Public servants: do they know why they are striking?

Halve the number of public sector workers by not replacing natural wastage.

Halve the number of M,P's

Halve the number of students

Halve corporation tax

-Double GDP. pay decent benafits

The biggest myth perpetrated by the media and politicians is that public service pensions is a NEW problem somehow linked to the recession. This elephant's been in the room for YEARS and needs taming. There'll never be a better opportunity to get it sorted.

I found this a much a better article than the previous one by Lorna Burke which seemed designed to pit Citywire readers against each other. My view is that many public sector workers accept the need for some sort of change.

Many also seem to understand the main messages from the Hutton review without understanding the detail - it is oft repeated in television interviews - work for longer, pay more in contributions and get less back in benefits. Not surprisingly with this triple whammy they are willing to strike as they beleive the Goverment is going too far too quickly. Who in their right minds would want to roll over and just accept it? So I think certain messages have got through.

There are though some advanatages to the new proposed scheme to certain members eg those whose career earnings stay fairly flat. But whose fault is that that these messages have not got through? It is the Government as their employer who are to blame. They have hardly bothered to tell them anything about what is being proposed. The message is take what's on the table or we'll make a worse offer eg as said on TV by Francis Maude and Danny Alexander(note he is a LibDem). This is such cack handed management of the work force as to be almost unbelievable but heigh ho that the ConDems for you.

"Halve the number of public sector workers "

You sure, Colin ? Half the number of teachers ? How will the next generation have a chance of understanding Pensions then ? Halve the size of the NHS ? I doubt the Private sector would pick up that much slack - you'll just end up paying them all dole money instead ...

What this article highlights is the poor quality of the communication around public sector pensions, if a private pension provider was responsible for a level of understanding that poor for a scheme they'd sold, they'd be hauled up for mis-selling...

One does not have to reduce the number of public employees accross the board, just those whose services we can do without, I am sure that we could loses most of the 1m extra jobs created under the last Government.

The Government is up against some loud Union voices who are intent on misleading their members. And many interviewers in the media including some prominent "financial correspondents" who do not understand pensions, so they are ineffective at questioning these voices.

Finally even many more successful middle managers in the public sector are ignorant about the deficit, Some I know genuinely think that it can just be written off and refuse to believe otherwise. Humans are predominantly driven by emotional beliefs - not facts - look at Greece !

As a lecturer I felt that the article was generally well-balanced and fair. However the penultimate para did really annoy me: "Actuaries calculate that the cost of providing two-thirds of final salary as a pension at retirement requires pension contributions of 15% of gross (before tax) earnings throughout a person’s working life. "

My 'lectuer pension' will pay half salary if I work 40 years full-time - and the contributions made by myself and my employer (not the Governent by the way) will exceed 15% gross. I therefore seem to have been cheated somewaht.

Please do explain how "many lower paid public sector employees will be better off because of the link to ‘career average’ earnings rather than final salary." Unless their slary is lower in their later years than in their earlier years, this cannot possibly be true.

Having heard. on Radio 4 Today this morning, Ian Duncan-Smith floundering around insisting that teahers' pensions were 'untenable' and 'unaffordable' in face of evidence to the contrary, and in apparent ignorance of waht is actually in the Hutton report, it is clear that this is just an ideological attack on the public services in the interests of impoverishing labour in order that the interests of capital may thrive. I wonder if IDS is a secret Maoist???

Completely agree,, message is not understood and the Government are doing a really bad job explaining it. Terms such as work longer payin more and get less is in fact incorrect and why people are upset. In reality it should be work longer, pay in more but get more out! (annual pension may be slightly smaller but it will be for long so you are getting more out.

Basically It just shows what we arleady know, most politicians are incompetent, have no idea of the real world or how to present and sell something

Rather than sack anyone how about putting all NON-ESSENTIAL public setor workers on a 4 day week?

Thats everyone in Whitehall. For example would anyone notice if the DTI was on a 4 day week?

Thats every Council head office employee. For example would anyone really notice if Council head office employees only worked 4 days?

Thats everyone with the words co-ordinator, equality, diversity, out-reach, climate change, 5 a day, sexuality, transgender, support, recycling monitor, bin inspector, facilitator or adviser in their job description. Would anyone really notice if this lot were reduced to 4 days. In fact their days should be reduced to ZERO.

If we did this we would say over £50 billion a year and not one single nurse, fireman, doctor, teacher, policeman (real ones not plastic) or other esential servants would lose their job or pension.

Chazza

You are right in what you say - the lower paid will not be better off but they won't be disadavantged too much by the proposed new arrangements especially if there is no increase in their contributions. The new arrangements will hit hard those whose salary rapidly increase as their earlier years will not be worth so much in pension terms.

For many decades, GPs and dentists in the NHS pension scheme have had their earnings career averaged. Their earnings do the opposite to most people - rising very quickly in the early years and then tailing off in later years. A final salary scheme actually disadvantaged them so hence the career average. They will be one group cheering out loud that the career average scheme will remain - they will be quids in and continue to cost the taxpayer a small fortune. Did anyone think of that? Not this Government.

I am not at all sure that the root of this action is purely about pensions.

My gut feeling is that is more to do with what public sector workers believe is a sea change in their lives : in that they may face having to work in the private sector.

This ,apparently, is causing stress and depression for some workers; with one lady stating that " How am I expected to work within a commercial enviroment...... I want to stay in local government until I retire"

Sadly change comes to us all, but wether or not the public sector workers have grasped this is another matter

When I went into debt from a business collapse, I had to do what most have to do - tighten my belt, cut out all non-essentials, cut back on luxuries, and get to work harder at getting myself solvent again. That is what ought to be happening now for the country. The public sector, like the private sector, has to be trimmed by cutting non-essentials, and improving the essentials, as well as cutting any waste. Communication by the Government is appalling - not least because of years of 'spin' has made the public unable to believe a word politicians say - like Brown on Blair! But in unions, there seems to be a hard core determined to bully the main hard working and well intentioned body of public sector workers by shouting lies louder than the Government can speak truth.

It is a pity the private sector can't strike against the public sector - no access to shops, retail, private services, and industry!!! Maybe this anachronistic strike scenario might be stopped in its tracks, and some sensible solutions discovered instead.

But like it or not, the private sector has suffered hugely in loss of pensions thanks to Brown, and also thanks to Brown the country has an increased public sector bill it cannot afford - and pensions are going to increase because of longevity as well. So the public sector really needs to consider that the end result of this strike is likely to be real loss of earnings, pensions and everything else, because we are nearly bankrupt and will be going the way of Greece if the current measures at least are not supported..

You can drastically reduce the size of the public sector by out sourcing essential services to the private sector,This has been a partial success with PFI funding only marred by incompetent contract negotiating by the public sector.Efficient outsourcing would provide a better ,more flexible and more competitive enviroment,

Colin,

"Efficient outsourcing would provide a better ,more flexible and more competitive enviroment" may be true of some functions currently in public sector, but:

Have we got cleaner, better hospitals since hospital cleaning was outsourced?

Have we got better, more efficient social services or nursing where agency workers have been hired because of prohibitions on increased direct employment?

Not from what I've seen. Outsourcing of essential public services seems mostly to have increased costs, eroded the conditions of workers, and massively damaged the goodwill and sense of vocation that such services require. But then the market is indifferent to such things.

Going back to the beginning, the suggestion is that the strikers don't understand what the issues are about their own pensions. Obviously both employers and unions have something to answer for here: but so too does the BBC. Every bulletin seems happy to give air-time to the Serwotka/Blowers version of the story without ever explaining the simple home truths about longevity or the pain the private sector has already taken.

Could this be related in some way to the BBC's own gold plated scheme being under review?

The cause of the strike? .....easy! Labour supporting Trade Unions simply herding their sheep..........baaa!

I am a 48 year old tax inspector trained by the Revenue straight from leaving University.

I don't necessarily reject the idea of reform to Public Sector pensions, but my own gripe is the lack of detail provided by the Hutton report.

For example, with regard to retirement age one of the proposals is that this should be linked to the present and future state pension age. However there should be some tapering for employees who are close to retirement. For example why should the same apply to me as would apply to, say, a 30 year old Graduate Inspector who only has 9 years service as opposed to my 27 years.

Also. with regard to the termination of final salary provision, because I am 48, I have far less time to make up for the shortfall I am going to suffer if I am switched to average salary basis in four years time. This is in contrast to the 30 year old who has 30 years plus. Also worth bearing in mind that the current bear market in stocks is likely to rumble on for another 5 years or so, which will make my task of plugging the shortfall even harder. So once again there should be some transitional provisions to deal with, what is to my mind at least, an anomaly.

As regards average salary scheme, what does this mean. Clearly if pension is to accrue each year at 50% of salary (extreme example I know - but to illustrate the point) then such an 'average' salary scheme would be more generous than final salary provision. The problem is that the Hutton report talks about a career avarage scheme, but I don't believe it mentions the actual accrual rate, and for any average salary scheme, this is crucial. I have seen some unofficial reports that the Government is envisaging an accrual of 100th but nobody seems to know. Such detail is vital before one can form a view about whether they support an average salary scheme or not.

