Public Sector Pensions

For all the talk of reducing departmental budgets by 25% or even 40% the area that will really cripple this country if left un checked is public sector pensions.

A Commision has produced a report that has given the following recomendations:

- Pensions should accrue benefits at one 80th of final pay for every year employees were a member of the scheme, not one 60th. This would cut the cost by £10bn a year

- Increasing the pension age from 60 for some to 65 for all members, saving £5bn a year

- A short-term option of increasing employee contributions by 2%, raising up to £2bn a year

- Consideration of hybrid schemes of defined benefit and defined contribution pensions

This is the area of reform that will be most fiercely opposed by the Unions, but it is the area that needs to be reformed none-the-less.

coupled with an increase in salaries it might be more pallatable (sp) imo. any cuts/savings need to start with a culling of the people who create extra work to justify their own existences imo. they know who they are and sadly they are now busier than ever trying to deflect attention from themselves. it's all ****ed up in the middle not at the coal-face.

there are lights that need to be turned off and i do not mean of the electrical type.

off to WORK now.

ttfn

The only way that extending the retirement age will save money is if some of the members die in service between 60 & 65, otherwise all it does is delay payment, rather than cut it. They will also work an additional 5 years, thus increasing the number of 60ths or 80ths of salary they receive as their pension & lump sum.

Not quite. The average life expectancy of men is 75 and women 80 in the UK. Assuming those 60-year olds that they're talking about retire at 65 instead, then this would cut a male pension bill by a third and a female pension bill by a quarter. A much bigger saving than an extra 5/60ths or 5/80ths of their full wage. In any case, in a final salary scheme there's usually a maximum (typically 50%) of the final salary achievable, so many long-term employees (30 or 40 years) have reached their maximum contribution level anyway by the time they're 60 and are then unlikely to significantly increase their salary on which the final pension is calculated.

Should men get bigger pensions than women seeing as they will live five years less (on average), it seems to me that men are subsidising the pensions of the women.

Men do get a better deal than women when buying annuities with private pensions - especially if they're smokers or have histories of heart problems.

It is strange that the press do not report that the majority of public sector workers are women in low paid jobs .There are some civil servants and managemen tin local government who continue to do very nicely,the majority of us get screwed by whatever mob are in government .No one seems to mention that the employers did not worry about the pensions black hole when they took payment holidays for a number of years

For all the talk of reducing departmental budgets by 25% or even 40% the area that will really cripple this country if left un checked is public sector pensions.

 

A Commision has produced a report that has given the following recomendations:

 

- Pensions should accrue benefits at one 80th of final pay for every year employees were a member of the scheme, not one 60th. This would cut the cost by £10bn a year

 

- Increasing the pension age from 60 for some to 65 for all members, saving £5bn a year

 

- A short-term option of increasing employee contributions by 2%, raising up to £2bn a year

 

- Consideration of hybrid schemes of defined benefit and defined contribution pensions

 

This is the area of reform that will be most fiercely opposed by the Unions, but it is the area that needs to be reformed none-the-less.

Errm. Most public sector pensions are based on 80ths, not 60ths, already.

And the retirement age has already risen in many schemes, for new entrants at least.

Public sector pensions may be the latest whipping boy for the Tory press, but not all are underfunded.

K.

Some public sector pensions are overly generous, but many are not.(teachers get 1/80th for each year worked. New entrants get this at 65, existing at 60. Contibutions are 6 % of salary)

maybe maintaining reasonable public sector pensions will incentivise private sector firms to keep or start up decent schemes to help recruit the best staff.

Would be nice.

maybe maintaining reasonable public sector pensions will incentivise private sector firms to keep or start up decent schemes to help recruit the best staff. Would be nice.

No need to incentivise the private sector as they are being forced to do it from 2012 (as the Stakeholder Pension idea never really took off)

Here is the latest advice from the Pensions Regulator:

You must provide a pension scheme for your workers from 2012 and make an employer contribution towards it. Even if you already offer pension arrangements for your workers, you will still have some new obligations to meet. The pension scheme that you provide must meet a number of conditions based on the level of contributions paid or the benefits received. Membership of the scheme must be automatic for certain workers, known as ‘eligible jobholders’. Because these people will not have to do anything to join the scheme, the process is known as ‘automatic enrolment’. Most of your workers are likely to be included in the automatic enrolment process. They can choose not to be in the scheme if they want to, by actively ‘opting out’.

