British Public Sector Strikes

[HksDrifter]

Who cares about all the little details about it all I care about is a free day of school which means more time to drift

 

[MatskiMonk]

I've never understood how pensions work. Do you get all the money back that you pay in, or does it depend on how long you live/when you retire? Surely pension contributions should cover 100% of the pension pot (i.e. not having to be supplemented by the government) and if they don't, there is something fundamentally wrong in that system.

I've always though that it would be better to set money aside myself in a savings account instead of paying into a pension pot, or are pension contributions compulsory?

I would like to support the strike action, in principle as they are being royally screwed by these reforms. But my lack of understanding of pensions means i'm really just sitting on the fence, as I've only heard one half of the story.

Anyways, a quote that somebody posted on facebook:



I think this taps into much deeper problems within a free market economy, pay is disproportionate to the work people do. Anyone who questions this is accused of being a hypocrit for wanting something for nothing, or a communist who wants to destroy democracy and civilisation as we know it.

Back to pensions, everybody should get out what they pay in. But because it's based on earnings, those in lower income brackets i'm guessing have to be supplemented as they do not earn enough for a decent living standard even when they work, never mind when they retire.

A pension fund is an investment, like any investment it can go up or down in value.

 

[Famine]

Who cares about all the little details about it all I care about is a free day of school which means more time to drift

I think the 2 million people striking, the 17m public sector workers and everyone else who pays for their pensions do. Who cares about what you do with your free time?

 

[arora]

Who cares about what you do with your free time?

Everyone on facebook

 

[Seismica]

They don't. That's pretty much the problem.

Say you have a cushy public sector pension. You'll be paying in about 7% of your salary and, when you retire, you'll get two thirds of your finishing salary. Inflation makes this calculation a bit awkward, but let's assume you retire today, aged 55, on £60k with a full public sector pension.

Two things here. First, you'll get a salary of £40k for the rest of your life, adjusted for inflation (but not deflation). That's £3.3k a month gross (remember that your tax band will change at 65 too, so net will be variable). The second and more important thing is that your last pension payment will have been £350 in your last month of employment before retirement. You should already be seeing that there's a problem with the figures here... Paying in £350pcm on your top salary but getting out £3.3k pcm for life? A private pension at the same level of contribution would pay out just £6k per annum for life...

So let's look at the entire term of your employment. You'll have been employed for about 30 years and, in 2011 pounds (because inflation screws with you again), you'll have started on about £16k. With increments and promotions you're looking at a lifetime earnings of about £750k (an average salary of £25k over your career). At 7% contributions you'll have paid into your pension a grand total of... £52,500. You will get that back inside fifteen months of retirement, but they keep on paying you as long as you live. Say you live, like an average Joe, until you're 78 - the taxpayer will give you £920,000 (less tax - which drops like a rock at 65) in 2011 money (rising with inflation) when you've only paid in £52,500 in 2011 money! No wonder they want to keep it!

Now that's just one average guy starting on an average civil servant entry wage today - he results in a net loss to the Exchequer of just over £850k. Half of the people employed in Britain today - which is 35m people - are employed in the public sector. 17m people each taking £850k out of the pot adds up to a lively £14.5 trillion in 2011 money! No wonder they want to get rid of it!

Public sector pensions have been unsustainable for a decade. They just weren't touched until now...



By my math, your public sector pension contributions form about 4% of the pension you receive (an average lifetime contribution of £145pcm compared to an average monthly receipt of £3.3k). If you live for 15 months or less after retirement you will not get out all that you put in. If you live for more you will get out many times over what you put in - 16 times on average, making your contribution just 6% of your pension. The rest comes from the taxpayer.

That is... simply staggering. I thought pensioners were hard done by, but two thirds of your finishing salary?

I still don't think Teachers are paid enough, but pensions at that level are astronomical considering the amount paid in. The extent to the reforms proposed is a big change, but the existing pension is simply too much, at least for those in higher wages.

Am I right in saying that the way it is, nobody, regardless of what they earned whilst working, has contributed enough to cover their pension for more than 1-2 years?

If over 90% of it is from the tax payer, why is it proportional to earnings when the contributions clearly don't reflect that?

The current pension system is making my brain hurt. Who in the world thought that it was a good idea...

 

[Famine]

Everyone on facebook

No, they just 👍 Like it.

It is obscene just how much taxpayer money is thrown at public sector pensions. It makes the national debt, the colossal money pit that is the NHS, MP salaries and expenses, every single public building project or IT upgrade overspend and the entire benefits system look like chump change. We could run NASA with it...

That is... simply staggering. I thought pensioners were hard done by, but two thirds of your finishing salary?

