Public Sector Pensions Reform - About friggin time..

[Mammoth]

When TB was elected first he gave Frank Field carte blanche for widespread pension reform/revolution- then got scared and sacked him. A sadly missed opportunity.
Now Frank Field is penning a review for DC- what odds the same outcome though?

 

[Spiros]

It just sounds like it. My wife went in to teaching to make a difference, not because of the pension or anything else. But all this goverment is doing is putting worker against worker. Why has no one questioned what these politicians are getting. Are the politicians pensions safe? I bet they are.

This goverment are again picking on the wrong people.

Why do you think it's the government doing this? Ironically the recommendations have come from a report produced by a LABOUR peer, formerly Pensions Minister in the Labour government. ie one of the previous mob who created the financial 'situation' our country finds itself in today.

 

[drew]

Drew - Can I please nail this pensions holiday tale that you frequently cite, once and for all.

All final salary schemes are periodically valued by independent actuaries and the funds (with projected returns) are compared with the projected liabilities. The reserves are measured as a percentage of liabilities so a fully funded scheme would be at 100%. Many schemes in the 80s and 90s enjoyed huge surpluses in their funds (some as big as 120%) yet companies were expected to keep pouring money into these schemes.

The Government allowed companies to stop making contributions where the value was something like 105% or more of liabilities. The reasoning being that the companies were being responsible and maintaining a fully stocked up pension pot and then some. As soon as the levels dropped below this magical figure then the company had to top the fund up again. At no time did the government allow the companies to be excused from their responsibilities of maintaining a full pension pot.

What is important is the company was being a model employer and ensuring the pension pot was full. What they were asking back was the excess that they had paid in.

.....And then along came Gordon Brown and wiped out 20% of annual future earnings overnight.

So, the actuaries stuffed up with their advice and the companies couldn't see further than the next profit announcment. Which government decided that a 5% margin for error was ok? You can trawl through NSC to see how many threads there have been from our right of centre members slagging off Labour because they didn't save during the good times and now you are suggesting that it is ok for companies to do the same thing! One example is unilever as per the following:

So who the devil has ruined your pension? | Money | The Guardian

The margin for error is ridiculous when you consider that in one day, say yesterday, 1.5% is wiped of the stock market. Look back to 2001 and the recent recession and the market drops by considerably more than 5%.

As for the actuaries, in the 1980s and 90s, wasn't it clear that the increasing life expectancy and elderly population would put greater demands on pension funds. People starting work in the 80s and 90s would be the ones retiring in 2020s and 30s.

There are many contributing factors to problems with pensions but it is a shame you seem to absolve everyone except GB (and for the record, not by any stretch of the imagination my favourite Cof E or PM)

 

[Bry Nylon]

There's a big difference in public sector contributions: I believe the armed forces pensions are non-contributory, some areas pay 6-7%, the police pay 11%. Not sure about firefighters.

11% also.

 

[Lincoln Imp]

11% also.

Yes, that's probably because fire-fighters retire when they are about 12.

 

[CliveWalkerWingWizard]

Why is the private sector so jealous of our pension ? I can retire at 55, but I would have severe penalties. I need to work for 40yrs to obtain a final pension of 50% of my salary. I know that this is a good pension but the money I can retire on is insignificant compared to the 20K extra per annum with the same qualifications can earn.

 

[Castello]

Wow.

I was in a Unite Branch meeting on tuesday night with a Labour MP speaking to the meeting called to build support for the March and Demonstration against the cuts on 26th March.

TUC national demonstration against the cuts


In the meeting the MP stated that this week the Hutton report was being published, with a recommendation that we have seen. He stated that unions were now talking about unified industrial action to oppose this. At the time I thought to myself give it two days and this will be a big binfest on NSC. You took a day longer than I thought.

There have been many uninformed comments made attacking public sector workers and some informed comments suggesting there needs to be a way forwards.

