What will teachers pension increase by this year? 10% CPI?

SouthCoastBoy

jimi_man said:

Terron said:

german_keeper said:

Terron said:

nigelbb said:

Exodi said:

SouthCoastBoy said:

I think the next few years could highlight the massive difference between govt db, db and dc pensions
 The govt db pensions really are the gold standard when it comes to pensions.

My partner has a govt db pension, I work in the private sector and have a DC pension.

She hadn't really paid much attention to her pension (we're still relatively young) but we looked at it for the first time a couple of weeks ago and... I mean jesus wept, it is absolutely bonkers. I earn about 60% more than her (and contribute equivalently), yet her pension is likely to be 4x+ mine.

While we might be able to go on the odd holiday every other month on mine, her pension could easily see us on a cruise every month with spending money.

I heard the stereotypes about public sector pensions, but as a private sector worker, your eyes will water if you see the actual numbers behind them.

You don't contribute equivalently. You have chosen to work for a higher salary & poorer pension. It's always been the way with public sector jobs. The old deal was that working in the public sector was a lower salary with a good pension plus secure employment but now even the jobs of nurses & teachers aren't safe from redundancy.

No it hasn't. In the mid 80s my sister was a a teacher whilst I was working in the private sector in IT. The pension scheme where I worked was only open to management so I was starting a personal scheme. She claimed I got a higher salary in exchange, but when we checked her pay was higher (by £200pa). I had started working a year before her so it wasn't a matter of seniority. I was also getting a lot of overtime.

Just wondering what the relevance is of comparing the pay and pension of 2 people in completely different jobs?

It shows that the claim that choosing to work in the private sector gives higher pay in exchange for a poorer pension is just wrong. My job was private sector, hers was public sector. As a teacher she got similar pay and a much better pension than I did working in IT. I can't remember my exact job tile at the time - I got lots of promotions in that job. I had to change jobs to get what seemed a good pension and higher salary. But the pension wasn't as good as it appeared. Neither my first nor second employer still exist.

I do get what you're saying, but it's worth pointing out that the plural of anecdote is not data. One example doesn't necessarily mean that everyone was in a similar position. Statistically public sector pay has lagged private sector pay (ONS figures) and whilst there was an element of catching up, over the last few years the gap has been increasing again - mainly due to public sector pay restraints/freezes.

So it's not wrong I'm afraid, it's correct. 

Not sure that is correct did you see my post earlier in thus thread? Always difficult to compare the two, but the bbc article implies public sector are paid more, based on ons figures, although gap has been closing recently due to pay constraints.

nigelbb

german_keeper said:

Terron said:

german_keeper said:

Terron said:

nigelbb said:

Exodi said:

SouthCoastBoy said:

I think the next few years could highlight the massive difference between govt db, db and dc pensions
 The govt db pensions really are the gold standard when it comes to pensions.

My partner has a govt db pension, I work in the private sector and have a DC pension.

She hadn't really paid much attention to her pension (we're still relatively young) but we looked at it for the first time a couple of weeks ago and... I mean jesus wept, it is absolutely bonkers. I earn about 60% more than her (and contribute equivalently), yet her pension is likely to be 4x+ mine.

While we might be able to go on the odd holiday every other month on mine, her pension could easily see us on a cruise every month with spending money.

I heard the stereotypes about public sector pensions, but as a private sector worker, your eyes will water if you see the actual numbers behind them.

You don't contribute equivalently. You have chosen to work for a higher salary & poorer pension. It's always been the way with public sector jobs. The old deal was that working in the public sector was a lower salary with a good pension plus secure employment but now even the jobs of nurses & teachers aren't safe from redundancy.

No it hasn't. In the mid 80s my sister was a a teacher whilst I was working in the private sector in IT. The pension scheme where I worked was only open to management so I was starting a personal scheme. She claimed I got a higher salary in exchange, but when we checked her pay was higher (by £200pa). I had started working a year before her so it wasn't a matter of seniority. I was also getting a lot of overtime.