For all of those abusive comments about public sector workers and what useless jobsworths they are etc, try running an allocation of enquiries in the Anti Avoidance Group for a year (often working longer hours than you are contracted for).

Oops! It appears my voice recognition is fialing – it was not Ian Duncan-Smith whom I heard blethering on Today this morning, but Frances Maude. Can there be 2 Maoists in this government???

The last comment about actuaries calculate 15% contributions for 2/3 rds final salary is out of date by about 30 years. This is the figure I was given in 1965.

Today it is obvious it would need around 26%. I paid in the 15 % and got 1 fifth of final salary with no inflation increments. When the oringinal figures were calculated many people left school at 15 and worked until 65. They died witin 10 years of retirement. Now people work 40 years and retire for 20.

"Please do explain how "many lower paid public sector employees will be better off because of the link to ‘career average’ earnings rather than final salary." Unless their slary is lower in their later years than in their earlier years, this cannot possibly be true."

Of course it can be true, if you understand basic maths.

Given a fixed ammount of money to distrubute in pensions then if you distribute it according to career average earnings rather than final salary earnings the people who had relatively flat earnings across there careers will get more, at the expense of the people who had rapid advancement and ended there careers with a higer salary.

Your amazement and error is assuming that the money to be paid in total is not limited or redistrubuted.

This redistribnution would result in the higer paid 'gold plated' public sector pensions being reduced to improve the lower paid ones, probaly a good thing in it's own right.

Make all public sector final salary pensions paid up with immediate effect thus protecting their past service and retirement ages.

For existing staff's future service benefits and new entrants auto enrol all into NEST.

15% of gross earnings??!!!

even 26% is conservative considering there is no investment risk.

I think upwards of 30% is a true reflection of the value of the pension.

now if they deserve the benefit is the real question but lets start putting realistic figures on the cost of the pensions. I think there's a case of actually increasing pay now and lose the pensions as all we're effectively doing is deferring the cost to future generations.

Public sector workers may huff and puff and strike. The reality is that in 30 or 40 years the government may not be able to collect enough tax to pay for their pensions. What then?

Who predicted the financial crisis? We may have other crisis and one must not forget the wealth is moving to the East. Forget about pensions the government may not have money even to pay interest on the loans. Does Greece ring a bell.

Sheep the lot of you strikers are. Your union leaders are just trying to beat the government by using you as pawns If your union can't negotiate they have failed in their duty to you , stop paying your subsription its never worth it when you have to do their work for them .

Unions for workers are no longer required, employers now need the protection from the workers.

I've a suggestion - stop offering pensions and just give the contributions as a pay rise. If those already in receipt of pension want to receive it in the future they will have to accept reform as they won't get it from those bringing up the rear? No pension liabilty going fwd, pay rise to compensate and reforms for those who already get it? Seems fair - all in it together type thing?

To Pach, whilst your pension accrues @ 1/80th of FS you have overlooked that you also receive 3/80th x servicec tax free lump sum. the combination of these equates to 2/3rd after 40 years service.

Retirred IFA

The main problem stems from poor communication. I am self-employed and don't have much of a pension, but that is my concern. Most people I speak to in the public sector agree there is a need for change, but in the main many are fearful because they do not understand the proposed changes.

I suspect also that the union 'top brass' have their own agenda and feel that this is an appropriate time to do a 'little sabre' rattling. I feel they could also do a little more in way of explaining the detail.

Anyway I believe that we should simplify all pension's in this country and I vote that we all have the same pension arrangements as the Members of Parliament. (With all the benefit's)

Vote For: 1 Vote Against: 0

The real world - Private sector final salary schemes

Sorry we're shutting the scheme - you've accrued benefits and they will now be fixed with inflation increases provided of course we're still in business and the pension fund fully funded. Oh and bye the way if we do go bust then the PPF will provide 90% of what you were due but if any entitlement was earned before 1996 then you won't get inflation increases on that part. You are now invited to contribute into a stakeholder scheme and we the company will put in 3%. If you don't accept the new terms, you know where the door is.

Public Sector final salary schemes - fully guaranteed to pay out + inflation as there is no fund invested in to cover the payments the only place it will come from is ALL tax payers.

The remaining tax payers - the majority can't strike against our taxes being used to help fund public sector pensions but public sector employees can strike, inconvenience the majority and cause all sorts of knock on problems. Do you really think that is justifiable ? What about those union leaders stirring the muck - do you think they care you are loosing a day's pay or give a toss about the rest of us - on their £80K + salaries and no doubt massive expense claims they can sit back and laugh - they are politically motivated - nothing else. I suggest you union members take a look at the expense claims these bosses are making - I'd take a bet it would be as bad as some MP's

The government have to make changes thanks to the idiots who voted in yet another labour government who overspent, promised the earth and in the end betrayed everyone including those who voted for them. Forget the bankers and that shower - look what Brown, Blank and Daniels did to Lloyds that was political not commercial. The prudent Chancellor who spent and spent and spent and sold all our gold at the ridiculous price. Talk about spin.

You are being asked to take some of the pain many of us in the private sector have had to take for the last ten years when these final salary schemes started to go under. You will still be much better off than many of us in your retirement and remember you pension is guaranteed - ours is not - what price peace of mind !!!!

I think they probably do know although we all see something from a different perspective. Public servants besides being slammed all the time are getting hit from various directions so its not surprising that they have differing view points.

One thing is for sure that services that we all need or will do are being destroyed daily. Looking at what is happening to companies that take them on because they believe they can do so much better and then going bust with tens of thousands of vulnerable people in there care or having to deliver a much more limited version. We may in years to come wish we had just let them have their pensions and retirement date.

One thing that seems wrong about the pensions to me is the way the very high earners like upper management have them when they are rich and clever enough to invest their own money. I suspect that the bulk of the payments are made to less than 10 percent of the employees who are on 20 to 40 thousand a year while the other 90 percent are on about 4000 pa.

I have said before why don't we make the wealthy pay their taxes?? Just those with offices in Switzerland would get the country over 120 billion a year and thats with out the billions put in trusts and so on by those wealthy enough to pay a good accountant.

I can understand them striking, the unions are doing what they are paid to do,

We should take great care what we throw away, it will come back and bite us one day. We had the same hatred generated when Mrs Thatcher was on her lame duck policy. Even though it seemed kind of right at the time, I don't think we ever recovered from it and lost our industrial base.

We do understand why we are striking. I chose teaching instead of banking or law because I liked children and I wanted the security of a final salary scheme pension. Teaching has got harder over the years because children are not disciplined at home they come into a disciplined environment and we have to show them how to behave even before starting to teach them. Believe you me, it is no picnic and the thought of having to do it until I am 66 fills me with horror. Many of my friends say they could not do the job and wouldn't take 'a pension ' to do it.We are teaching for the love of children and the final pension scheme-40/80ths. I have worked with people who came from other jobs and most of them left within 2 years because they were too stressed to continue. Teaching isn't an easy option and without the attraction of a secure, final pension scheme I am afraid that it will be difficult to attract teachers in the future. For those of you who envy the pensions please try a year teaching in a demanding school before you judge us.

All part of the "services " malaise. If I give my hard earned cash to a bunch of experts who tell me they are going to invest at a profit and pay me a pension, then what to do when they've lost it in a housing bubble?

Are these pension fund managers going short of holiday money? Are the politicians who decided to pay civil service pensions from future taxes seeing their own pensions reduced? Incompetence and mismanagement is what it's about. I see old Fred Goodwin is not having his pension reduced and having to work longer.

It's all due to the paper shuffling mentality, that somehow we can create money by moving it around from one set of crooks to another. I pay my pension money, the pension fund manager puts it with some other "investment" group or financial adviser, he puts it in some obscure derivative fund, it's then loaned out at 5% by Northern Rock, and round and round it goes with fees, rake-offs, commision and interest but no real earnings.

When the s**t hits the fan, who loses? Northern Rock chairman? The financial advisor? FSA who didn't know what was happening? Government ministers who are paid to look after the people who elected them? No lads we're all in the Bahamas, the losers are the people who paid in, either directly or via employers schemes, or by good will in choosing to work for the government.

They don't need to understand the details, the bottom line is enough.

How true the old adage " If you can't do anything be a teacher". The whole teaching profession has declined so much, both in ability and attitude since the 1940/50's and very few command any respect.

Start by smartening up and have pride in your appearance and understand the rest of the country does not owe you a pension.

There is a false argument being presented here, as governments often do, that all pensions should be reduced to the lowest level.

What this means is in the long run is capitalism will be destroyed by capitalists. This has happened already in the US, where the middle class has become an endangered species largely due to cuts in job security and benefits such as pensions.

In fact private pensions could be seen as very generous if you calculate an average that includes those at the top with pension pots in multiple tens of millions.