It depends on the sector - and when you joined. The police get two thirds but that was cut to just over a half in a 2008 review for new recruits. Firemen get two thirds. Teachers got a little over a half with a "golden handshake" of their salary + 20%. The golden handshake has gone, but the pension has gone up.

Ultimately the British taxpayers pay about £20bn a year - the budget of NASA - into public sector pensions after tax deductions have been made from the pension payouts themselves.


Yes, really.

 

[Seismica]

No, they just 👍 Like it.

It is obscene just how much taxpayer money is thrown at public sector pensions. It makes the national debt, the colossal money pit that is the NHS, MP salaries and expenses, every single public building project or IT upgrade overspend and the entire benefits system look like chump change. We could run NASA with it...

If everything you said is true (I'm guessing it's fairly accurate ) then that means some people are earning more in retirement, for not working, than most people are getting for working. It seems a bit backwards to me. I've known people saying "I've worked hard all my life and this is all I get?", but... you were paid for your hard work...? What justifies somebody getting a higher pension (beyond their own contributions, which is proportional to earnings) for the same amount of work? (i.e. none)

I thought this strike was justified, but the entire basis of it relies on the fact that they are entitled to money which goes well beyond what they contributed. I have a suspicion that somebody who lives until their 90s gets more back than they paid in taxes, ever.

 

[Famine]

Well... they do pay tax on their pensions too (though at the over 65 rate, which is lower), but yes. A teacher who works 30 years, finishing on £40k in 2011 money gets a £22k pension salary. For life. Since they'll have only paid £50k into their pension, they'd get it all back in 2.5 years and we'd pay them for the rest of ever. They'll have paid about £270k in income tax over the course of their life, which they'd get back (taking tax on their pension into account) in 15 years. So by the time a retired teacher is 73, they'll be in net profit...

Shorter for a fireman (especially if he keeps on doing that taxi round on the side).

 

[Dotini]

To fix this will involve breaking promises and contracts - something of a slippery slope?

Respectfully,
Steve

 

[Famine]

Nope - that would be illegal. Everything up to the date of the change is as it is (or was) - no-one's losing out on what they've put in and what they'll get out for those contributions is what they expect. All that changes on the date of the change - whatever the change is - is everything after it.

To someone who's entered the public sector recently and is young (under 25), this is quite bad - they'll be paying more and for longer into a pension that is worth far less. To anyone who has been a public sector worker for some time, they'll not be seeing as much money but it's not significant. To someone who is close to retirement, almost nothing will change.

 

[Touring Mars]

But I wonder, what would JC do?...

 

[Nessy]

I know there is'nt much sympathy towards the public sector pensions from a private sector standpoint, which i suppose is quite understandable really.

My partner works for the public sector (TBH she is the breadwinner of the household), and with the changes set to take place, she stands to have to increase her public pension payments from £200 to £300 come the beginning of next year... that's quite a jump considering we're both living close to our means... on top of that, there's a 50% chance she could be made redundant come march next year, and as well as that she Will be losing her skill shortage/on-call pay, aswell as a 2 year pay freeze and essentially a 3% pay cut... basically she stands to be about £9000 a year worse off aswell as working harder (due to lack of staff in her department and working unpaid overtime).

Not really looking for sympathy... it's just that with regards to pensions, it's not all just about the end game, for my household it's about the immediate effects more than anything.

 

[Famine]

she stands to have to increase her public pension payments from £200 to £300 come the beginning of next year...

They are not compulsory and they are opt-in programs.

on top of that, there's a 50% chance she could be made redundant come march next year, and as well as that she Will be losing her skill shortage/on-call pay, aswell as a 2 year pay freeze and essentially a 3% pay cut... basically she stands to be about £9000 a year worse off aswell as working harder (due to lack of staff in her department and working unpaid overtime).

This has all already happened to the private sector - including the ravaging of the private sector pension schemes by the last government...

it's just that with regards to pensions, it's not all just about the end game

That's what pensions are - the end game.

Putting in £200 to a public sector pension scheme means a pension worth about £22k a year. Putting in £200 to a private sector pension scheme means a pension worth about £6k a year. If she's now going to be putting in £300 to a public sector pension scheme for a £22k pension (though bear in mind whatever she's already put in will return at the rate she expects) she's still outperforming a private sector one of similar contribution levels by 250% and it's an opt-in program she's chosen to be a part of and can opt out of.

 

[Nessy]

Famine,

I'm just pointing out the immediate effects.. not just the pension payments but the other stuff on top of that (really bad timing).
Another thing i'd like to point out, is that alot of the private sector love to complain about the public sector pensions, but fail to grasp the fact that most public sector workers get paid far less for the job they do than they would if they we're doing the same job in the private sector... so for many, this whole pension thing is a bit of a trade off..
: private sector job pay = good.. pension = poor.
: public sector job pay = poor.. pension = good.