To those uninformed people attacking public sector workers, I suggest you take a look back and realise that the public sector workers help to keep the infrastructure of this country running, often being on the receiving end of physical and verbal abuse from those they are trying to help, as well as thanks. This is true from policemen to nurses, from social workers to housing officers, from firemen to binmen. I wouldnt make them out to be saints , they do get paid a wage for it. Part of that wage has been (in some cases but not all) contributions to a pension fund, usually matched by contributions from the worker themselves.

As someone who has been a public sector worker and still works in a related profession, I have always taken the abuse and kept my calm, understanding that the person abusing me was themselves under pressure, and taken the thanks with a smile and said "im just doing my job". In my experience this is the view of most public sector workers. I dont like but take the abuse and appreciate but dont need the thanks.

However what i do expect at the end of the day of doing a hard stressful and tirning job, helping the public (i e all of us) is the wages I have more than earned. This includes the pension I contributed towards for many years. To those who disrespect public sector workers for this I merely ignore you as ill informed souls who know not what you say.

To those of you seeking a way forwards I would say this: Most public sector workers live in the same streets as the rest of you, we see private sector workers as no different. The truth is there are just workers doing jobs.

If your employer wanted to cut your wages and gave you no say no choice and just cut them you'd be mighty pissed off. If you were in a union you may even go on strike. If you werent you probably would look for a new job. Whatever happened morale would drop, productivity would drop and the idiot boss would lose out as well.

However if your employer came to you and said we are experiencing financial difficulties, were going to make savings. I will give us some of what i get, but Id appreciate it if you could help out, and when things get better ill make it up to you, your response would be different and probably more positive.

Why do you think it's any different here. If the government want to confront public sector workers over a part of the wages called a pesnion, impose this, force this through, there will be a big fight. We may lose, but so will the rest of the public. They will have a further demoralised public sector already cut to shreds and feeling very unappreciated. I would suggest this only helps those who dont need the NHS, free education and can afford their own security and fire service. I think you know who they are.

However If the government comes to the unions and say ok we have a problem here, we have made mistakes, you have made mistakes, but rather than blame each other lets find a way to sort it out. We know your members will have to make sacrifices, but the benefit will be felt elsewhere and another time, please work with us. You might find under these circumstances that workers will bite the bullet and accept losses. Youd also have a public sector that felt involved in the decision, and would be more willing to cooperate. This to me is a way forwards.

Now personally I dont believe either party have the ability to take this route forwards. The Labour party is too arrogant. The tories have another agenda. They want to destroy the public sector. They want this confrontation, seeing it as a way to attack and destroy the unions. They may well get what they want. However just remember you will be the losers as well as us.

As for me, Id rather live in a society where i feel involved listened to and respected for helping others. If thats not an option, I'd rather die on my feet fighting than live on my knees begging.

Finally if youd rather have the positive way forwards, come and show this government on the 26th March this is what you want. There is an alternative. Make it happen.

Sorry to take up your time, but I had to get that off my chest.

 

[Seagull over Canaryland]

Re. reply #65 - Lincoln Imp

Hopefully just a WUM on your part, but just in case a couple of clarifications may help:

The Firemens Pension Scheme closed to new entrants in 2006. Like the Police this required 11% gross contributions from the employee. It did not allow employment after 55 and discouraged service after 30 years contributions as no further benefits would be accrued. The scheme assumed shorter life expectancies that were more common in society decades ago. The number of members will now steadily gradually reduce. The replacement scheme requires less contributions but also gives less benefits and requires longer time in service, reflecting a longer life expectancy these days. It also allows for re-employment so valuable experience is not lost, however this is at the Fire Authority's discretion and the individual does not have a real say in this.

Both are mandatory final salary schemes and broadly reflect that being a firefighter is not a normal role with operational service requiring a high degree of fitness, shift working and an element of risk. Frequently there are very unpleasant aspects to the role but most see this as a vocation. Like any occupation there may be a few 'skates', but it is my experience that most exhibit goodwill, working beyond the minimum hours (as is also the case in other public sectors ie Police, NHS, Teaching etc). I acknowledge that most get to enjoy their pension but several acquire occupational injuries, illnesses or are killed on duty. The latter is on the increase, inspite of health & safety and emphasis on training etc. Hence provisions in the pensions schemes for widows / widowers. Please reflect on this.