What is wrong is sucking money away from workers in the private sector to pay fat bonuses to bankers et al., or to pay ever higher dividends, which money should be going to the bank workers' pensions.

The country must afford to keep all pensions at a level which will allow its citizens to enjoy a comfortable retirement and also pay for care in their later years.

Over the long term, reducing the pension paid to public or private employees is bad economics, since it drops the level of discretionary spending that can sustain economic activity; fewer people can afford the odd Thorntons, or to replace the carpet.

Republicans in the US complain so much about how awful government is, that they seem to feel the need to get elected to prove the point.

I sincerely hope the UK government does not follow their lead, and can have the sense to drop this plan to ruin the pensions of so many of its citizens.

I have a wizzy spreadsheet, which of course I can't post on here because that would be too easy and would allow everyone to make their own.

I have played with some numbers for an average civil servant or private sector employee. It's pretty easy to set up some kind of model for an individual.

Here's the assumptions.

A 25 year old enters the workplace on a salary of 30,000 and will work until 75 and then draw down a pension for 15 years and then draw an accumulated lump sum for 15 years so there is nothing left.

The 25 year old will pay 15% of salary that will keep up with inflation, but will receive promotions worth 1% per annum over their working life of 50 years, so will finish up on just over 49,339 when you compound this 1%.

Key assumption: the contributions will accumulate and decumulate at 2% real, hence we can ignore inflation.

The pension pot at age 75 is worth 497,713, which decumulates over 15 years to zero, but with a pension of 37,795 or 77% of final salary or 98% of simple average salary over 50 years.

These are the sums that people are going to work into if we get the same rate of increase in longevity we have seen over the last 50 years.

I would say this is the truth, for a 50 year working life with 15 years in retirement. I would also say that this kind of thinking makes everyone poor. We should be looking to get down to 40 years in work and 25 years in retirement as a reward for working our buns off, not listening to whatever political fashion is in vogue. This is a civilisation issue, where smart returns (greater than 2% real) reduce time in work and increase time in retirement. Get those spreadsheets working! I will play with the sheet some more on 40 +25 to see what the real return needs to be!

engineertony - nailed it.

Okay, if you can earn 4% real with the same starting salar with 1%/promotions from 25-65 and life for 25 years until you are 90...and pay 15% contribs, you can earn a pension of 35,277, so a few grand less, that will be worth 71% of your final salary and 91% of your average salary over 40 years.

All we need to do now is to get wages aligned with inflation of 4% and this model works.

Kind of makes you wonder why anything needs fixing and whether there is a baked in profit margin being paid to finance the entire pension fund industry.

If the Bank of England can keep inflation at 2%, then the nominal rate of return is a measly 6%. Cash rates are usually around 1% more than inflation, so this is an even measlier 3% over cash, on average over a human lifespan.

The equity risk premium is usually 3% over the long dated gilt, which ought to average around 1% over cash of that 3% = 3% cash + 1% gilt +3% equity = 7% nominal which in turn is 7-2 = 5% real.

My models are assuming just 2%. Exactly what is the difficulty in getting a reasonable pension and time in retirement to enjoy it? 1% expenses to reduce the 5% real to the 4% in the model ought to be reasonable.

So, over the 65 year (40 + 25 or 50 +15) pension life span, means all a person has to do is invest for an average annual return of 4% after paying the middleman.

Do we really think that 7% nominal or 6% after expenses in unacheivable?

gooooo warren! :)

As tax payers we seem to be paying for people who are union representitives at many public serv ice work places. ie they do no work relating to their department but merely do work for the union. Why, therefore, have they done such an appalling job in explaining to their workforce how and why things need to change. From TV and radio it seems that supposedly well educated people (ie teachers) do not really understand at all what is proposed and what the rest of the world has been experiencing for the last several years. Why are we paying millions a year for these union reps when they are doing such an appalling job for the membership.....but also, why are we paying for them anyway??

Let us not forget how Gordon "Private Sector and Old Age state pensioners 0,75p rise ENEMY Brown ruined pensions.......

Did away with dividend tax relief for pension funds thus effectingALL private sector pensions at a stroke.

This gave greedy bosses the green light to do away with final salary schemes and reduce their contributionsas most have done.

Failed to sort out public sector defecits in unfunded pension schemes. Vote buying if ever there was.

Allowed greedy bosses to get generous tax savings on ohe outrageous pensions provision like his dopey Scottish incompetent banker mate Sir Fred the shred of RBS......

Failed to pay Equitable Life pensioners compensation for gross regulatory failure. We are still waiting and could wait until June 2012

About 8 years ago my final salary contributions increased by sixty per cent for the same benfit -two years later they increased another 20 percnt and my pension was reduced. Any possibility of AVC was also withdrawn so I had to take out a SIPP to improve my pension. I count myself lucky to still have a final salary pension. The public sector workers have been blinded by Gordon throwing money at them --if they want a better pension they will have to fund it themeselves rather than expecting everybody else to fund it--welcome to the real world and get back to work.

I can remember in the early 70's examining all the Pension options on offer. The final salary scheme dominated but had major drawbacks to the ambitious who wanted to move on. I quickly came to certain conclusions to protect and build a pension for myself and my wife. Firstly the pot haas to be as big as you can make it. Simply the size of the pension is dominated by how much you can put by. This was achieved by your own contributions with the Tax relief allowed, and how much you could build into your remuneration package in your new job ,if you were head hunted as in my case. My last position the Employer added a third of my annual salary to my pension pot. In addition I was able to make large contributions with the Tax relief. Coupled to this I was able to direct the underlying funds investment. This built into a sizeable pot with unversal rights attached. This enabled me to take 25% in cash and play the annuity market with the rest. At the time with very careful negotiations I managed 11% on two lives both under 65. There is no magic in this all can do it with a little application. I am proud I do not rely on the hard pressed Tax payer to meet my Pension. The public sector workers could easily set up their own fully funded additional contribution pension funds and ease the financial strain on the rest of us. I am in my 70's and still paying 40% Tax to keep that lot in clover having made no personal effort.

I am retired and live in a seaside village which is a bit of a tourist attraction. Normally during the week it's quiet here but today was like a weekend. Presumably all the strikers off to the seaside.

For those public servants who don't understand why they are striking, Listen up!

- many wonderful people advocated the free market, esp. top bankers, there should be practically no public spending, the free market solves all problems.

- those same people wrecked the banks, ran with their begging bowls to the government and received billions of taxpayers money.

- of course these wonderful exponents of non government interference and the free market deserved every penny of their £7 Bn. bonuses for such wonderful efficiency and devotion to to the free market.

- Trouble is government needs to find the money to pay for the bailout

- Of course! Make teachers and others pay more in pension contributions, treasury grabs it to cut the deficit.

Public servants should be grateful to have the chance to ensure the goverment repays the bankers subsidies with their pension contributions

and not have the temerity to strike, in fact the sooner this lefty right to strike is banned the better!!!

Anonymous 3 has it right. There should be proper transitional arrangements as one's age is a key element in the mix. Having worked entirely in the private sector I can recall when there were jobs for life in large private sector corporations however this security disappeared a long long time ago. I find it curious that public sector workers in their 20's and 30's are so exercised about the proposed attack on their pensions which are decades away. One can only presume that there is still a presumption of a job for life in the public sector. It really isn't realistic to have an expectation of a job for life and a much superior pension vis a vis the private sector. Something has to give.

.@ Chris Cain -

"This redistribnution would result in the higer paid 'gold plated' public sector pensions being reduced to improve the lower paid ones, probaly a good thing in it's own right"

Sorry, not on my understanding of career average pensions as there is no redistribution down the chain, simply greater savings made by the scheme from higher paid than lower paid. The lower paid employee still gets less than on a final salary scheme so the claims that it is "fairer" to them is nebulous to say the least.

Low flyer and High flyer join on the same day with a salary in to-days money of £20K. Forty years later Low is earning £25K by dint of one promotion whereas High is in charge of a large operation and gets £5Ok.

Low's pension is based on 2/3 of £25K on final salary but only £22.5K on career average. High's pension is based on £50K FS but only 35K on CA,, High loses far more and costs the scheme far less but none of this assists Low who also less than on an FS scheme.

There is nothing intrinsically unfair in career average as contributions are career averaged but neither is it fairer to the lower paid as they get less too.

Why should the lower paid workers get a better pension? If they are being paid a reasonable wage for their skills, why should they have a larger hidden benefit? This does not happen in the private sector. If we are to help the lower paid, then we should increase the State pension for all, and raise the personal allowance tax threshold, rather than spend the money on a select few.

I am happy for public emnployees to have good pensions provided the taxpayer pays no more than private employers do. In other words, if you want a good pension you have to forego some of the pleasures of life and save.