If you already have a pension scheme, you may be able to use it if it meets certain qualifying conditions.

An introduction to work-based pension changes

Work-based pensions are being reformed to encourage more people to save for their retirement. As an employer you are likely to be affected by the reforms.

What are the changes?

Work-based pension scheme. An arrangement you make to provide your workers with an income for when they retire.

Worker

A ‘worker’ is a wider category than just employees and can include some contractors or agency workers.

As a general rule, if you have to pay the national minimum wage to someone, or they are working under an apprenticeship, they are a worker.

Eligible jobholders

Workers you will need to automatically enrol are known as ‘eligible jobholders’. These are workers who:

• earn more than £5,035 a year (this figure will be reviewed again in 2012);

• are aged between 22 and state pension age; and

• work in Great Britain.

For more info, see www.tpr.gov.uk/news

Generous pension provisions used to balance out lower pay in the public sector but this pay difference has gone nowadays.I doubt if any Private Company will be offering anything other than money purchase schemes in 10 years time. Unfortunatly it can only be right that Public sector pension's suffer the same fate, as it is workers in defined benefit plans that will be largely financing them.

Do not blame the new Govt for the mess our pensions are in, before 1997 our pension provisions were amongst the best in the world.

Some public sector pensions are overly generous, but many are not.(teachers get 1/80th for each year worked. New entrants get this at 65, existing at 60. Contibutions are 6 % of salary)

 

maybe maintaining reasonable public sector pensions will incentivise private sector firms to keep or start up decent schemes to help recruit the best staff.

 

Would be nice.

nah, not gonna happen, we are on a race to the bottom, they gonna shaft the bottom 75%'s quality of life as much as possible

so, as a public sector worker serving the emergency services, i will be expected to work longer, pay more, and get less money at the end? While struggling to make ends meat as a lone first time buyer?

Good ol Tories eh

nah, not gonna happen, we are on a race to the bottom, they gonna shaft the bottom 75%'s quality of life as much as possible

sad to say, but I'm sure you are right.

Thinking might go:

pensions (state pension and occupational) can be taken apart because

THe bottom 50 % have only the state pension and thus no choices or influence.

of the next 40 % at least half (the public sector and the better paid in the private sector)will have a pension that provides something that is liveable, if not great. Of the others in the top 40 % a certain number will inhereit/get lucky /downsize/or just have to lump it.

And the top 10% are sitting pretty, as ever.

incidentally, it would be really interesting to see some real analysis on what will really happen if working age pushes up towards 70.

unless there is a real labour shortage, the inescapable conclusion is that the total labour pool will grow, keeping down wages, and that youngsters will spend more and more time and (borrowed) money chasing ever higher paper qualifications to get into "graduate" jobs.

Time to stand and fight.

sad to say, but I'm sure you are right.

 

Thinking might go:

 

pensions (state pension and occupational) can be taken apart because

 

THe bottom 50 % have only the state pension and thus no choices or influence.

 

of the next 40 % at least half (the public sector and the better paid in the private sector)will have a pension that provides something that is liveable, if not great. Of the others in the top 40 % a certain number will inhereit/get lucky /downsize/or just have to lump it.

 

And the top 10% are sitting pretty, as ever.

 

incidentally, it would be really interesting to see some real analysis on what will really happen if working age pushes up towards 70.

 

unless there is a real labour shortage, the inescapable conclusion is that the total labour pool will grow, keeping down wages, and that youngsters will spend more and more time and (borrowed) money chasing ever higher paper qualifications to get into "graduate" jobs.

 

Time to stand and fight.

The trouble is there will be one, by 2034 there will be 3.5m people over 85. (1984: 660K) The additional costs in terms of pensions and health etc will be huge as the over eighty fives consume a greater proportion of public services than over age groups. There will not be enough taxpayers to generate the revenues needed.

On the up side, I will be a pensioner by then so it will be all you nippers out there keeping me in the lifestyle to which I have become accustomed.

