Shrewsbury teacher fears £60,000 pension cut
Tuesday 15th November 2011, 6:59PM GMT.
A teacher at Shrewsbury College of Arts and Technology today revealed he could lose almost £60,000 from his pension if controversial Government proposals are passed.
Mike Edwards, who teaches trade union studies, said the Government’s plan to cut public service pensions would see him worse off every month, working longer and left with a smaller pension.
He said it would be a bad deal for public sector workers.
“I will have to contribute nearly £74 per month more for my pension, retire one year later and will lose almost £60,000 over the 25 years I might expect to be in retirement.
“That’s a really bad deal for me, and for many like me.”
The news comes as public sector workers across the county prepare to down tools and strike on November 30.
Shropshire and Telford Trades Council (S&TTC) is now urging members and non-members to get involved.
Brett Davis, chairman of the S&TTC, said there was widespread anger over the cuts which he claims mislead people into thinking public sector pensions were ‘gold plated’.
He said the average pension was worth about £7,000, with some getting less than £5,000.
“It is also widely claimed in the media that pensions are unaffordable.
“Like so many myths spread about by the ConDem government the reality is different,” he continued.
“Pensions are affordable, they are not wildly generous, and cutting them is not fair.
“It is vitally important that people realise that the fight over pensions is not just some local squabble or difference of opinion with an employer.
“This is serious stuff and will have long-term implications for young employees as well as for those nearer to retirement,” he said.
Leo Fisher, from the Telford Unison branch office, said: “One serious issue is that people will have to work longer to earn less in their pension.
“This will slow down workforce turnover and will block opportunities for youngsters trying to find jobs.”
By Jason Lavan
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It might surprise Mr Edwards to hear that while the average public sector pension is £7,000, in the private sector it is £1,700 and NOT protected from inflation. Also, private pensions were robbed of £5 billion a year when Gordon Brown abolished dividend tax relief in 1997 and used his plunder to fund public pensions. Over 80 per cent of public workers have final salary pensions while the figure in the private sector is 15 per cent.
What Mr Edwards and his cosseted colleagues fail to realise is that the great British public have had enough of financing public pensions through ever-increasing national and local taxation, and no amount of appeals by unions for support for their cause amid warnings of looming poverty will persuade them otherwise.
Indeed, they may be tempted to welcome public sector workers to the real world and point out that councils are saving money for every day that staff go on strike.
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Sorry to interject with some fact, but Gordon Brown didn’t ‘plunder’ a single penny from pension funds. Instead he simply stopped allowing tax relief on employer contributions to such funds at a time when many large employers were foolishly taking a payment ‘holiday’ based on the false assumption that their pensions were sufficiently well-funded for the future.
As far as tax relief on individual pension contributions goes, that remains, and more is spent on this than on the total spent on paying public sector pensions. It’s simply ridiculous to suggest that the money saved was spent on public sector pensions – it’s simply that tax relief on non-existent contributions was removed, as it was no longer an effective fiscal policy.
Public sector workers do live in the ‘real world’ despite what your Daily Mail might tell you – and they’re taxpayers too by the way!
They retain their final salary pensions because they’ve had the good sense to organise and get trade union backing to preserve these. I wonder what you did when your employer decided to steal your pension rights from you? Probably nothing – so why whinge at those who have taken the time and energy to protest?
If you are really concerned at wasting public money and fairness, why aren’t you questioning the massive tax breaks for the wealthiest individuals and companies, which cost us up to £150bn per annum, and allow the richest to pay typically less than 10% of their income as tax?
Would that you and I had such options available to us!
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Sorry to interject with some fact but Gordon Brown DID plunder private pension funds by abolishing tax relief on dividends from investments held by such funds. Tax relief remained for employees’ pension contributions. The big difference is that the public sector pension pot is empty. Such pensions are financed by taxes and Joe Public has become fed up not only with financing them, but also with the constant whingeing about how badly the public sector is being treated. Incidentally, I read the Independent!
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The suggestion, Nick, is that Brown took money OUT of private sector pension funds. He didn’t – he stopped giving taxpayer’s money to put IN!
He stopped allowing tax relief on contributions at a time when many large employers had stopped putting money into their final salary schemes – so they weren’t qualifying for the tax relief anyway. The problem with private sector final salary schemes in many cases was simply that the employers wilfully underfunded them and the employees involved sat back and let them do it to them.
Much of the public sector has never had a ‘pension pot’ – instead, the government has always spent the contributions on the public spending of the day – to the benefit of all citiznes, private and public sector, taxpayers or not.
Under the government’s current proposals, the increased contributions still won’t go into a ‘pot’ or proper scheme – once again they’ll still just be used as ‘petty cash’ by the Exchequer. That’s the way it’s always been with public sector pensions – why only start whingeing about it now?