Incidentally the taxpayers's cost of bailing out the banks was fully prepaid, but Brown spent all of the money. The total bank losses were far higher than the cost of the bailout, and the lost cash went to many private individuals (a % or two to the greedy bankers but 98% to house sellers and loan/credit card defaulters.) OK a bit went to US borrowers, but the UK problem was the main cause. And all of that money went on spending directly and indirectly. The Treasury had tax, employer's and employees' NI. It had the VAT, fuel, tobacco and alcohol; tax. And as the remaining money went round again it took another slice.

The true loses were the bank shareholders, including our pension funds so the people with savings and DC pension funds took the biggest hit.

And the taxpayer may just make a profit in the end !!

I bet most of you had nor worked that one out - should make some interesting dinner debates.

Perhaps lower paid need a better pension as they will only become wards of state if they don't. There is a great deal of boasting from people who are retired and made all these wise decision when they were young. Try it now!! Money simply can't be made from money like it used to be.

At this time people are living from hand to mouth which is why our high streets are turning to ghost towns. On top of this we are telling people who don't know about financial matters to forgo heating to invest in something that the government just takes away as it wishes anyway.

Judging people on our own ability gives a false impression of the problem. Most working people struggle to cope with basic life and don't understand investment they just look at a thieving government that is bludgeoning the poor while hundreds of billions goes out of the country or is tucked away in trusts of the wealthy.

Lloyds about to dump 15000 on the dole, care providers going bust wholesale, millions of public job losses pending and absolutely no sign of the rescue by the private sector who seem to be doing more downsizing than employing. We cannot complain about the numbers on benefit if we keep putting them there. Pay people to work not to be on the dole. Make the big companies and wealthy pay the taxes they are owe! Get a handle on who is getting the bulk of the public pension payouts! its not the low paid!! If they keep this up we are going to be in the worst mess we have seen since the 30's.

There's a clear bias in the article we are commenting on, and some sloppy reporting. Pension contributions are not increasing by 3.2%, they are increasing by 3.2 percentage points: this represents a near doubling of the contributions many PS workers pay, and in the case of most teachers it is a 50% increase in their contributions.

I have no idea what "protected" means in respect to the PS workers' pensions: their value will still be eroded substantially over time with the measure of inflation shifted to from RPI to CPI. Retirement will inevitably be shorter and less comfortable.

I've tried to understand comments regarding the beneficial impact on pension levels of career average schemes over final salary schemes. It would take a very odd salary progression to favour the former.

The government proposals attack pensions of public workers on three fronts - the level of contributions, the benefit level and the duration that benefit will be paid. Any one of these might seem reasonable, but taken together they represent a cruel blow to the expectations of workers at all stages of their working life.

Have we not the 'lions led by donkeys' scenario? Yes, there probably are too many public servants, and yes pensions probably need revision but the real problem lies with some of the union leaders who are determined to cause chaos in this country.

My husband and I are civil servants. Our union provided us with a calculator which could be filled out with the help of the most recent p60. My husband (25 years in the job and shiftworker) who currently pays £50/mth will under the new scheme pay £150, will work until he is 68 and his pension fund will be worth between £30-50K less. Pay more, work longer, receive less than what you originally signed up for.

When i see that we genuinely are "all in it together" I'll be happy to take my share of the hit, but whilst our politicians still have their snouts in the trough I'll continue to stand up for my rights concerning the contract we signed.

Under the old scheme I would have received £7000/yr and a lump sum of £20K. Is that gold plated? My parents who recently retired having been in the private sector (own small VERY small busniess) received £100K plus lump sums and are in receipt of more money each month than they can ever hope to spend. I'm delighted for them, they worked hard all their lives, supported their family, never went into debt other than for the mortgage for their house (same one they have lived in for 50 years). It seems to me that the opportunites are there to "make it" in the private sector where as for the vast majority of Pub.Sec workers career progression is nil (certainly in my department), The civil servants I know accepted the "secure" pension as compensation for mediocre pay and no much chance of promotion. The future certainly isn't in working for the government which is why we have started our own busniess and one day soon will be handing in our resignation. Yes I'd rather take that uncertainty than sell my soul for a so called "gold plate" pension (it's EPNS if that imho).

Apologies for intruding into this forum, but i felt it was misrepresentative of those on strike to suggest that they are ignorant of the reasons for the strike.

Have a good morning everyone.

The problem arrises because previous governments spent the extra money when the teachers' scheme paid out less then was taken in. At that time unions were demanding the money be put into a proper pensions fund. This would have been huge by now. It is not the fault of teachers that they were being screwed by taxpayers for decades.

Dear Mr. Cameron,

Please find below our suggestion for fixing the UK's economy.

Instead of giving billions of pounds to banks that will squander the money on lavish parties and unearned bonuses, use the following plan.

You can call it the Patriotic Retirement Plan:

There are about 10 million people over 50 in the work force.

Pay them £1 million each severance for early retirement with the following stipulations:

1) They MUST retire.

Ten million job openings - unemployment fixed

2) They MUST buy a new British car.

Ten million cars ordered - Car Industry fixed

3) They MUST either buy a house or pay off their mortgage -

Housing Crisis fixed

4) They MUST send their kids to school/college/university -

Crime rate fixed

5) They MUST buy £100 WORTH of alcohol/tobacco a week .....

And there's your money back in duty/tax etc

It can't get any easier than that!

P.S. If more money is needed, have all members of parliament pay back their falsely claimed expenses and second home allowances

If you think this would work, please forward to everyone you know.

Also………..

Let's put the pensioners in jail and the criminals in a nursing home.

This way the pensioners would have access to showers, hobbies and walks.

They'd receive unlimited free prescriptions, dental and medical treatment, wheel chairs etc and they'd receive money instead of paying it out.

They would have constant video monitoring, so they could be helped instantly, if they fell, or needed assistance.

Bedding would be washed twice a week, and all clothing would be ironed and returned to them.

A guard would check on them every 20 minutes and bring their meals and snacks to their cell.

They would have family visits in a suite built for that purpose.

They would have access to a library, weight room, spiritual counselling, pool and education.

Simple clothing, shoes, slippers, PJ's and legal aid would be free, on request.

Private, secure rooms for all, with an exercise outdoor yard, with gardens.

Each senior could have a PC a TV radio and daily phone calls.

There would be a board of directors to hear complaints, and the guards would have a code of conduct that would be strictly adhered to.

The criminals would get cold food, be left all alone and unsupervised. Lights off at 8pm, and showers once a week. Live in a tiny room and pay £600.00 per week and have no hope of ever getting out.

------------------------------------------------------------------------

I think Lorna may have uncritically regurgitated some Government propaganda in this article. I'm a public sector worker and I must be one of the 10 in her article who think I will lose what I have already accrued.

Why? Because it has started already. As an example my pension should be index linked once I begin to draw it but the proposal seeks to link it to the CPI rather than RPI which will see the value of the pension decreasing by between 1 and 1.5% per year. Bear in mind that even index linking was not that great because earnings have historically exceeded RPI and when Thatcher changed the State pension from earnings link to RPI link pensioners saw the value of their penions reduced to pocket money value over a 20 year period.

Secondly final salary pensions are (not surprisingly) based on final salary. My salary has been below CPI or RPI for 3 years and is frozen for the next two (at least) Therefore my salary and hence accrued pension is being reduced by up to 5% pa unless there is s huge catch up just before I retire.

Finally, bearing in mind how much the government needs to take from the proles to help out their friends in the financial sector, no-one really believes that the tax free lump sum (which is part of my accrued pension) won't be confiscated by some means - either abolishing it altogether or making it taxable.

I have just heard on the news about the recovery by our manufacturing industry the saviours of our nation! if you believe that!. and it would appear we are heading for deep do do.

Our old money "The peasants have no bread? let them eat cake" leaders trying to pretend they know what hardship is are guiding us down the toilet. And sadly proving the man we love to hate right, in taking too much money out of the economy will create mass unemployment low spending power all round and prevent people from buying the goods we want to sell them in order to recover. The other thing is that pensions are an investment since those receiving it will ultimately return it straight to the economy or the tax man rather than hang on to it.

Does it really surprise you that people are going on strike, without knowing why? Less and less people are reading mainstream newspapers, while very few people watch the tv news. children are reading less, because no one in their faimilies read. The result of this decline, can be found all around us, and while this country is still run from Brussels, the general public don't know. Do a survey on the EU, then you will see how thick the people really are.

Mr Douglas, what would be the point in reading mainstream news? We are fed the information that suits the powers that be depending on who's scratching whose back at the time. There is a nuclear apocalypse occuring in Japan, is there any mention of it? I haven't seen any. Everything harmful to the status quo is played down. Our politicians spin and engineer during their time in office (no matter what their political persuasion) to ensure they can walk into a nice cushy HUGELY well paid consultancy job and a nice fat pension. If that isn't an abuse of position I don't know what is. If I want to find out the "facts" (whatever that means these days) I certainly won't go look for them in the mainstream media. If I wanted to find out who is sleeping with whom on the celebrity freak show circuit, then yes that would be the place. The mainstream media is a diversion for what is really going on.

