Rhetoric media on state gold plated pensions

SouthCoastBoy

Prism said:

JoeCrystal said:

Andy_L said:

CorseyEdge said:

dunstonh said:

frugal90 said:

Don't think mine is especially gold plated. I worked as a teacher in middle management for 36.25 years. Pension is £22800 per year plus I got 3 times as a lump sum. Fortunately married to retired teacher , so comfortable compared to many.

It is the deal we signed up for. Those that complain go and do 36 plus years at the chalkface.

To get that equivalent in the private sector, using a DC scheme, you would need to have paid around 25-30% of your salary (including employer contribution).

The comparison of just pension equivalence could be seen as quite a narrow economic view of the teaching profession's impact to our society. If we continued to pay teachers £20-45k pa (headteachers £50-80k) and then asked them to contribute 25% of salary how many teachers would we have... less of them or more??

Today's public servants contribute 6-10% (teachers ~7-11%), the 'employer' contributes around double that, that being the private industry standard. There's your 25-30%

I don't think that the private industry standard is employers contributions of 2x the employee's. Do you have a citation for that? 

Especially when the private industry standard is 3% from the employer and 5% from the employee based on the amount above the qualifying earnings limit. Even major companies try to get away as little as possible; Amazon, for example, only match 5%, so 10% overall. I believe Tesco only contributes 7.5% maximum as an employer as well.

Pension provision is undoubtedly one of the most crucial aspects to look out for when applying for new jobs in my case.

I don't think it matters too much what the employer contribution is as a % - its more about the total package of salary plus that contribution. My company pays in 4% flat but using salary sacrifice you can adjust that to be almost any split that you want.

Not sure I agree with that,, the bigger percentage the employer makes the more money you receive from the employer. If you have free cash then sure you can augment the final percentage figure, but there is an additional cost associated with it, not everybody can afford to do that

hugheskevi

Prism said:

I don't think it matters too much what the employer contribution is as a % - its more about the total package of salary plus that contribution. My company pays in 4% flat but using salary sacrifice you can adjust that to be almost any split that you want.

If the employer refunds 100% of employer National Insurance savings on salary sacrifice, it doesn't matter at all what the employer contribution is, as that enables an individual to choose the pay/pension balance and still obtain all the efficiency of employer contributions.

The exception would be very low earners, those at or close to minimum wage - in those cases the remuneration package may not be so flexible due to the minimum wage constraint and so those workers may benefit from an employer offering a standard, high employer contribution rate. However, where statutory minimums aren't an issue then higher employer contribution rates just limit the ability of employees to choose their pay/pension balance. 

However, there is a strong perception that paying the statutory minimum is bad, so employers may be reluctant to do that even if it may be the theoretically most efficient approach for their employees. All the research I've seen suggests most employers want to pay what is typical within their industry sector.

Prism

SouthCoastBoy said:

Prism said:

JoeCrystal said:

Andy_L said:

CorseyEdge said:

dunstonh said:

frugal90 said:

Don't think mine is especially gold plated. I worked as a teacher in middle management for 36.25 years. Pension is £22800 per year plus I got 3 times as a lump sum. Fortunately married to retired teacher , so comfortable compared to many.

It is the deal we signed up for. Those that complain go and do 36 plus years at the chalkface.

To get that equivalent in the private sector, using a DC scheme, you would need to have paid around 25-30% of your salary (including employer contribution).

The comparison of just pension equivalence could be seen as quite a narrow economic view of the teaching profession's impact to our society. If we continued to pay teachers £20-45k pa (headteachers £50-80k) and then asked them to contribute 25% of salary how many teachers would we have... less of them or more??

Today's public servants contribute 6-10% (teachers ~7-11%), the 'employer' contributes around double that, that being the private industry standard. There's your 25-30%

I don't think that the private industry standard is employers contributions of 2x the employee's. Do you have a citation for that? 

Especially when the private industry standard is 3% from the employer and 5% from the employee based on the amount above the qualifying earnings limit. Even major companies try to get away as little as possible; Amazon, for example, only match 5%, so 10% overall. I believe Tesco only contributes 7.5% maximum as an employer as well.

Pension provision is undoubtedly one of the most crucial aspects to look out for when applying for new jobs in my case.

I don't think it matters too much what the employer contribution is as a % - its more about the total package of salary plus that contribution. My company pays in 4% flat but using salary sacrifice you can adjust that to be almost any split that you want.