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Actually Nick you’re wrong. The public sector pension pot is not empty. The NHS pension is currently in surplus (i.e. all those paying in meet the outgoings plus add money to the Treasury) plus the local government pension is fully funded. Whilst you say you read the Independent you do seem to be falling for the Daily Mail type argument – however you should never let the facts get in the way of a good rant.
You might want to look to yourself and see why your pension is small now – did you get off your backside and fight for it ?? My guess is not. So why begrudge people who are?
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Wish my pension was like his. The country can’t afford it…so get used to it.
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What is your pension like?
The condems have done well into hoodwinking people into thinking that public sector pensions are GOLD PLATED, they are not they range from £7k to less than £5k, i wish mine was like an MP’s (who wont talk about theirs) £13.5k a year for a minimum of 5 years service for life !
I think all public sector workers should pull out and just take the State pension like most others do.
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Public Sector Pensions DO NOT range from £5000 to £7000.
What does a time served teacher/ police officer/ fireman etc etc pension equate to, get real.
The low figures quoted are for jobs that are no doubt invaluable but they are no doubt part time positions or 35 hours a week at £7 an hour.
The sooner the Public Sector tell the truth about hourly rates/ pensions ratios to actual earnings, then the general public will have slightly more empathy for their position.
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Firemen pay for their own pension, about 12.5%. of their pay
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Care taker , clerical full time that’s
who gets the pension quoted so honest figures please.
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As far as the Civil Service is concerned, for those over a certain age, the rules were that 1/80th of salary accrued per annum served, up to a maximum of 50% of final salary, after 40 years’ service.
So, someone earning £25k at the end of their career of 40 years, would get a pension of £12.5k. Someone on the same final salary after 20 years’ service would get £6.25k per annum, and someone with 10 years’ service £3.125k.
For those who joind after a certain date (I can’t recall the exact date) and for new starters for at least the last few years since the terms of the PCSPS were negotiated with the previous government, the terms are considerably less generous.
I work for a private sector company and have done so for the last 16 years or so. It has maintained its final salary pension scheme, which pays out 2/3rd of final salary as a maximum.
Though the scheme, like the terms of the old PCSPS scheme, has been closed to new entrants for several years now – it shows that reasonable quality pensions in the private sector are still not unknown, despite the hype.
If you look at a history of 40 years in the public service (from the perspective of someone coming to the end of a long career, for example), though at present the statistics show public sector salaries as slightly higher (due to employers taking full advantage of the recession to cut pay), for most of that period, public sector salaries have lagged behind, especially during times of high inflation – and the statistics show this.
I can well recall when in the Civil service back in the ’80s, double digit pay rises being the norm in the private sector, whilst the Civil service were lucky to get 4-5% – it’s swings and roundabouts over a long period. I can also recall that those with specialist skills, such as IT or accountancy skills, had to be paid additional allowances, as the Civil Service were losing experienced people hand over fist to the better-paid private sector.
It was OK to get lower pay rises though, because every year, we were told that the lower salary increases took account of the cost of pensions – so it’s erroneous to suggest that these pensions haven’t been paid for by the recipients.
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Where is the evidence that the country can’t afford it!! Also, why is your own pension so small?! Roll your sleeves up and do something about it or face poeverty in retirement!
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The Hutton report on pensions.
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Ok deal, we private sector workers will carry on paying into public sector pensions to such an extent that you don’r lose anything if you reciprocate by paying some of your wages into my private personal pension
Face facts, no one cares. We’e all too busy trying to keep a roof over our heads today to worry about the pension you’re going to get years from now
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Public sector workers’ personal contributions to pension funds are often underestimated. As a junior (ie unpromoted) lecturer my required payment was £240 a month. £74 a month extra would be a real burden on top of that.
Workers in both the public and private sectors are struggling.
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So you must be on a £40K+ salary??
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Now self employed.
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Re Jeffrey Borra’s point about the percentage of salary public sector workers pay on personal contributions to pension. I paid 10% of net.
Btw not public sector funds are the same.
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“Mike Edwards, who teaches trade union studies”
and gets a pension of that size – what have I been working for for the last 35 years?
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Mike Edwards, Teaches “trade union studies”.
Must be a trade union rep.doing another Non Job.
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absolutely my point – nice work if you can get it
and who pray is he actually teaching and for what job????
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Another pointless reply from John who never looks at the point beyond what he reads in the Mail?
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Isn’t it called the Daily Fail!
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I do love it when Peter and his Public servant friends whinge and then try to dismay us with “facts”.
Well here’s some facts from a private pension holder…self employed. (if you’re tempted, I believe you too could opt out into a private pension, if yours is so bad).