I have already posted my own views re pensions reform and agree that something has to be done, especially regarding final salary schemes but suggest it is not the fault of individuals, but successive governments that avoided tackling the issues.

I am mindful this is principally a footie forum so wish you all the best - regardless of your allegiance.

 

[portslade seagull]

My final salary pension was changed by my company and i now have to work longer before receiving it as well. sadly it seems to be affecting everyone else so no special cases here.

 

[m20gull]

Drew - Can I please nail this pensions holiday tale that you frequently cite, once and for all.

All final salary schemes are periodically valued by independent actuaries and the funds (with projected returns) are compared with the projected liabilities. The reserves are measured as a percentage of liabilities so a fully funded scheme would be at 100%. Many schemes in the 80s and 90s enjoyed huge surpluses in their funds (some as big as 120%) yet companies were expected to keep pouring money into these schemes.

The Government allowed companies to stop making contributions where the value was something like 105% or more of liabilities. The reasoning being that the companies were being responsible and maintaining a fully stocked up pension pot and then some. As soon as the levels dropped below this magical figure then the company had to top the fund up again. At no time did the government allow the companies to be excused from their responsibilities of maintaining a full pension pot.

What is important is the company was being a model employer and ensuring the pension pot was full. What they were asking back was the excess that they had paid in.

.....And then along came Gordon Brown and wiped out 20% of annual future earnings overnight.

As an actuary (and a pensions one at that) I could probably write for hours on this subject but am not going to. There are many facets to the subject of why the pension system is in such a mess and a lot of it is down to governments thnking they can legislate to make employers provide additional benefits without adding to the cost - and then making it more expensive to do so. Companies then run away from the cost and the risk and well done to them. Hutton is all about making the public sector realise that you can not simply provide more pension without it costing more - the only guarantee is that there is going to be an awful lot of crap spouted by people defending their own position.

 

[Lord Bracknell]

After taking early retirement from the public sector (and receiving a - reduced - pension as a consequence), I'm now working in the voluntary sector, where pay levels are hardly excessive. Reading this thread, it strikes me that quite a lot of my current work colleagues have a similar employment history. Enough of us, in fact, for me to put forward a claim that it's a positive BOON TO SOCIETY that public sector pensions (and the options for early retirement that go with them) can ensure that voluntary sector organisations are in place to deliver what Call Me Dave thinks will transform the lives of millions - The Big Society!

Marvellous.


Water down public sector pensions, make folk stick with their jobs until they are approaching 70, and who knows what might be lost?

 

[m20gull]

After taking early retirement from the public sector (and receiving a - reduced - pension as a consequence), I'm now working in the voluntary sector, where pay levels are hardly excessive. Reading this thread, it strikes me that quite a lot of my current work colleagues have a similar employment history. Enough of us, in fact, for me to put forward a claim that it's a positive BOON TO SOCIETY that public sector pensions (and the options for early retirement that go with them) can ensure that voluntary sector organisations are in place to deliver what Call Me Dave thinks will transform the lives of millions - The Big Society!

Marvellous.

Marvellous - but not free.

 

[Lord Bracknell]

Marvellous - but not free.

Of course it's not free. But, if Cameron thinks he'll get his Big Society for nowt, he's deceiving us all.

 

[beorhthelm]

However If the government comes to the unions and say ok we have a problem here...

well, we dont know how it will be approached yet. but will the unions, PCS in particular, listen? some seem to already be calling for strike action, before the government has even responded. its the fundemental problem in this country, from both sides, to start from a belligerent stance. there seems little interest in debating what it means if we dont reform pensions, because the numbers are f***ing scary. its an issue thats been ignored and side stepped for too long, Labour bottled it after Fields, will Tories follow through? you better hope they do something, because the risk is pensions become alot worse down the line if its not brought under control now.

if the unions believe the Tories want this confrontation to destroy them, then theres a very simple way of disarming and moving to a position to defend the long term interests of their members: accept there is a serious issue and it needs to be addressed, seperate it from the cuts and the politiking and seek a solution that the country can afford.