The public sector used to have a lower pay than the private sector but there was a good pension scheme at the end of it, but that has now changed with the average pay for the public sector being higher than the private sector. Gordon’s raid on private pension schemes coupled with the incompetence of the financial sector put an end to final salary pensions in the private sector even before the bust. Can we remember all the news stories about the private pensions fund shortfall for the FTSE 250 companies which were always about the figure that Gordon had taken out of private pensions? (£7billion per year)

So we now have private sector employees, most of whom do not have pension schemes at all, paying taxes for to give public sector employees jobs at a higher salary than they can get and then to pay for their pensions as well. As the number of people employed in the private sector paying taxes decreases in proportion to the number of pensioners it is just unaffordable.

As I look at the mountains of paperwork I get from various public bodies and the poor service I often receive when I try to communicate with them (with a few exceptions) I wonder what i am paying my taxes for.

Having worked for over 40 years and with a total tax rate in this country of approx 40% I have spent 16 years working for no benefit to me. With Gordon's raid on my pensions and incompetent financial services I lost 30% of my pension fund even before the bust. I will be working for another 15 years if my health allows. That is the reality of the private sector.

So I think the public sector needs to get real. Who do they think generates the wealth to pay for Government expenditure?

Striker1

I wholeheartedly agree.

For example I thought it was odd that after the nuclear leak in Japan various experts came on TV to say the radiation exposure was no more than one would get from a CT scan. I know that the radiation dose from a CT scan is very high ( maybe the equivalent of 7 years of normal background radiation) so this struck me as a very strange thing to say.

It is now clear that the government and nuclear industry in the UK had launched a campaign of misinformation (it is reported in the Telegraph today) and I have to assume the BBC and mainstream media were compliant.

As a local authoriity worker, our union has explained the changes to us in great detail, so we do understand the changes very well. The increase of 3% does not mean you p3% more than you do now, it means that instead o 7 or 8% you pay 10 or 11%, which is a big increase. The rates already went up two years ago. At that time we were told that this would mean that there would be enough money in the pot to pay for our future pensions, including allowing for us to live longer etc. Unlike the rest of the public sector, council workers pensions are funded, i.e. their contributions are paid into a fund which is invested, much like other private sector pensions are. I presume that the government staff who worked it out last time knew how to do there sums. Now there is talk by the government or allowing councils to use the pension fund for other services, which sounds extremely dangerous. Most people leaving councils due to redundancy etc, come out with very low pensions that you could not live on.

I have worked in local government for 30 years, I needed a lot of qualifications to do my job, including a degree. Those I went to university with now earn far more than I do, but I stayesd in it because I felt I was performing a service of use to the community and at least would get a reasonable pension.

Linda,

While you may be contributing to a pension fund unfortunately it is not able to cover the outgoings. So at the moment about 25% of Council tax is used to pay Local Authority pensions.

In the private sector if you are made redundant you may get your pension eventually but historically if your company went bust you often lost your pension as well. Especially since Gordon's raid on pensions when companies had to cover large unfunded liabilities. Yes lots of companies took pension contribution holidays but they were getting advice from actuaries (Finance sector) and the economy was doing well.

The Hutton report said that the Public Service pensions would decrease as a percentage in the future but he omitted to include the increase in life expectancy in his figures.

Also there are lots of people in the private sector with degrees and lots of job qualifications who will have no pension when they leave and they may well be earning similar amounts to you .You will still get a pension when you retire/leave and from what I can see benefits already accrued are not being lost. I think you may still end up a winner overall compared with your contemporaries. If I had stayed in the Public Sector when I was younger I would now be retired and on a good pension instead of facing another 15+ years of working, see my previous post about my diminished pension pot

I believe we as a country cannot and could not afford the expansion in Public Services that took place under Blair/Brown and we are all now having to pay the price.

Whatisname

you repeat the over-generalisations about both public and private sector pensions.

The Local Government Pension Scheme is not single scheme but consists of 99 separately administered regional pension funds. Their investment performance varies considerably and only some of which are in deficit (one of the largest was in surplus last time I checked). Moreover, they are actuarially valued only once every 3 years, so the deficits may in some cases be more apparent than real.

The notorious (but massively over-hyped) 'Brown raid' affected the Local Government Pension Scheme (and other fully-funded schemes tied to public sector rules, like the Universities scheme) just as much as private pensions that depended on investment income from share dividends.

Public sector salaries are now, on average, higher than the private sector average because, especailly after the outsourcing of so many manual jobs to the private sector, public sector employees are much more likely to be highly qualified professionals than the average private sector employee.

It may look like a 'fair' and clever wheeze now to reduce the value and increase the cost of public sector pensions, but do not be surprised if, when the economy eventually improves, there are damaging shortages of qualified personnel right across the public services leading to hugely inflationary pay settlements. If we want high quality public services, we must pay for them, and it is rank folly to insist that public sector pensioners must follow the scandalous route to penury that has been imposed on many in the private sector.

It is true that we will pay, if not for public sector workers then for private sector profits or subsidies to stop essential services turned private from breaking down as they are doing everywhere even now.

Get rid of public service if you like along with pensions and whatever else but as sure as beans is beans you will not pay less tax, in whatever guise it is taken from you.

The nearest the private sector got to an index linked Civil Service Pension was the original SERPS and even that had to be paid for by increased NS contributions. Well you know how long that lasted. The alarm Bells were ringing loud and clear and had to be drastically curtailed. The average teachers pension on contributions of a measly 10% of salary would cost you pension savings of £500000 on to-day's annuity prices. I was contributing up to 25% of my salary over the last 10 years. This lot have to be made to understand that the exconomy has shrunk and is continuing to shrink, plus they are all living longer. My advice is save like mad as individuals and do not rely on the state because it will not be able to meet these obligations, as the forecast profits and accompanying tax take will NOT meet the needs by miles. You can protest and shout all you like but it will not make the slightest difference to reality.

Whatsisname

Hutton most certainly DOES include life expectancy trends in his models. C15 on p174 of the report explicitly defines his source for predictions (ONS2006).

anonymous5 do I detect a hint of envy and also were you a disgruntled student? Did you have a rotten time at school? Just as a matter of interest, we are not all dischevelled teachers-most indeed take a pride in appearance. We are no different to other workers-variety is the spice of life. Incidentally, some of the best teachers I had in the 50s were untidy and unkempt but they were damned good teachers.It is thanks to those 'untidy' teachers who inspired me. I did go on to get a 1st class degree from a good university and chose teaching as a career instead of going into a lucrative career in banking. I wanted to give something back and although it wasn't as well paid as some of my university contemporaries, it did promise a decent pension-how wrong was I!

Many of my students have been back to thank me as they have done well in their chosen careers. Instead of knocking the public sector which is what the government wants, we should all be fighting for decent pensions. By the way, private pensions are subsidised by the taxppayer but it is unscrupulous employers in the private sector who have mishandled your pensions.

anonymous5 do I detect a hint of envy and also were you a disgruntled student? Did you have a rotten time at school? Just as a matter of interest, we are not all dischevelled teachers-most indeed take a pride in appearance. We are no different to other workers-variety is the spice of life. Incidentally, some of the best teachers I had in the 50s were untidy and unkempt but they were damned good teachers.It is thanks to those 'untidy' teachers who inspired me. I did go on to get a 1st class degree from a good university and chose teaching as a career instead of going into a lucrative career in banking. I wanted to give something back and although it wasn't as well paid as some of my university contemporaries, it did promise a decent pension-how wrong was I!

Many of my students have been back to thank me as they have done well in their chosen careers. Instead of knocking the public sector which is what the government wants, we should all be fighting for decent pensions. By the way, private pensions are subsidised by the taxppayer but it is unscrupulous employers in the private sector who have mishandled your pensions.

Sorry Graham -I am happy for you that you have a decent pension but it is with the help of tax relief-paid for by taxpayers-some of whom were in the public sector.

Morgan Pipe Sir, All Pension payments are Tax relievable including School Teachers. However The Government then Taxes it all back again until you die at 40% in my case. This is a straight subsidy for all Public Sector Workers, many who have contributed practically nothing towards their own index linked Pension. The cost of this type of Pension is now prohibitively expensive for most ordinary people. One statistic which illustrates the point that these Public sector pensions Have to be cutailed is, that only 1 person in 3 is now saving for a pension. Can you imagine the acturial nightmare that will shortly dawn on this nation in BENEFIT Payments. . I remember when the Soviet Union ran out of money and could not pay the Civil Service pensions or only in part. It left millions destitute. Any worthwhile serious politician has to grapple now with this catastrophe" now." There is no room, believe me for Argy Bargy. Its that serious.

One further ryder I would add; I wholly support the eradication of large sectors of the Ministry of Defence, especially those parts engaged in fighting some other Country's internal wars. Heaven knows how many Civil Servants we could do with out. In addition I am very pleased to note that some Universities are considering going private. This will save some money,and sharpen up the rest who remain subsidised by the working population. One day we might say we get real value for money from the Striking Public Sector, I doubt it in my lifetime however.