In the early nineties I remortgaged my house and to cover the extra £25K mortgage took out another pension plan to cover the extra £25K mortgage which should have given me £25K on maturity (called a pension mortgage).
This pension has been costing me £57.70 a month. (Ok not a fortune but it’s just an additional plan to others that I have.)
As of this summer I have paid into it, £13,790. If I retire in five years time I will have paid in £17,250
What will this plan pay me then?
With a 5% growth, it will be worth £16,700 giving me a lump sum of £4,180 and annual pension of £575 or just a pension of £766.
Any public servants out there tempted?….I thought not.
It’s about time that they realised that all pensions have suffered over the years and some of us a lot more than they are ever likely to, so wake up boys and start living in the real world…it’s tough out here.
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Grumpy – I’m not a public servant, nor do I have a public sector pension.
If you have always found the public service so attractive – why have you never applied?
The reason that private sector pensions have suffered is because those in private sector companies sat back and allowed their employers to drain their pension funds to fund fat cat directors and shareholders – you can’t blame the public sector for that.
Perhaps you could also enlighten us over the tax breaks allowed to the self-employed?
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Oh Peter, you poor deluded person. I have no wish to join the public sector I am happy with my salary from self employment and couldn’t work in such a wasteful, workshy environment of the public sector (know too many people in it to believe otherwise)
I just object to the mistruths spouted about how bad it is compared to the rest of us…as if!
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“Perhaps you could also enlighten us over the tax breaks allowed to the self-employed?”
No, peter, perhaps you could enlighten us with some facts about tax breaks allowed to the self employed…you seem to like boring us silly with talk about how multinational company directors are so well catered for, so please inform the general public how us “one man bands” are ripping off the country…..I’ll start the ball rolling shall I with our 40p per mile car allowance…something the public sector were complaining about being TOO LOW for them, If I remember….over to you now,Peter.
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It is very plain to see whom is deluded “such a wasteful, workshy environment of the public sector”.
GOM’s statement of course includes our Armed Forces, medical, firefighters, police etc.
What a pathetic drivel laden sad uneducated statement.
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Nice punctuation, Gary.
Do you not wish that you had received a better education from the public sector and then, maybe, you could contribute more to the debate, without just badly punctuated insults?
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@Roadrunner,
Self-employed people have a number of tax advantages allowed to them.
Firstly, they pay their taxes in arrears, rather than at the point of income as with PAYE, so they get to hang on to their untaxed income longer.
Secondly, there is a multitude of business items that can be offset against taxable income – PAYE taxpayers have fewer of these. For those who choose to set up small limited companies to support their self-employment, there is the option for a spouse who doesn’t actually do any productive work for the company to be declared an employee, thus allowing an effective transfer of tax allowances, and potential spreading of income to allow avoidance of higher rate tax – no such transferable tax allowance is allowd to PAYE taxpayers.
I’m surprised your accountant hasn’t made you aware of these practices.
You seem to be very confused about mileage rates. There have certainly been complaints from public sector unions that the tax-free limit set by the government via the Inland Revenue has not risen in line with the cost of motoring. 40p per mile, which was the maximum allowed to be paid without any such allowance becoming taxable as a benefit in kind, did not cover the running cost of a vehicle. This tax free figure wasraised to 45p a little while ago – still not enough to cover running a vehicle with increased fuel, insurance and other costs. It’s not a perk – simply a reimbursement of legitimate expense.
But you miss the point – this tax free allowance doesn’t just apply to public servants – it also applies to the private sector – most private sector companies also pay up to this amount for business miles undertaken in the individual’s car – which is all the public sector are doing. Those who are self-employed can offset legitimate business mileage against their expenses in exactly the same way.
Where a lower rate is being paid by an employer, you can actually claim back the tax on the diffrence from HMRC.
So, once again, I’ve presented facts to support my argumants – something sadly lacking in the contributions from too many of those who add to these discussions.
I look at the comments about ‘wasteful’ and ‘workshy’ from ‘Grumpy old man’, knowing that he has never worked in the public sector, whereas I have worked in both public and private sector. I have no public sector pension, and have worked in the private sector for many years, and I can tell you that those ordinary workers in both public and private sectors typically are diligent and hard-working and dedicated to doing a good job.
Both sectors have a minority of wasters and as far as bureaucracy is concerned I’ve seen far more waste in large public sector companies than I ever saw in public service.
I speak from experience – I suggest it is you who is deluded by an apparently unrelenting diet of tabloid propaganda.
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Mr Edwards needs to get in the real world. Teacher pensions are final salary and guaranteed by the taxpayer. In the private sector final salary pensions have all but disappeared, and are linked to investment returns. And to get a pension of the size mentioned he must be very well paid. Teaching trade union studies. Up the workers! Some are more equal than others maybe?