 

[m20gull]

well, we dont know how it will be approached yet. but will the unions, PCS in particular, listen?

It does not seem like it. Already threatening strike action. Over what - a recommendation?

 

[blue'n'white]

Before any more of you have another pop at Public Sector pensions you ought to be more aware of the facts! The average Public Sector pension works out at less than £4000. My wife for example retired from a local authority two years ago and gets a magnificent £1200 pa. Do you think thats too much? Don't forget if the average is about £4k then there are a hell of a lot getting less than that. I had a neighbour once who used to laugh at me and my wife because we paid tax and 6% of our salary towards our pensions when he, in the private sector of course, earnt considerably more but paid diddly squat because he was able to 'fiddle'. No doubt he is at the fore front now of those demanding a cut in pensions for the Public Servants.


Although it might have recently changed a bit, for a good proportion of my 45 years in Local Govenment I was paid considerably less than those workers in the private sector doing a similar job but the saving grace was that I would have a reasonable pension to make up for it. Now all those who paid little or nothing towards their pension but decided to spash their cash in other areas can't wait to have a pop when they realise they should have been saving a bit more themselves.

And yes I could have gone and worked in the Private Sector but I didn't fancy lining the pockets of shareholders and Chief Executives!

Hear hear - 100% correct.
What the average man in the street thinks is that all public sector workers are well paid and with a "gold plated" pension at the end of it. For years and years I've put up with pay rises of either nothing or 1 or 2 per cent whereas private sector workers have enjoyed huge salaries and huge bonuses (and I'm not talking about bankers here but friends of mine who work in other areas). It's been a sort of trade off that whilst we don't get paid anywhere near as much as private sector workers we do at least get a bit of a pension at the end of it. And despite what many of you want to believe it is only a bit of a pension - there ain't going to be any Amex season tickets for me when I retire. And now the bastards are going to take that away too - all because successive governments have given our money away - frittered it away on crap

 

[Castello]

well, we dont know how it will be approached yet. but will the unions, PCS in particular, listen? some seem to already be calling for strike action, before the government has even responded. its the fundemental problem in this country, from both sides, to start from a belligerent stance. there seems little interest in debating what it means if we dont reform pensions, because the numbers are f***ing scary. its an issue thats been ignored and side stepped for too long, Labour bottled it after Fields, will Tories follow through? you better hope they do something, because the risk is pensions become alot worse down the line if its not brought under control now.

if the unions believe the Tories want this confrontation to destroy them, then theres a very simple way of disarming and moving to a position to defend the long term interests of their members: accept there is a serious issue and it needs to be addressed, seperate it from the cuts and the politiking and seek a solution that the country can afford.

The reality os that the union side will offer talks, they always do and always will do. For one simple reason, to win a strike ballot they would have to convince their members there is no alternative. Without offering to talk they cant do that. If the government agree to talk they will meet and do so.

If this happens and the government then want to impose something, will you then accept that workers have a right to defend themselves? Or will you say workers have to take what they're offered for the sake of the public. Just remember this is our money that is being talked about.

