would need to increase by to compensate for lower employee contributions going forwards, Ouch was their response when they saw the numbers, cheaper to carry on as they were.

A second, similar organisation, wanted to end their LGPS membership and move everybody over to a new scheme. No employee or employer benefits being paid in the future so they would have needed to contribute about 10 years "profit" (social enterprise, nominal 1% profit to be used for re-investment in service provided) in a lump sum at point of leaving. Apart from not having that level of cash available it was again more cost effective and beneficial to carry on with the LGPS DB scheme.

On a general point don't forget the move to CARE will significantly impact the overall cost of these schemes in 30-60 years as those on older FS elements die off and it is only CARE benefits being paid out.

There was a reference earlier to in-service pension increases being better than deferred. Didn't understand that or recognise it from today's situation. CPI on CARE accumulated to date, 1 - 2% on Final Salary pay rises compared to CPI on it all if deferred. As CPI is running ahead of Local Gov pay rises deferred is a better growth route on accrued pension to date.

Silvertabby

There was a reference earlier to in-service pension increases being better than deferred. Didn't understand that or recognise it from today's situation. CPI on CARE accumulated to date, 1 - 2% on Final Salary pay rises compared to CPI on it all if deferred. As CPI is running ahead of Local Gov pay rises deferred is a better growth route on accrued pension to date. Posted by AlanP

It depends on the scheme. I think it's the NHS that has an annual revaluation on in-service benefits of CPI plus 1.5% (note: this is on top of any increases due to salary increases).

The LGPS, however, has a live annual revaluation rate of CPI only - and if CPI is negative, then the reduction is applied to the CARE pension accrued to date.

Deferred and in payment increases are also CPI but, in the event of a negative, 0% is assumed and so no reduction is applied.

Tammykitty

Instead of reforming the public sector - reform the private sector.


If it would take 25% employer/employee contributions to get DC pension schemes that would equal the DB schemes - then we should be looking towards this - not reducing the "good" pensions.


I spent 10 years working in the private sector - recently checked the value of my various pensions - think its around £15k (It's under £1,000 a year!)


I have spent the last 3 years working in the public sector, and my pension is currently worth about £3000 a year.


So yes, I really appreciate my public sector pension.


But now the small print - I contribute about 10% of my salary to get this, and in the private sector I think I contributed 3% if even!


I also took a £5k pay cut to get the job in the public sector.


So if I had contributed this £5k (or say £3k after tax) plus an extra 7% of my earnings when I worked in the private sector - what would my pension be like?


It would be at least £35k higher in value - just on the amounts I paid in!

GunJack

No, I'm not going to bite on this thread....must resist....