Unlike private pensions there is no pension pot for teachers. Governments have used all the contributions made to run the country, whereas private pensions were invested, albeit badly but that is the fault of your pension fund managers. I started on £48 a month when my university friends were on £100 a month. We were always the poorest professionals until fairly recently. I chose my career because I wanted to make a difference but suffered financially-not because I couldn't do anything else but because I wanted to put something back . The fact that we have a reasonable pension-my pension is £9000 a year after 40 years teaching, is I think a fair payback for low salaries until the late 80s. Some of my university contemporaries are on pensions of £30000 or more. I do not begrudge them their pensions as it was my choice of career as you all chose your careers.

John – I agree that your contributions were used by the Government just like NI, but had you put those same contributions into a pension find then they would give you a VERY small pension now. The taxpayer is contributing a very very large amount (£35k required for each £1k of index linked pension at 60).

Some pension managers have not been as good as others, But Brown started the annual tax raid which has gone into the pot and helps pay for public expenditure with no compensation when we retire. Most of the shortfall we see is the result of longer life expectancy. But public employees do not recognize the huge additional benefit they have accrued on this, and expect others to pay for it. Whether or not the Government has used your contributions you get paid back in aces at the end of the day.

We are not suggesting that we take away any accrued benefits, so public employees may have received a growing hidden benefit but we are not asking for it back. We are simply saying that this cannot go on.

The people you quote retiring on £30k must be the last of those in private industry to benefit from final salary schemes, which are now being replaced by DC schemes far far worse that the future pension deal for public employees.

I have many acquaintances who have retired form the teaching profession on half salary who are getting £30k or more a year index linked. They would need a pension pot of some £1m to buy this. So I am also mystified why your pension is more modest (but still very good – and worth around £250k - compared with many in the private sector)

Whether by intent or stupidity most people are being misinformed about this extremely important issue and the media has a great deal to answer for.

The starting point is “if life expectancy continues to increase”. Normally the ‘If’ is left out, people have little idea how complex this assumption is, look up ‘life expectancy, mortality rates etc’ and you will start to see the scale of the problem.

For instance: Life expectancy is often confused with life span when people hear 'life expectancy was 35 years' they often interpret this as meaning that people had short life spans. This ignores the fact that the life expectancy generally quoted is the at birth number which is an average that includes all the babies that die before their first year of life as well as people that die from disease and war. Because of this sensitivity to infant mortality, simple life expectancy at age zero can be subject to gross misinterpretation, leading one to believe that a population with a low overall life expectancy will necessarily have a small proportion of older people. For example, in a hypothetical population in which half the population dies before the age of five, but most die at about 70, the life expectancy at age zero will be about 37 years but if you measure life expectancy from age 5 thus excluding the effect of infant mortality, life expectancy at age 5 is about 65 years.

The significance of this is that the ‘everybody is living longer’ claim is based on the average mortality age of people who have died over the last 5, 10, 20 and thirty years. The current life expectancy for U.K. males (U.N.) is 77.2 and 81.6 for women. These figures have risen steadily for many years but the increase has been rapidly declining. Is it realistic to expect this level of improvement in life expectancy to continue? They do not relate to you or the current population directly. You have to think about the changes that have occurred in public health and quality of life since the 1920’s, no Penicillin, modern drugs or vaccinations, but plenty of Measles, Mumps, Chicken pox, Polio, T.B. and poorly treated V.D. (Churchill’s father for instance) just for starters. General nutrition levels are far better as is quality of life and there has been a dramatic shift away from ‘hard labor’ such as coal mining (most miners never lived long enough to even get a pension) and manufacturing in general. Obesity and pollution are taking a heavy toll on the current population, the latest figures in the U.S.A. suggest a FALL in life expectancy for those under 60, you are not hearing to much about that. Is 12 years of retirement really that selfish? Have we really become that mean.

Next you have the “unfair” tax burden. Who scraped the N.I. contributions increasing in line with pay by ‘capping’ etc.? Well the Tories of course.

No one ever mentions the large number of people who die without ever reaching retirement age, they have normally ‘paid in’ in some form.

We are hitting the ‘baby boom’ retirement patch, this is followed by a ‘baby slump’ where are the figures for that.

Both in the private and public sector there is a casual acceptance that both groups should just accept a breach of contract by employers from the media and, even worse, they are actively helping to turn them on each other, just as they have done over helping the poor which has become a ‘war’ against cheats, so any defense of existing contracts is ‘un fair’ to the ‘tax payers’, pathetic.

Personally I feel a general retirement age of 65 is fair and I would restore the link between N.I. and pay.

Enough for now.

DWSS

Whether by intent or stupidity most people are being misinformed about this extremely important issue and the media has a great deal to answer for.

The starting point is “if life expectancy continues to increase”. Normally the ‘If’ is left out, people have little idea how complex this assumption is, look up ‘life expectancy, mortality rates etc’ and you will start to see the scale of the problem.

For instance: Life expectancy is often confused with life span when people hear 'life expectancy was 35 years' they often interpret this as meaning that people had short life spans. This ignores the fact that the life expectancy generally quoted is the at birth number which is an average that includes all the babies that die before their first year of life as well as people that die from disease and war. Because of this sensitivity to infant mortality, simple life expectancy at age zero can be subject to gross misinterpretation, leading one to believe that a population with a low overall life expectancy will necessarily have a small proportion of older people. For example, in a hypothetical population in which half the population dies before the age of five, but most die at about 70, the life expectancy at age zero will be about 37 years but if you measure life expectancy from age 5 thus excluding the effect of infant mortality, life expectancy at age 5 is about 65 years.

The significance of this is that the ‘everybody is living longer’ claim is based on the average mortality age of people who have died over the last 5, 10, 20 and thirty years. The current life expectancy for U.K. males (U.N.) is 77.2 and 81.6 for women. These figures have risen steadily for many years but the increase has been rapidly declining. Is it realistic to expect this level of improvement in life expectancy to continue? They do not relate to you or the current population directly. You have to think about the changes that have occurred in public health and quality of life since the 1920’s, no Penicillin, modern drugs or vaccinations, but plenty of Measles, Mumps, Chicken pox, Polio, T.B. and poorly treated V.D. (Churchill’s father for instance) just for starters. General nutrition levels are far better as is quality of life and there has been a dramatic shift away from ‘hard labor’ such as coal mining (most miners never lived long enough to even get a pension) and manufacturing in general. Obesity and pollution are taking a heavy toll on the current population, the latest figures in the U.S.A. suggest a FALL in life expectancy for those under 60, you are not hearing to much about that.

Is 12 years of retirement really that selfish? Have we really become that mean.

Next you have the “unfair” tax burden. Who scraped the N.I. contributions increasing in line with pay by ‘capping’ etc.? Well the Tories of course.

No one ever mentions the large number of people who die without ever reaching retirement age, they have normally ‘paid in’ in some form.

We are hitting the ‘baby boom’ retirement patch, this is followed by a ‘baby slump’ where are the figures for that.

Both in the private and public sector there is a casual acceptance that both groups should just accept a breach of contract by employers from the media and, even worse, they are actively helping to turn them on each other, just as they have done over helping the poor which has become a ‘war’ against cheats, so any defense of existing contracts is ‘un fair’ to the ‘tax payers’, pathetic.

Personally I feel a general retirement age of 65 is fair and I would restore the link between N.I. and pay.

Enough for now.

DWSS

The life exspectancy of the average Civil Servantor School Teacher has now past 80 years for both sexess. The annuity market now reflects this acturial fact and to draw a pension of £30000 per annum at say age 65 years index linked( the real cost of living index) you will need to hand over for two lives £500000 up front. Even under the new suggested contributions of 10% the employer contribution(The Tax payer) will have to find enormous sums to make up the difference. The Pensions also include full widows heritable rights fully indexed linked. To buy this in the private sector would make the British worker totally uncompetetive in Europe, and out of sight with the Chinese. This debate is beginning to focus on reality at last. Just look at our MPs' gold plated Pensions fully indexed linked. No wonder politics is such an attractive way of life. Government Pensions along with all other Government expenditure is now totally out of line with the size of the UK economy which is hard pressed to support it. Just like Greece ,Ireland Portugal aand dare I suggest the United States. Britain in reality is in the worst position of all. It is full of self delusion to start with. Having lived of borrowed money for decades, the market is beginning to think twice about Sovereign debt. My advice to all is save your money, Have some in Gold and keep well spread in your carefully selected investments. Those who can build a Sipp. Take action yourselves, dont rely on the state and certainly not to Politicians. Rise above strikes . The populace will not respond to Danegeld.

Mr Barlow's figures are a good example of the gap between reality and perception, to take one part of it ie £30000 p.a.