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My lecturers’ pension (USS) isn’t guaranteed by the taxpayer. Instead, it’s financed by new people coming into the sector and investments. If it collapses nobody is going to bail us out.
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If I were you I’d refer Shrewsbury tapayer et al to Arkell v. Pressdram (1971)
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Are you a lawyer too?!
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Ms deGama has told us that she is self-employed. So she is not a member of the Teacher Pension Scheme. Mr Edwards is. No comparison. Let’s hope Ms deGama isn’t teaching anything too complicated ;-)
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For information I taught law for 22 years at a university which during some of that that time ranked higher than Oxford. I have a double first, prizes and scholarships, a research degree and publications in internationally acclaimed journals. I now have a public sector pension and my own business doing something I love. I worked very hard for all that.
Most people, other than former colleagues, tell me they couldn’t even think about doing that job. Please don’t try to punch above your weight.
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So for the benefit of us mere morals, Ms de Gama, are you saying that it’s your public sector pension that isn’t guaranteed or your own private pension?
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Hi my Universities Superannuation Scheme (USS) pension isn’t guaranteed by the taxpayer. I don’t know what the situation is for teachers in other sectors (school and further education). They would be in different schemes.
I retired a couple of years ago in my 40s because a sight problem and live mainly on my pension. EVERYONE should have a fund like that.
I don’t have a private pension in any formal sense.
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None of which is relevant to the point that the pension scheme mentioned by Ms deGama (USS) is not that of which Mr Edwards is a member (TPS). Even a lot of knowledge can be a dangerous thing. It can be so easy to wander from the point.
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Love it!
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Well you manage to avoid the point very well but I expect you read the mail for your facts!.
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The point being what ? The university teaching? The double first? The superiority? And there was I thinking the debate was about teachers’ pensions!
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Oh for goodness sake its only money get a grip , go and volunteer at a hospice and see if money is that important to the people who are having to reside there.Shallow or what, want more save more.
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Very well said, Andrew. Should I live long enough, I shall have earned 3 good pensions, but being an ordinary bloke I can absolutely guarantee that the government of the day, be it red, blue, yellow or rainbow will be very sure to make certain that I’m no better off than the average. Only the really fat cats in banking and global business can get away with that. As a Unison member, I voted against strike action. It was loudly promoted as say yes to pensions. In rather smaller type, the ballot paper said say yes to strike action. It’s a thinly veiled attempt to unseat the government in conspiracy with other unions and put Labour back in power, but that’s a cynical manipulation of the membership and plain daft. It will please the government no end to have the public consciousness distracted from the economy and eurozone crisis by low impact strikes. The public won’t back strike action as indicated in some earlier posts here and please remind me. What actually is the difference between Cameron, Clegg and Milliband apart from the colour of their rosettes? They’re all utterly useless and they all need a good slapping before they hand over the keys to Frau Merkel. As Peter rightly says. Volunteer to work in a hospice. It’ll help you to sort out your priorities in no time.
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Peter’s earlier reply that Gordon Brown did not plunder £5 billion a year from pension funds but merely failed to put money IN to them is an extension of the old argument over whether a door is half closed or half open. The essential fact is that pension funds contributed £5 billion more a year to the Treasury than they need to have done, and even that largesse was not enough to prevent the cupboard being bare when Labour left office. In the mid-90s Britain’s provision for future pensions was the envy of Europe and obviously of Gordon Brown. Now private pension holders face a difficult future, if not poverty, and expect the public sector to share the hardship.
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thats too high
i dont have a pension so why should they
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thats simply too high, i cant afford that so why should my taxes pay that for him ? that is not social justice that is not equality for all that is not acceptable
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Public and civil servants keep society running and I begrudge them nothing. They’ve always had less pay compared with the private sector but they take pride in providing a job for you ungrateful lot.
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I fully support those striking on Nov 30th. I don’t agree that workers should pay for this crisis (or retired people..or anyone for that matter).
The banks caused this economic meltdown, they should pay for it.
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I second that. It’s probably been the most sensible comment in this debate.
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So Mr Edwards (who apparently “teaches trade union studies” – is there only one or should that be “trades union” thinks he’s hard done by and entitled to 25 years of state (ie private sector) feather – bedded pension.
Those who are in the private sector have far worse provision, especially post Brown’s Pensiongate, and should not have to pay towards his long-term comfort.
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For the record, Taxpayer, I am not superior to anyone. You implied I was a lightweight and I am not. That was my point.
Who knows, maybe one day you will need someone who has studied employment law in a trade union studies department. That’s my next move.
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