 

[severnside gull]

Hear hear - 100% correct.
What the average man in the street thinks is that all public sector workers are well paid and with a "gold plated" pension at the end of it. For years and years I've put up with pay rises of either nothing or 1 or 2 per cent whereas private sector workers have enjoyed huge salaries and huge bonuses (and I'm not talking about bankers here but friends of mine who work in other areas). It's been a sort of trade off that whilst we don't get paid anywhere near as much as private sector workers we do at least get a bit of a pension at the end of it. And despite what many of you want to believe it is only a bit of a pension - there ain't going to be any Amex season tickets for me when I retire. And now the bastards are going to take that away too - all because successive governments have given our money away - frittered it away on crap

you clearly mix in different circles to me. After 20 odd years as a teacher I took early retirement and subsequently worked in the private sector where my experience was that pay rises were less generally than the public sector average in similar roles/functions and general conditions were also inferior (pensions included). The argument often used by public sector unions that the beneficiaries are generally low paid (specifically lower than their counterparts in the private sector) is, in general terms, a myth perpetrated to maintain priveleged conditions. I benefit from a very generous pension in that it was both final salary based and index linked. My private sector pension when I get it will be much less advantageous.

Notwithstanding I can appreciate the argument that final salary pension schemes as currently widely operated are unaffordable. People live longer and (often) retire earlier and the claims on the funds outweigh the income to them. Something has to be done and although it would be unfair on current members of these schemes to be disadvantaged in the short term there has to be a medium to long term shift towards a more sustainable model.


Having said that I do not believe the changes necessary to achieve a sustainable pensions model in the public sector will actually materialise because the people charged with making it happen are those who will be most disadvantaged by any adjustments. In the same way public sector job cuts will not be achieved in the medium to long term as front line service cuts will be counterbalanced by administrative and managerial staff increases. Hot air and smoke and mirrors and nothing much changed. It was ever thus

 

[Lord Bracknell]

... In the same way public sector job cuts will not be achieved in the medium to long term as front line service cuts will be counterbalanced by administrative and managerial staff increases.

That's not the public sector that I recognise. The quality of management and administration has plumetted in recent years, as experienced people have left, to be replaced (if at all) by young, hopeful graduates and school leavers who can't do the job and can't survive the stresses.

 

[braveheart]

I've no doubt that is the case. Outsourcing always delivers a deal that cuts pay. But the point I was making was that public service workers traditionally enjoyed better conditions but relatively lower pay than mainstream workers in the private sector who had worse conditions but better pay. As a career choice, there was a trade-off between the two.

The outcome of outsourcing public service work is the worst of all worlds for the workers - poor conditions AND lower pay.

And this is really what it is all about, there will be a rapid reduction of the public sector and many of those roles (cause there really are not that many non jobs out there) will be outsourced to the private sector, and done on the cheap. To achieve this worker's pay and conditions will be attacked, so no wonder in many areas the private sector will seem to be lower paid with poorer conditions, it's inevitable if you are going to provide a similar service, not necessarily better, at lower cost.

Also as regards Hutton's recommendations they do not necessarily need to be taken up by the government. What could happen is that they want to go further and faster, hutton may just not be radical enough for them. I suspect the unions know this hence they are already talking about strike action, as they fear worse than what is already being proposed.

The reward for destroying the public sector unions and substantially reducing public sector involvement will be tax cuts, which will take us back to the 80's scenario. Namely,you can have a couple of pence off your basic rate income tax, but if you want a good education for you kids it'll cost 12K a year per kid and you will need to pay for effective health care. Leisure services, libraries etc will only be available if you want to pay or run one yourselves (who will have the time, once the relatively young final salary schemers have all grown old and everyone behind them is now working until they are 70 and then living a relatviely poor existence.

The truth is the big society and the current approach to reducing the deficit, are just a con. It is allowing the Tories to radically reduce the public sector that will result ultimately in tax cuts, benefiting mainly the wealthy, who already pay for their private education, health care and leisure, while the rest of us go back to an underfunded and demoralised public system with run down facilties. Part of the reason for the new labour project was because people had become angry about the poor health service and an education system that was not delivering for their children, and they did not earn enough to pay for a better private option.

so if you want to believe the sound bites by the likes of the Daily Mail that is fine, but ideology is back in politics and so is the nasty party. It's just that currently they've been presented with a cover story (deficit reduction) that allows them to cleverly go far beyond what is honestly required, while telling us there is no choice or other option cause it's the other lots fault.