Mean Pensions Median Pensions

Police £15,636 £15,583

Teachers £10,858 £10,275

Armed Forces £8,834 £7,987

Civil Service £7,632 £5,023

N.H.Service £7,510 £4,087

Local Gov £4,777 £3,048

All P S Schemes £7,841 £5,603

Mean Pensions inc. Dependants

Police ?

Teachers £9,806

Armed Forces £7,722

Civil Service £6,199

National Health £7,234

Local Government £4,052

All Public Sector £6,497

This is a part of the Hutton report the government and media makes no noise about:

DWSS

Another part of Hutton that the media will not tell you about:

The pre-July 2007 Scheme

Those who joined the civil service in or before July 2007 remain members of the previous version of the Principal Civil Service Pension Scheme - "the PCSPS" - which had a number of interesting features:-

The scheme is unfunded, in the sense that there is no pension fund which is built up to pay future pensions. But it is funded in other ways:

First, the budgets of individual departments include employers' contributions to the PCSPS, and these contributions are now not only large in themselves, but have recently risen very quickly, up to an average of 19.4% in 2007. (Employer contributions are tiered, depending on salary paid. The details are in a document known as EPN 148.)

Second, all civil service salaries are fixed by reference to those gross salaries that would be paid for similar work in the private sector, and then reduced to allow for notional pension contributions.

This leads to the strange effect that, as pensions are calculated on civil servants' net salaries (after they are reduced by these notional contributions) the reduction is carried through to the pension eventually paid. Civil servants and their dependants therefore continue to contribute getting on towards 20% a year towards their pensions after retirement!

Finally, many civil servants also have real pension contributions of up to 3.5% deducted from their salaries.

DWSS

Well said-to be fair I believe the police pay about 12% to their pension but they retire at 50 or after 25 years service and it is 60/80th. The army pension although it seems smaller is non-contributory and they retire after 22 years service-for most that is when they are 40. I wonder why the government has no plans to touch these pensions yet! Could it be the possibility of civil unrest which would need controlling?

Excellent input from DWSS (I guess that's not short for Departmenr of Welfare and Social Security!) and John Rogers. The perspecitve about the armed and police forces is important, if you do hire young people into harms way ("dulce et decorum est pro patria mori" and all that) that 22 years service should they survive to 80 (22 years for 40-50 in retirement) is a tough one financially, but justifiable morally, provided the rationale for conflict is the removal of oppression.

Going back to DWSS, the pensions extracted from the Hutton report look, frankly, to be factually wrong or, at best, to have been hijacked in some way to reduce the mean/median benefit.

If you check out the numbers I put up previously, unless the mean/median salaries were just a smidge larger than the salaries enjoyed during a 30-40 year tenure, the size of the contributions made by the employer (civil service department) of 19% for pre 2007 contributions, should have resulted in ample pensions. This seems to be the source of the friction.

I started (at 16) in the mid-70's in a QUANGO with civil service terms of 5/80th plus 1/80th of final salary. Salaries back then were around 2,400 for a CO and 3,600 for an EO, depending on age. Having the advantage of 11 years service, then an 11 year absence then 9 years back, I can see that my final salary of c. 16,000 as an HEO in 1986 with 11 years service was reportedly worth an inflation proofed £4,250 with a lump sum of £12,800 back in February 2008. Or a total capital pot of 4250/4% annuity rate plus 12,800 or £106,250. I am not unhappy with that, but I can see how someone who works three times as long (33 years tenure) would baulk at just double that rate.

In other words, if you follow my previous post, either the money was not included in budgeted costs as described by DWSS and schemes are truly unfunded (what else happened to the budgeted allocation, did it just get spent elsewhere by the machine) or, there is a massive rake off being taken somewhere else, or the Hutton numbers are just plain WRONG!

Anyway, it's great to see that we have already moved beyond the propaganda and hyperbole and into the meat of the argument. I firmly believe that we might make mistakes, but everyones intentions were good, but without informed and widely dispersed fact sharing, tinkering with pensions not only breaches past promises (in good faith between informed, consenting adults) but also destroys the credibility of a political system built on such promises.

It is clear to me that we live in a world of spin and twisted truths.

I wonder if there is a better way to help our ills.

Pensions all end up back in the economy unlike war costs

People need to be working and spending.

So, what if, ( simplistically )

Students get one free or reduced cost crack at a degree based on a point system which judges the desirability of their profession for the future of the country. Everyone else pays. We need innovators.

Cap the public pensions paid to those on £60,000 p.a. or over and leave everyone else alone. They are gifted enough to invest their own money.

Make the wealthy and big company tax dodgers pay. get rid of the loopholes the rich use this would have to save £130 billion or more which makes the £1.8 billion pension crisis look insignificant.

Stop poking our noses into other countries business to protect oil interests. Spend the money we save on innovation and alternative energy sources. Get our country using it's brains and not just being assemblers for Japan etc.

Allow people to retire at 65 or earlier if they can, unless they want to work on.All money paid to retired people ends up back in the economy anyway. Unlike the billions we have given away to other countries.

Give pensioners a liveable pension. And care for them as we would wish to cared for.

Make it law that a person can go part time at 55 if they can afford to ( no benefits though ). It would release work for the young and cost nothing.

Continue to get people back to work and off benefits.

Stop council bosses ripping us off with their massive pay awards and put an aggressive independent private sector controller in place to keep an eye on them. This is where the real public sector pension cost is. Not as many think with the workers. Many of whom can'e even afford the contributions.

Very strict control on immigration and stop immigrants sick relatives coming here here and becoming instant wards of state.

No NHS for immigrants. and show insurance. Sorry, but they are over riding those who have paid taxes here all their lives and often fought for us.

Stop trying to be so euro-perfect and obeying every stupid rule they come out with while nobody else does. and get rid of some of the stupid euro rules.

Do these things quickly.

It seems to me that austerity is the reverse of what we need. People need to be spending to help industry and the private sector do what they have been asked to do. Austerity is the opposite of what they need.

Can some clever person please explain to me (preferably in words of one syllable) just why in these days of nationwide computerisation it is not possible to replace all the various and different pension schemes Retirement (OAP) Police , Army, public service and private employment pension schemes (including MP's) with just one basic State Retirement Pension Scheme to which every individual could add their own contributions as they think fit in order to improve their ultimate retirement pension. ?

No :)

and good thoughts David. Your mission, should you choose to accept it, is convincing those with a vested interest in preserving the status quo (aorund 15% of the population) that the other 85% want something similar to your suggestions!

DWSS – you suggest that there is a gap between reality and perception and then go on to quote mean/median pensions. But you fail to give alongside the corresponding mean/median years of service. Therefore you data is meaningless/medianless in the context of the value of public pensions. We must stop comparing chalk with cheese and deal with directly related facts. That is why the data you have presented is not media worthy of itself. My wife has an NHS pension of “just” £5k. But she has worked there part-time for only 18 years and it is a very good pension indeed as she would need £165k to buy it. Had she worked there 40 years full time then her pension would have been several times as high, well above the mean/median figures you quote. She worked at a relatively low administrative grade, below nurse entry levels.

David – pensions do not always end up back in the economy as we are not living in a Keynsian country but in a Global economy. This is the big mistake Brown made and QE is making. We are enabling people to spend more, much of it on imports. Our trade gap widens, and Sterling falls. King keeps the bank rate down to reduce the cost of paying our debt, so sterling falls further, This causes “external” inflation which hurts us all, giving King another good reason why rates should not go up ! It is all a vicious circle we can escape from only by spending less and investing more so that our trade gap is eliminated and once more we can pay our way in the World. This is the key problem. All the other suggestions you make are peripheral.

Hooligan – you appear to welcome a universal pension system. Of course this was what NI was meant to achieve until it became just another form of income tax, with the employer paying a fair chunk even before it appears on your payslip. But in order to bring all current pension contributions under one umbrella and share them fairly then there would be a hefty transfer from public sector pensions to private sector worker pensions. The effect would be far harsher to public employees that the current proposals.

Robert, because if the government managed a universal pension pot at some point would steal it, would you trut them with your money?. If it were managed by the financial sector they would take thier millions and leave everyone else with very little, blaming government policy, recession, difficult trading conditions etc.

Jon - I think there is a difference between the ability for individuals to save universally and a universal pension. I merely stated that pensions have been, are and will be readily attainable and attractive at a 15% contribution rate. So in other words, it was, is and will be possible for everyone to have a gold plated pension, universally. I did not talk about mechnaisms. The issue about compulsory contributions and central government actually funding accumulating portfolios of assets, tax rates, retirement dates was left out. I opened up the need to talk about the total costs embedded in the current "system" that reduces pensions paid to individuals.

Jon you have a good point but the reason for my suggestions is just that. You see buying from abroad is the only choice we all have. Since the day of the lame duck policies its the only choice we have. All this about manufacturing recovery is a lie we have become nothing but assembly plants for foreign companies. We need to trigger innovation here.

The pensioners I am speaking of are the vast majority who don't buy fancy imported goods they buy care for themselves, groceries, heating and the basics of life not much in the way of imported goods.