Not sure I agree with that,, the bigger percentage the employer makes the more money you receive from the employer. If you have free cash then sure you can augment the final percentage figure, but there is an additional cost associated with it, not everybody can afford to do that

What I meant was that a job with a higher salary but lower employer contribution can work out the same as a slightly lower salary and higher contribution. What is important is the total not what each element is.

SouthCoastBoy

In my experience employers will pay whatever they can get away with hence the point made earlier, "...most employers want to pay what is typical within their industry sector", ultimately employers are there to maximise profits, therefore they will try and find the percentage that keeps retention but doesn't cost them too much, hence match their industry standard so the flight risk is less.
 

zagfles

SouthCoastBoy said:

In my experience employers will pay whatever they can get away with hence the point made earlier, "...most employers want to pay what is typical within their industry sector", ultimately employers are there to maximise profits, therefore they will try and find the percentage that keeps retention but doesn't cost them too much, hence match their industry standard so the flight risk is less.
 

The problem is most employees or potential employees will look at the salary rather than the total remuneration including the pension. For instance if they were looking for a job and one paid £38k plus 10% employer pension cont, and the other paid £40k plus 3% employer pension cont, which do you think would be the most appealing?

Also if they offer sal sac, the employee can always trade pay for pension, so it doesn't really make sense to have a high employer pension cont, just have the minimum and offer a higher salary instead. Then the employee gets to choose the balance between pay and pension.

Andy_L

hugheskevi said:

Prism said:

I don't think it matters too much what the employer contribution is as a % - its more about the total package of salary plus that contribution. My company pays in 4% flat but using salary sacrifice you can adjust that to be almost any split that you want.

If the employer refunds 100% of employer National Insurance savings on salary sacrifice, it doesn't matter at all what the employer contribution is, as that enables an individual to choose the pay/pension balance and still obtain all the efficiency of employer contributions.

The exception would be very low earners, those at or close to minimum wage - in those cases the remuneration package may not be so flexible due to the minimum wage constraint and so those workers may benefit from an employer offering a standard, high employer contribution rate. However, where statutory minimums aren't an issue then higher employer contribution rates just limit the ability of employees to choose their pay/pension balance. 

However, there is a strong perception that paying the statutory minimum is bad, so employers may be reluctant to do that even if it may be the theoretically most efficient approach for their employees. All the research I've seen suggests most employers want to pay what is typical within their industry sector.

Well they are trying to compete for staff within that sector

Albermarle

For instance if they were looking for a job and one paid £38k plus 10% employer pension cont, and the other paid £40k plus 3% employer pension cont, which do you think would be the most appealing?

For an MSEr the £38K + 10% looks better, ( about £1K with the tax saving as well ) but I agree for most people they would be tempted by the higher salary, especially if they were younger.

Altior

Deliberately so I would suggest, the broadcast media never contextualises public sector pay. Essentially they lobby for the minimum equivalence with the private sector, without acknowledging the numerous additional benefits. Additional leave, early retirement, extended sick leave on full pay, fewer hours, well paid overtime, job security and others. 

As well of course, the biggest one, a DB, guaranteed, index linked pension.

Lockdown being a recent example, as those who were sent home remained on full whack, with the private sector on furlough predominately on 80%.

People choose which industry they go into, and accept their working conditions. Anyone can therefore opt to move to the public sector. 

It does stick in the craw somewhat that the mainstream ignores the numerous additional benefits of working in the public sector, and simply shouts about the base salaries received by people at the bottom of the hierarchy. 

SouthCoastBoy

"People choose which industry they go into, and accept their working conditions. Anyone can therefore opt to move to the public sector. " I am not sure that is true, where I live it is very difficult to get public sector jobs as they are generally the better paid. People can apply and try and get in, but no guarantee and therefore I would not say it is a choice. 

This illustrates some difference, https://www.gov.uk/government/news/rules-on-carrying-over-annual-leave-to-be-relaxed-to-support-key-industries-during-covid-19, between private and public sector. I work in the private sector, and we were allowed to carry a maximum of 10 days over from 2020, but they had to be used by Jun 2021. I know somebody in the public sector who has so much holiday accrued they are not going full time (4 days a week) until June 2023, this is a perfect example of why as a nation productivity is poor. 

Altior

If you were absolutely determined to get into the public sector, it could be achieved in all but the most niche of cases. The role you are willing to accept is another matter. But there is always a ladder to climb, once in the door.