Just wondering what the relevance is of comparing the pay and pension of 2 people in completely different jobs?

It shows that the claim that choosing to work in the private sector gives higher pay in exchange for a poorer pension is just wrong. My job was private sector, hers was public sector. As a teacher she got similar pay and a much better pension than I did working in IT. I can't remember my exact job tile at the time - I got lots of promotions in that job. I had to change jobs to get what seemed a good pension and higher salary. But the pension wasn't as good as it appeared. Neither my first nor second employer still exist.

But it's 2 completely different jobs. My brother in law works in the private sector and earns about 4 or 5 times what I do (or did) but his is also a completely different job to mine so the comparison is irrelevant.

There is the added twist that some occupations are either exclusively public sector (police, military) or overwhelmingly public sector (doctors, teachers, social workers etc).

Prism

I have a private sector job (trainer) that is broadly similar to a public sector job (teacher or lecturer). Both roles learn and keep knowledge up to date, are considered experts in their field of knowledge, prepare courses and teach. There are differences in the audience/age group. In this case the private sector pays typically pays significantly more than the public sector however the public sector role gets roughly a 20-25% employer pension contribution whereas my private sector employer contribution is 5%.

bluearmy18

Hi All, I have just joined this forum as I am 4/5 years from (hopefully) retiring at 62/63, fingers crossed. 

I am absolutely amazed that people (except for the post regarding 1.2 million,) are considering either themselves rich or another poster is rich or well off.  the private sector/public sector comparisons are also bizarre, as are the "your pension is better than my pension" comments, they are just as baffling. 

If you have saved & done your best to provide for yourself, and you family during your retirement, well done. You should pat yourself on the back...     

the State pension (and the other payments attached) are not a right or benefit, we have all paid for it through (probably) 45+ years of hard work & taxes paid. But I'm sure we all know that.... 

This post is now so far from the original question/comment.

drummersdale

Yes I agree so I’ll still take a punt at 10% 

hyubh

bluearmy18 said:

the State pension (and the other payments attached) are not a right or benefit, we have all paid for it through (probably) 45+ years of hard work & taxes paid. But I'm sure we all know that....

The state pension is a 'contributory benefit' in law. Although, that doesn't particularly mean much - a final salary or CARE scheme will refer to its pensions as 'benefits'. (Mildly curious why you're so down on rights though...!)

This post is now so far from the original question/comment.

Ha ha, we should all agree on that 

JoeCrystal

bluearmy18 said:

I am absolutely amazed that people (except for the post regarding 1.2 million,) are considering either themselves rich or another poster is rich or well off.  the private sector/public sector comparisons are also bizarre, as are the "your pension is better than my pension" comments, they are just as baffling.

I think it is more of an issue that public sector pension schemes are not widely appreciated on how valuable they are. The number of posts I have seen do not see the point of paying into public sector pension because it costs too much or they want a holiday or wedding, so asking if they should opt out instead. Indeed, many posts do not understand how their pension scheme work, thinking it is a pot of money rather than an annual unlimited index-linked pension for life.

I can vaguely recall a long time ago on this forum, several generations ago, that one police officer was deeply unhappy about how much they were paying and spent a lot of time arguing with posters here over the value and that it is pointless paying into it and so angry about how expensive it is despite how amazingly generous it is.

The truth is that for most public sector pension schemes, the taxpayers who funded these pensions for life, basically deferred wages, and the share of the pension cost to the Treasury will ever go higher.

The trouble is that the Treasury will almost certainly think it is a lot cheaper to run these schemes since closing them and replacing them with DC pension contributions would skyrocket in the short term (especially if they decide to 2:1 matched contribution up to 10% so 30% overall into a DC pension scheme along with slowly winding the public sector pension schemes over this century and during 2100s.

Beside, I understand that some academies withdrew from the TPS scheme since the employer's contributions are so expensive for these schools. Having said that, I remember reading that many employers whose staffs who still retains LGPS after getting TUPE'd realise that it is cheaper to pay the employer's contribution since LGPS will ask many multiples of the cost to be allowed to be withdrawn.

