I think there is an awful lot of rhetoric and disingenuous argument based on spin and political belief.
The Government has proposed that most public sector employees would be required to increase contributions to their pensions and would see their retirement age moved from 60 to 67, over the next decade. In addition, those under 50 will see their pension switched from a final salary scheme to one based on average earnings.
Even with these reforms there will be an enormous gulf between public and private sector pensions. Over the past decade most private sector companies have abandoned final salary pensions but, rather than stick with earnings-based pension schemes, most have replaced them with "defined contribution" schemes, where the pension is based solely on the amount of money invested, stock market returns and prevailing annuity rates.
It is estimated that someone in the private sector on similar earnings to a nurse would need to accumulate a pension fund worth £600,000 to be able to secure the same pension.
Ros Altmann, director general of Saga (not someone known for Right-Wing leanings), the old age specialist, and former independent adviser on pensions to Tony Blair, said: "This is a fantastic deal for public sector workers but it is a worse deal for the taxpayer." She said it seemed incredible that some public sector workers were considering rejecting this offer.
Here are some facts to bring some proportion back to the thread.
1) Millions of public sector workers will retire on bigger pensions, even after the Government's watered plans to reform their pensions.
2) The Government made two key concessions, which will see more than one million older workers exempted from these changes and accrual rates boosted for younger workers, meaning they will earn a larger pension for each year worked.
3)The Government now propose to allow older workers to keep their current retirement age – in most cases 60.
Those who turn 50 by April next year won't be moved into the new career average pension scheme. Previously the Government had proposed that the retirement age for public sector workers should be moved in line with the state pension age: this is due to rise to 66 over the next decade, before rising to 68.
4)The Government is proposing that the under-fifties will be moved into a new career average plan, will have to pay more into it, and will see their retirement date pushed back.
However, whereas previously the government was proposing that members would earn 1/65th of their average earnings for every year they work, now it will be 1/60th. In other words, for every year they work they will qualify for a bigger pension slice, compared to the previous offer. This should mean that those on middle and lower earnings should still get the same, or a bigger pension when they do retire.
5)Most schemes currently just offer 1/80th of earnings for every year worked. It is argued that this is less generous, but remember it is 1/80th of their final salary, rather than 1/60th of "average earnings". As most people's salary increases during their working life this means most people get bigger pensions from final salary arrangements.
6) Although the Unions keep harping on about Public Sector workers having to pay 3.2% more for their pay into pensions, this is a disingenuous figure for the following reasons :-
(a) No-one earning less than £15,000 a tear will pay any increase
(b) The 3.2% only applies to those at the highest end of the earnings scale and NOT the majority of workers.
(c) the average rise in pension contributions will be 1.5%
(d) Those in the Local Government Scheme itself will only pay 1.5% full stop.
7) As a comparison with the private sector, it has been estimated that a nurse would have to accrue a pension pot worth £600,000 in the private sector to buy the equivalent pension that would be paid in the public sector – even if these reforms go through.
8) There will be very few "losers" only those who have had steep pay rises in recent years. For a teacher earning £37,800 at the end of a full career in the scheme would get a pension of £25,200 under the new rules, compared with a pension of £19,100 under the existing final salary scheme. To achieve that through a private scheme they would need a pension pot of £675,000.
The cost of Public Sector provisions has risen by 30% in the past 10 years. It is NOT Public Sector workers who are being asked to fund their very generous pension but the ordinary working person, most of whom are in the private sector.
Remember that the same Unions who want to oppose these moderat changes are the same one who supported and canvassed for a Government which as one its first acts was to destroy the same pension schemes provided by the private sector simply to enable it to go a spending spree of never before seen proportions, the outcome of which was to damage the ability of the UK to protect itself once the World Markets fell.
Private sector workers have had to pay far, far more than 1.5% extra towards their pension funds, which are now practically all based on defined contribution schemes which ar far worse than the Public Sector schemes.
A Public Sector worker earning £30,000 contributing 10% (£3,000) of salary a year for 40 years will get an index linked pension of £20,000 (based on the new 1/60ths formula). Current life expectancy means they’ll receive this for about 20 years. This was acceptable, a few years ago when life expectancy meant they’d receive it for about 5 years. This is not acceptable now, annuity rates have dropped to a third (a £100,000 annuity now pays £3,333, it paid £10,000 twenty years ago), in the last 6 months alone annuities have gone down by almost another tenth. In twenty years the cost of private pensions has gone up threefold whilst Public Sector pensions have remained unscathed.
When they retire their pension contributions and national insurance payments will cease (thus saving them over 20%), their (age related) tax code will commence and they’ll also get a state pension (it’s being proposed this is raised to circa £7,000 a year soon). Their net income will be greater during retirement than when they worked. This is totally unjust and a mockery to other pensioners. The vast majority of this injustice will be funded by the Tax Payer.
Paying £3,000 a year for 40 years to receive £20,000 a year for 20 years is an exceptional deal.
In the Private Sector paying this £3,000 a year may just mean one escapes means testing in retirement. Any insurance company that forecasts a pension even close to £20,000 a year for this sum is lying.
I think you will find that there is no sympathy towards Public Sector workers who already have a heavily provisioned pension, which will always be paid for by those of us in the private sector, whilst at the same time we have seen our pensions schemes destroyed, and have been required to pay ever increasing amounts to simply keep up, and in many cases having to pay considerably more, whilst our jobs are being taken away and pay cuts/freezes established.
Public Sector workers have a far better provisioned pension that pretty much anyone in the private sector, and to whinge about a mere 1.5% increase when the rest of us are being screwed for considerably more leaves a pretty unpleasant taste in the mouth.