If we don't give people money to spend somehow and encourage them to buy British these couple of old money leaders we have will make a worse mess than Gordon Brown and Thatcher put together. They used to say in the oilfield "When you start believing your own Bull*&^t it's time to stop it".

David – but if a public employee works for 40 years and then retires on ½ or 2/3 pension then, with the State pension, I rather think he/she is above the level you are talking about. In fact I guess that the largest proportion in the bottom group have never had any significant time, if any, as a public employee. There are whole armies of public employees on £25k and more who will never face poverty. They do not have to save now and you will see them in the shops buying lots of cheap clothes, shoes, handbags and techno stuff all imported. We are “giving” these people money, but they have no incentive to save or invest so they spend spend spend and a fair proportion of this goes abroad.

I have many friends who have recently retired, and about half are ex-public employees, with lower qualifications, narrower work experience and no concept of taking proper responsibility for actively introducing change (ie you lose your job if it goes wrong – and in my case you lose it when it goes right as the company becomes attractive to a buyer). These friends have pensions I can only dream of despite the fact that I contributed a far greater % of my salary to my pension fund and had a similar salary. Now that their children have left home they are having the time of their lives, with many foreign breaks, cruises and exotic destinations. If we go out for a meal together I am uncomfortable about the size of bill we rack up. And so it goes on. Now I am happy that they are able to enjoy life without much restraint, but I believe that this situation has to be curtailed so that our children can enjoy more than bread and potatoes.

I hope that you are able to see the “Made in Britain” series on BBC1 – probably on BBC IPlayer – as it is very watchable. Finally I would like to think that everyone believes what they say (other than when they are playing devil’s advocate). But one must also understand that beliefs are very difficult to change, otherwise we would not have so many religions. We are at least 80% emotional animal so it can be difficult to allow the 20% rational side to have a say.

Those who have been less than fortunate in the outcome of their career decisions clearly resent the success of the (relatively) small proportion of public service employees who manage to retire on high final salaries with full pensions.

The statistics simply do not support envy-driven rants about public servants becoming affluent pensioners living it up in top restaurants, when not off on another cruise.

I highlighted many posts back the boss of my son's university who is set to retire on a pension based on his final salary of over £300k. There will be other examples of similar fat-cats skewing the picture, but not many.

Most public servants retire on secure, but very modest, pensions.

Hopeless Romantic – I think that the underlying problem is that there are different opinions on what is “modest”. Take a public employee on £20k working 40 years who gets a pension of £10k at age 60 which may be considered “modest”. To buy this annuity he would need around £350,000 which I do not call a modest sum. At most, in to-day’s terms he will have contributed £50k to that, whilst the taxpayer has contributed £300k - that’s like the taxpayer buying a house for him to keep. Those in the private sector on the same salary would find it the other way round or even worse when the employer makes no contribution.

So perhaps rather than talk about “modest” pensions, we should be talking about the effective annuity pot a person has. For some reason so many appear to shut their eyes and ears to the real financial facts.

And we must remember that everyone is entitled to a State pension on top. Our priority should be to give EVERYONE a State pension they can live on without benefits rather than to skew taxpayers’ money to one sector of the population at the expense of the other. It is not resentment but recognition that we live longer. If public employees can justify considerable extra pay simply because human life is extended, then I can justify an extra pension from the taxpayer because the population of buzzards in the UK has increased.

You may not like to accept the above, but that does not mean it is a rant. And, as I have said before, the statistics must include data on the years worked for any meaningful interpretation, Quoting figures out of context ie easy but also irresponsible.

Hi Jon - If I may say so (without in any way wishing to appear condescending) may I say that this is the first reply to the initial comment that I have found to have been of any real practical value at all. I would much appreciate your opinion on my earlier request for someone to explain just why we cannot have one National Retirement Scheme providing the same basic retirement pension for everyone with the ability of anyone to make such additional contributions as they think fit (or can obtain from their employers) to enhance their pension upon retirement. PS - I loved the bit about the buzzards!!

Robert – I believe we could if we were starting with a clean sheet. But we are where we are. The cost would be enormous unless we reduced occupational pension schemes which are paid on top of the state pension, both accrued rights and pensions being paid. But it is human nature to want the increased state pension and not to want to sacrifice any of the additional pension. Those with good pensions would see it as taking money away from them (even though they would be no worse off, and any beneficiaries by definition would never be as well off as they).

An alternative would be to fund the additional state pension through additional taxation on anyone receiving them. A sort of gentle means testing However this would be difficult to legislate as many are trying to fund their retirement through ISAs, property and so on.

Another possibility is to remove all index linking from additional pensions. Apart from reducing the future cost this might make the whole Country wake up and realise what is causing inflation (mainly falling Sterling) and all pull together to make this Country economically self-sufficient.

However, by containing the future costs of public employee pensions, and subject to eliminating the annual deficit with other measures, then we might be able to support some increase in the State pension, in line with the Coalition proposals.

Jon - my earlier post as not a justification of the status quo in pensions, I tried to highlight the quirkiness of you illustrating it in the subjective terms of your own position relative to ex-civil servant friends.

I'm presuming the friends had plodded through a low-risk career in return for modest salaries and assured pensions paid through through government income rather than through investments and annuities.

That they were able to afford a life-style of cruises and smart restaurants fueled solely by pensions is extraordinary, not at all what most public servants can expect. It seemed rather an awkward example to throw into the pot.

From what you write, you took a riskier road promising higher rewards. That the rewards failed to materialize fully is unfortunate. Just how unfortunate I have no idea. The misfortune was compounded by falling annuity rates and a dramatic fall in investment returns.

Your public servant friends were able to sail serenely through this difficult period simply because the terms and conditions of their working lives and their employment were not linked to annuity rates or investment returns, or to corporate whims in setting the levels of pension contributions.

I can understand your frustration when career tortoises outstrip the hare in terms of employment rewards.

Hopeless Romantic – I think that you are missing the point,

I am not alone. Millions of people in private industry and who are not in DB pension schemes have accepted that their pensions will be reduced and/or they work longer through greater life expectancy. They are not asking for anyone else to make it up, even though some of their loss was caused by Brown’s tax which is being spent each year on the public sector.

When recent retirees signed up as public employees, the pay was generally a little lower than private industries, but the pension was considered good compensation. Not only has pay overtaken the private sector, but the pension benefits have soared. These people are therefore now getting far more than they signed up for. And someone has to pay for it. This is not the odd person losing or winning in a gambling sense, but an imbalance between huge swathes of our society often using Union bulldozers against the defenceless.

The fault has been successive governments failing to continually rebalance the pension benefit, most probably in the light of Union power, and therefore public employees now have very very generous accrued rights. You talk as though these people are entitled to whatever pay levels some mathematical calculation provides without any reference to the market or to who bears the cost. If a private company upped its pay, then if its products were too expensive one could look elsewhere and the expensive employees would soon be out on the street. But the public sector is a monopoly. And do not forget that the “riskier” employees pay for it.

Jobs are not there for life – although many public employees think they are as they have never had to face anything else. But the more they demand, the more of their jobs will go. That is why private sector DB schemes are disappearing. The world is changing. Our economy is changing. Therefore unless we want the same fate as the dinosaurs we have to change too.

Obviously you have little sense of sharing the costs of us all living longer let alone the huge deficit. That is the crux of the matter. Nothing to do with tortoises and hares, employment contracts, envy, emotion, myth or political doctrine.

Hi Jon - Many thanks for your response. at the risk of boring you to tears, I would like to send you an idea that I have sent to various MP's, Chairmen of Select Cttees and anyone who appeared influential in the running of the country. Needless to say, I have not even had the acknowledgement of having received the letter, let alone responding to it. I did in fact submit it for inclusion on this website but was informed that it did not meet editorial criterea. If you could bear it, please let me have either an e-mail or snail mail address, I will be very pleased to share my thoughts with you. I can promise you not abuse this connexion in any way and will quite understand that you do not wish to engage in prolongued correspondence. Sincerely - Robert Benns.

Jon. Yes you have a good point. I do not come in contact with these people as they don't qualify for help. What I see is enough however. One thing we need to be careful of is putting young people off the idea of preparing for their old age any more than we already have. If we continue along this road no one will have the slightest faith in any pension at all. The country is full of people with big pensions and are not ex public workers. I have no beef with paying people what they are due and what they agreed to. I don't have it but would expect it if it had been agreed to. Many of the huge private pensions that exist are there because of a time when people had jobs for life. People go from job to job these days with little security at all, and now we even destroy the integrity of pensions and retirement age etc.

I do believe that the austerity idea is the wrong way round to help industry.

Let us take the Police median pension of £16000 pa at the age of 55. Approximately this would cost youaround £300000 up front in the annuity market to-day; even more with widows heritable rights. Add to that the £90000 cash which they take on retirement, you are well on the way to a£1/2 million. This is reality over perception. Let us have the real facts not disembling statistics.