 

[Nessy]

This has all already happened to the private sector - including the ravaging of the private sector pension schemes by the last government...


with regards to this, you're preaching to the choir.. i've been made redudant twice of recent times due to the ravaging of the private sector.

 

[Famine]

I'm just pointing out the immediate effects.. not just the pension payments but the other stuff on top of that (really bad timing).

That the private sector already went through.

Another thing i'd like to point out, is that alot of the private sector love to complain about the public sector pensions, but fail to grasp the fact that most public sector workers get paid far less for the job they do than they would if they we're doing the same job in the private sector...

This is the bit of the Hutton Report that public sector workers love to ignore. Fact is that it's just plain not true - there is no salary penalty for working in the public sector compared to the private sector. In April 2011, the average private sector salary was £455pw (up 1.6% from April 2010), but the average public sector salary was £473pw (up 2.2% from April 2010).

so for many, this whole pension thing is a bit of a trade off..
: private sector job pay = good.. pension = poor.
: public sector job pay = poor.. pension = good.

The reality is that the public sector pays the same as the private sector, but the private sector doesn't have the final salary-linked pension that the public sector does.

Public sector pensions have been unsustainable for a decade - or more. It's unsurprising that public sector workers want to keep them given just how much they outperform private sector pensions.

 

[Nessy]

This is the bit of the Hutton Report that public sector workers love to ignore. Fact is that it's just plain not true - there is no salary penalty for working in the public sector compared to the private sector. In April 2011, the average private sector salary was £455pw (up 1.6% from April 2010), but the average public sector salary was £473pw (up 2.2% from April 2010).


Not with regards to my partners profession.

The equivalent private sector job can pay up to nearly double the amount.. it's just the risk involved with being an independent expert (no guarantee of steady work load) that stops my partner from choosing this route..

 

[Famine]

Not with regards to my partners profession.

The keyword was "average" - and the keyword in your post was "most":

most public sector workers get paid far less for the job they do than they would if they we're doing the same job in the private sector

Which isn't true - the average public sector worker gets paid more and has had a higher rise in income over the last 12 months. It's in the Hutton Report.

Specific cases may buck the trend, but they aren't relevant. "Most" public sector workers get paid as much as their private sector colleagues, not "far less" at all.

The equivalent private sector job can pay up to nearly double the amount.. it's just the risk involved with being an independent expert (no guarantee of steady work load) that stops my partner from choosing this route..

I just want to reconfirm a point to you. A £300pcm public sector pension over 30 years pays £22k a year (net) at retirement (more for a copper). A £300pcm private sector pension over 30 years pays £6k a year (net) at retirement. That's more than triple the pension and it's sourced from other people's money rather than your own contributions.

I'll add that she has chosen her career path and has chosen how much money she contributes to the pension scheme she has chosen to contribute to (the one that gets her the most money for the least contribution at the end of it). She is free to choose differently.

 

[TankAss95]

I don't really know what's going on here but one thing I do know is that the UK is pretty much doomed.
Probably goes for the whole of the EU too. Can't they understand that no one wants Germany in power over Europe (that they pretty much are)? I thought we demonstrated this in 1914 and 1939...

 

[Nessy]

Famine, you're right.. maybe i should have not used the word most.

Since we're on the subject of the Hutton report, i'd like to add this quote that i found on the BBC website:


"Isn't a pension part of the pay deal for workers?"

"To a degree, it is.

However, Lord Hutton, in his influential report on public sector pensions, says that there is no evidence that pay is lower for public sector workers to reflect higher levels of pension provision.

It remains difficult to find comparative jobs in the public and private sectors anyway.

(not in my partners case it does'nt)

He makes two other key points.

Firstly, he regards public sector pensions as far from "gold-plated".

Secondly, he says that, although some private sector employees receive less, this should not affect public sector pensions. It should not, he says, be a race to the bottom."

(end of quote)

Specific cases may buck the trend, but they aren't relevant. "Most" public sector workers get paid as much as their private sector colleagues, not "far less" at all.[/b]

On the contrary, i do believe these are relevant... well in my partners case anyway, and many others within her work department not just in her region but across many departments in the UK, not just in her profession but many different professions within the public sector.

 

[Famine]

I don't really know what's going on here but one thing I do know is that the UK is pretty much doomed.
Probably goes for the whole of the EU too. Can't they understand that no one wants Germany in power over Europe (that they pretty much are)? I thought we demonstrated this in 1914 and 1939...