I was privy to a cabinet release today re 'the future', it may be in the public domain already (it was not marked confidential) but I shall check before posting any details. Suffice to say I did not photocopy it as it could have totally ruined my weekend had I read too much.

Promise to post if safe. Or hint at if not.

My pension is in the private sector.

40/60ths. Final Salary (average final 12 months) option to go at 60. Non contributory. Added 5 years service if redundancy (incl voluntary) after 50. Also if I die wife gets 2/3rds of my pension.

Not suprisingly I took voluntary redundancy at 51 after 33.5 years service. 5 years added. so 38.5/60ths. No further reduction for fact I was getting it from 51.

Since I went in Dec 2003 the firm have started to take contributions from salary of 5%, then did away with 5 year added service, then Government extended earliest it could be taken to 55 and now they are closing the scheme to existing members.

How lucky I was to get an opportunity to go when I did. Don't need to work again.

My pension is in the private sector.

 

40/60ths. Final Salary (average final 12 months) option to go at 60. Non contributory. Added 5 years service if redundancy (incl voluntary) after 50. Also if I die wife gets 2/3rds of my pension.

 

Not suprisingly I took voluntary redundancy at 51 after 33.5 years service. 5 years added. so 38.5/60ths. No further reduction for fact I was getting it from 51.

 

Since I went in Dec 2003 the firm have started to take contributions from salary of 5%, then did away with 5 year added service, then Government extended earliest it could be taken to 55 and now they are closing the scheme to existing members.

 

How lucky I was to get an opportunity to go when I did. Don't need to work again.

I dont know, all this public sector gravy train, they should be more like the private sector....oh.

Apologies if already posted and it's a week or two ood but in a nutshell:

http://www3.hants.gov.uk/getdecisiondocumentfile?item_doc_ID=4501&file=5%20Effici%20&%20Expenditure%20reduction.pdf&type=pdf

For all the talk of reducing departmental budgets by 25% or even 40% the area that will really cripple this country if left un checked is public sector pensions.

 

A Commision has produced a report that has given the following recomendations:

 

- Pensions should accrue benefits at one 80th of final pay for every year employees were a member of the scheme, not one 60th. This would cut the cost by £10bn a year

 

- Increasing the pension age from 60 for some to 65 for all members, saving £5bn a year

 

- A short-term option of increasing employee contributions by 2%, raising up to £2bn a year

 

- Consideration of hybrid schemes of defined benefit and defined contribution pensions

 

This is the area of reform that will be most fiercely opposed by the Unions, but it is the area that needs to be reformed none-the-less.

I don't know anybody who works in the public sector on a 1/60th pension; maybe some of the bowler hat wearing civil service types in Whitehall but certainly not at the teacher/nurse level of the public sector.

And increasing the retirement age, additional contributions and hybrid schemes are old news and some are already in place for new entrants. It's a bit difficult to change things for people that are already in post as their pensions are accrued rights.

I don't know anybody who works in the public sector on a 1/60th pension; maybe some of the bowler hat wearing civil service types in Whitehall but certainly not at the teacher/nurse level of the public sector.

 

And increasing the retirement age, additional contributions and hybrid schemes are old news and some are already in place for new entrants. It's a bit difficult to change things for people that are already in post as their pensions are accrued rights.

Nor do I. In the NHS it has always been 1/80th although that's now changed. I think, for new entrants, average rather than final salary is used to reckon the pension too.

Public sector workers are just the latest favourite scapegoats of the Conservative party/Daily Mail/Daily Express/Daily Telegraph. They have joined the ranks of immigrants and the poor as people it is acceptable to moan and whinge about.

Less hate, more love.

/\

What Wilko said....

The public will soon start moaning when their bins aren't emptied or their children don't get educated or their passports take 6 months to process if indeed they can even get in the air at the airport because Air Traffic Control has been decimated....

Happy days....

/\

 

What Wilko said....

 

The public will soon start moaning when their bins aren't emptied or their children don't get educated or their passports take 6 months to process if indeed they can even get in the air at the airport because Air Traffic Control has been decimated....

 

Happy days....