After all, it was only two years ago that the US government finally stopped paying an American Civil War pension!

hugheskevi

JoeCrystal said:

I think it is more of an issue that public sector pension schemes are not widely appreciated on how valuable they are.

It doesn't really help that there are so many different numbers in play which makes it very hard for anyone not versed in pensions to understand what is going on. For the Teacher's Pension Scheme:

• The cost to the employer for newly accruing benefits, as calculated by Scheme Actuary is 13.1% of pensionable earnings
  
• The employer contribution rate is 23.68% of pensionable earnings
• The cost to the employer on an accountancy basis (IAS 19) is 56.3% of pensionable earnings
• Some commentators will also calculate the cost on a full-buy out basis (ie roughly based on gilt yields) which is a bigger number again.
• And some will use annuity rates for the financial comparison, which is an even larger number (although it is an overestimate given it includes profit and RPI linking)
  

13.1% isn't really a huge benefit - well worth having, but not enormous, whereas 56.3% is very much a huge benefit.

Grumpy_chap

JoeCrystal said:

I think it is more of an issue that public sector pension schemes are not widely appreciated on how valuable they are. 

I think that is entirely true.

I also thing that public sector employers could do more to promote the value as part of making their employment package more attractive.

When applying for a new job in the private sector, the employer will be very adept at emphasising the value of the salary package and the need to consider the package as a whole, not just the base salary figure.  In many cases, the two big-number add-ons are pension and car / car allowance.

A few years back, I applied for a job in the public sector and the salary was lower than it needed to be. 
HR then said "don't forget to consider the extra £18k of benefits that we offer - it's not just the salary". 
An extra £18k was enough to seal the deal for me, so I responded "no-one had mentioned any further benefits up until now, what are they please?"
HR simply floundered and blustered and went "well, erm, er, well, it's just the extra value of working for a great employer like us" (or something equally vague and meaningless).

My one example does not necessarily reflect common practice but it is all I have to go on.

Nebulous2

JoeCrystal said:

bluearmy18 said:

I am absolutely amazed that people (except for the post regarding 1.2 million,) are considering either themselves rich or another poster is rich or well off.  the private sector/public sector comparisons are also bizarre, as are the "your pension is better than my pension" comments, they are just as baffling.

I think it is more of an issue that public sector pension schemes are not widely appreciated on how valuable they are. The number of posts I have seen do not see the point of paying into public sector pension because it costs too much or they want a holiday or wedding, so asking if they should opt out instead. Indeed, many posts do not understand how their pension scheme work, thinking it is a pot of money rather than an annual unlimited index-linked pension for life.

I can vaguely recall a long time ago on this forum, several generations ago, that one police officer was deeply unhappy about how much they were paying and spent a lot of time arguing with posters here over the value and that it is pointless paying into it and so angry about how expensive it is despite how amazingly generous it is.

The truth is that for most public sector pension schemes, the taxpayers who funded these pensions for life, basically deferred wages, and the share of the pension cost to the Treasury will ever go higher.

The trouble is that the Treasury will almost certainly think it is a lot cheaper to run these schemes since closing them and replacing them with DC pension contributions would skyrocket in the short term (especially if they decide to 2:1 matched contribution up to 10% so 30% overall into a DC pension scheme along with slowly winding the public sector pension schemes over this century and during 2100s.

Beside, I understand that some academies withdrew from the TPS scheme since the employer's contributions are so expensive for these schools. Having said that, I remember reading that many employers whose staffs who still retains LGPS after getting TUPE'd realise that it is cheaper to pay the employer's contribution since LGPS will ask many multiples of the cost to be allowed to be withdrawn.

After all, it was only two years ago that the US government finally stopped paying an American Civil War pension!

The treasury / government seems to be adept at short-term planning at the expense of the longer-term,  to fit the electoral cycle. I was quite surprised that they were willing to go the other way with Royal Mail and take on all the future liabilities to get their hands on the cash / investments in the pension fund.