That's massively irrelevant and quite xenophobic.

However, Lord Hutton, in his influential report on public sector pensions, says that there is no evidence that pay is lower for public sector workers to reflect higher levels of pension provision.

It remains difficult to find comparative jobs in the public and private sectors anyway.

It's very easy. Nurses, doctors, teachers. Plus whatever it is your wife does, apparently.

He makes two other key points.

Firstly, he regards public sector pensions as far from "gold-plated".

Secondly, he says that, although some private sector employees receive less, this should not affect public sector pensions. It should not, he says, be a race to the bottom."

There are two issues with these points.

The first is that there is no-one in Britain who would not be better off on a public sector pension even after the proposed changes than their private sector pension. And when I say "no-one" I literally mean 100% of all workers.

The second problem is that it is entirely justifiable to stop giving taxpayers' money to people who haven't earned it. The reason private sector pensions are lower is because they are based on the contributions the employee makes plus whatever their employer contributes (typically the same again, often a bit higher). The money used to pay for it comes from the people who contribute, the people who employee them, whatever's left over from premature death of people drawing the pensions and the results of investment. Public sector pensions aren't based on this - they're based on the end salary (one of the changes is to make it based on the average salary over the career) - and typically the money used for them comes from everybody else. Oh, and it's often paid to widows/widowers of the pension holder too!


It's nothing to do with a "race to the bottom", rather a prevention of an entire NASA-budget going out to people who haven't earned it. Having the last government savaging private sector pensions doesn't help generate support for a cause they see as unjustifiable and, frankly, inconveniencing everyone in the UK for a day doesn't either. Better still, striking in the face of a right-wing government - a government that'll happily privatise your industry and remove the issue altogether - is ludicruously naive.

Specific cases may buck the trend, but they aren't relevant. "Most" public sector workers get paid as much as their private sector colleagues, not "far less" at all.[/color][/b]

On the contrary, i do believe these are relevant... well in my partners case anyway

No, they aren't because I wasn't refuting that point. I was refuting the point that "most" public sector workers earn "far less" - a point you've now retracted.

 

[arora]

It's also something that comes up frequently by liberal commentators(media) here in the states, the action in Libya for instance........ "I think it's a good thing Germany did not get involved, we've all seen where that leads to" is one I saw

 

[TankAss95]

That's massively irrelevant and quite xenophobic.

Apologies.

 

[ExigeEvan]

The equivalent private sector job can pay up to nearly double the amount.. it's just the risk involved with being an independent expert (no guarantee of steady work load) that stops my partner from choosing this route..

But this can be said of almost any job in any sector. You can earn considerably more money being a private contractor but the increase in pay is countered by the loss of benefits of being part of a larger organisation (share options, health plans, transport costs).

 

[Nessy]

But this can be said of almost any job in any sector. You can earn considerably more money being a private contractor but the increase in pay is countered by the loss of benefits of being part of a larger organisation (share options, health plans, transport costs).

There is no health plan for the organisation she works for.. or share options, and for her line of work she would still have to pay transport costs (just not as much as she does now).

 

[Nessy]

Better still, striking in the face of a right-wing government - a government that'll happily privatise your industry and remove the issue altogether - is ludicruously naive.

Let's face it... i think we both know that's what's going to happen anyway, and at the hands of a government that we did'nt elect.

 

[Touring Mars]

Oops. Unison are apparently considering suing Jeremy Clarkson for saying that all the pension strikers should be shot...

Article...

Incidentally, what geniuses at the BBC thought that having Clarkson on a live interview on the day of the strikes, and asking him his opinion on the matter, was going to end well?

 

[TankAss95]

Oops. Unison are apparently considering suing Jeremy Clarkson for saying that all the pension strikers should be shot...

Article...

Incidentally, what geniuses at the BBC thought that having Clarkson on a live interview on the day of the strikes, and asking him his opinion on the matter, was going to end well?

+1
Especially considering Jeremy Clarkson wants the whole of the UK covered in Tarmac.

 

[ExigeEvan]

Oops. Unison are apparently considering suing Jeremy Clarkson for saying that all the pension strikers should be shot...

Article...

Incidentally, what geniuses at the BBC thought that having Clarkson on a live interview on the day of the strikes, and asking him his opinion on the matter, was going to end well?

My mam went in a blind furry and grabbed the TV remote and turned over. My dad and I just chuckled, got her, hook line and sinker.

 

[Encyclopedia]

Incidentally, what geniuses at the BBC thought that having Clarkson on a live interview on the day of the strikes, and asking him his opinion on the matter, was going to end well?

Also I can't believe anyone would take what Clarkson says seriously.