Is it fair that Govt employees get DB and private sector employees DC (in general)

[Deleted User]

And the public isn’t educated on this.  If you don’t know then you can’t make an informed decision when applying for jobs

thevilla

Deleted_User said:

And the public isn’t educated on this.  If you don’t know then you can’t make an informed decision when applying for jobs

So what is the point of your statement?  Because people don't research their remuneration before taking a job public servants should have lower pension benefits?  Should we all join the race to the bottom?
Public service pension schemes are , I understand, less 'generous' now but you can't take away what has already been bought and paid for.  My pension was transferred to a private company when I was TUPEd from the Civil Service in the 90's.  I still retained most of the benefits until redundancy in 2014.

[Deleted User]

thevilla said:

Deleted_User said:

And the public isn’t educated on this.  If you don’t know then you can’t make an informed decision when applying for jobs

So what is the point of your statement?  Because people don't research their remuneration before taking a job public servants should have lower pension benefits?  Should we all join the race to the bottom?
Public service pension schemes are , I understand, less 'generous' now but you can't take away what has already been bought and paid for.  My pension was transferred to a private company when I was TUPEd from the Civil Service in the 90's.  I still retained most of the benefits until redundancy in 2014.

The point of my statement is to express an opinion on the topic raised by OP. 

The main problem is that private sector Joe who has a lower compensation and all the risk can’t actually afford to pay for public sector Bill’s benefits. 

thevilla

When was the gun placed at Bill's head forcing him into a particular servitude?  Why not campaign for better pensions in the private sector than complain about those in the public sector?

steampowered

Public pension schemes are not as generous as you think they are.

Take the police pension scheme for example. Police officers pay an employee contribution of 13.7% of their salary. If you contributed 13.7% into a private DC pension - on top of your employer contributions - that's a very good pension.

Saying that the "current market turmoil" highlights anything is a pretty draft comment. There have been many busts over the years, and will continue to be many more, the most recent being in 2008 and 2000. The average long return generated by the stock markets is 7-8% despite those recessions. That's not a "low return".

The ONS has published statistics on this. After taking pension contributions and benefits into account there is a small pay differential in favour of the public sector for low paid workers, and a much larger pay differential in favour of the private sector for higher paid workers. It's nowhere near 25%. 

AlanP_2

There are still some private sector DB schemes around, both my son's are members of one so if you want to compare DB to DC then fine but please don't further extend the myth that it is ONLY the public sector that have access to a DB scheme. Yes, the majority of private sector schemes are not DB but it is not 100% as the OP implied.

steampowered

Deleted_User said:

Basically, private sector Bill not only pays for public sector’s Joe’s gold-plated benefits, but also takes on all the risk while also carrying 100% of the risk for himself. 

Humphrey has it sussed. 

What risk? Your comment is oblivious to how pensions work and how investments work. There is no "risk" investing in stock markets for the 30-40 year period of a working life.

When you hold shares for 10 years or more the chances of making a loss dwindle to zero (i.e. at pretty much no point in the history of the major stock markets would you have made a loss even if - unlike a pension where you invest monthly - you had put literally all of your money in at the top point of the market immediately before a recession).

Thrugelmir

steampowered said:

Take the police pension scheme for example. Police officers pay an employee contribution of 13.7% of their salary. If you contributed 13.7% into a private DC pension - on top of your employer contributions - that's a very good pension.

Private sector employees on auto enrollment schemes contribute nothing like those in the public sector. Far too simplistic to compare salary alone. Contracted in the public sector for the last 7 seven years of my working life. 6 years of a 1% rise plus a one off year of 1.5%. Austerity is alive and kicking. Only stayed for the pension. 

bowlhead99

thevilla said:

When was the gun placed at Bill's head forcing him into a particular servitude?  Why not campaign for better pensions in the private sector than complain about those in the public sector?

The practical answer to 'why not campaign for better pensions in the private sector', is that we know it's capitalism and if we want a private sector job we will take the going rates of whatever the employer says he can afford for total compensation (pay, benefits, pensions etc) and we are relatively powerless to influence what we are offered, unless we are exceptional candidates - which the vast majority of us, won't be.  So it's quite understandable that people are not fruitlessly campaigning to get better private sector pensions, especially when some of their colleagues would actually prefer more pay now and have their own choice how to use it to provide for retirement.

Whereas 'why complain about what those in the public sector get', is also quite understandable - the average taxpayer knows that his tax money goes to pay the wages and pensions of those in the public sector;  he thinks it's his democratic right to decide how the country should spend its scarce resources;  therefore believes that as he is paying the bills, he should get to decide what sort of bills get paid, and he doesn't like the size of the pension bills, so would like lower ones to be paid going forward, which means cutting back the DB pension cost and risk...

So, its not unexpected that these sorts of threads exist, even though not everyone wants to be a public sector worker so would not apply for those jobs themselves; they still feel that as the 'breadwinner' (performing the productive private sector work which bankrolls the public sector work, because public goods don't have visible revenue), they should get a say in how to compensate the people who work in that sector.

The shorter answer is, people are envious of what they don't have - everyone who doesn't have a great pension wants one,  everyone who doesn't have a high salary wants one... even if they don't want the type of work/ conditions / responsibilities necessary to get it. If you can't or don't want to get a job that pays better pay or benefits it is perhaps easier to moan about someone else getting the better pay or benefits...

Dox

Life isn't fair - and this argument has been rehearsed time and again until most people are sick of it. Right now there are much more worrying things to do than bleat about 'fairness', especially if you look at the number of people who have chosen to transfer from private sector DB schemes to DC arrangements because they view flexibility as more desirable than certainty and security.