All areas which are crying out for productivity improvements :-)

Dune I think you are wrong about public sector pensions. yes there are those at the very top and civil servants who get a huge whack however those in the lower paid jobs and middle range jobs get small pensions . if you think 15K a year pension is a lot for 43 years service then you have not done your full homework . Oh Teachers do well out of pensions but they are a law unto themselves.

Where the public sector should cut costs is to revisit the generous sickpay that is on offer. 6 months full pay and sicks months half pay for someone with 5 years service, and they only have to be at work ashort while before they go back to 6 full and 6months half pay. The public sector wuld save billions and I mean billions if the were more aggressive in dealing with sickness absence and reducing sickness allowance thugh the unions would get very upset at this. Yes there is genuine sickness but most of the ones I deal with are conning so and so's

I can only dream of having a pension. But it is a moot point really as the entire economy and political arena is going to change out of all recognition over the next 20-50 years. The country is not going to get richer, that is a myth. We are going to have to downsize, power-down, re-localise and radically adapt to a world with scarce resources and dwindling energy supplies coupled with the Orient and India in the ascendancy. Our time in the limelight is now over, we are now regressing to a much simpler and poorer society where pensions are a thing of the past.

I can only dream of having a pension. But it is a moot point really as the entire economy and political arena is going to change out of all recognition over the next 20-50 years. The country is not going to get richer, that is a myth. We are going to have to downsize, power-down, re-localise and radically adapt to a world with scarce resources and dwindling energy supplies coupled with the Orient and India in the ascendancy. Our time in the limelight is now over, we are now regressing to a much simpler and poorer society where pensions are a thing of the past.

Agree with this. Which is why I moved to Aus - but the same problems are just around the corner here too. But at least it's warm and sunny in Brisbane

Dune I think you are wrong about public sector pensions. yes there are those at the very top and civil servants who get a huge whack however those in the lower paid jobs and middle range jobs get small pensions . if you think 15K a year pension is a lot for 43 years service then you have not done your full homework . Oh Teachers do well out of pensions but they are a law unto themselves.

 

Where the public sector should cut costs is to revisit the generous sickpay that is on offer. 6 months full pay and sicks months half pay for someone with 5 years service, and they only have to be at work ashort while before they go back to 6 full and 6months half pay. The public sector wuld save billions and I mean billions if the were more aggressive in dealing with sickness absence and reducing sickness allowance thugh the unions would get very upset at this. Yes there is genuine sickness but most of the ones I deal with are conning so and so's

To be honest whilst that is a major issue you also need to factor in the many who turn up at work and are worse than useless, they really would be better staying at home. The real problem is sickness/poor performance isn't a disciplinary issue as such but is covered under "inefficiency" and it's nigh on impossible to get rid of staff on that basis and even if you do then it's a good chance the employee will take the matter to an Employment Tribunal which can be hugely expensive and even if the employer wins it is very rare that the employee will be asked to foot the costs and even then if they are it's not likely they'll be able to pay. So what happens in most cases is that the employees remain in post until they retire and then receive their pensions which are actually pretty good though as a general rule are not that excessive in comparison to the private sector.

For me the main problem is an historical one of poor recruitment procedures though they are generally tighter these days. In theory the problem should diminish as poor quality staff are reduced but bearing in mind someone could have joined the Civil Service at 16/18 they could be working for 40+ years!

Christine many of the points you raise are valid. Some Trade union stewards are so entrenched in supporting their members whatever the issue. They still see any indiscretion by their members as an optunity to slate manegement. Some are good and you can resolve matters through off the record dicussions but sadly there are to few and want to blame management or challenge them at all costs.

Dealing with ineffeciency is another problem Yes you can have fair and agreed procedures in place but when the employee goes running to an ET. The common sense and fairness aspect of how the employer has dealt with the situation goes out of the window. Instead legalistical arguments take precedence. Yes there are some very bad employers but there are far more bad employees making claims for trivial matters for which they are responsible for. Employment law has become to complicated with some laws all but Cancelling out the man on the no Clapham omnibus concept ( A resonable educated and intelligent person with no specialist knowledge) who that Lord Greer and Later Lord Dennison used in their employment judgements . Bringback common sense .