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Letter: Jealousy over public sector pensions is obvious
Saturday 27th August 2011, 9:20AM BST.
I think that Jon Lakin (Letter of the week, August 22) is correct. People who work in the private sector are jealous of the public sector pension schemes.
Until Gordon Brown started taxing the pension scheme funds of £3-6 billion per year the private sector schemes were not in bad shape, but as a result of this action the majority of schemes have had to be greatly reduced or even scrapped.
The public sector generally does not have any stored funds so they escaped Gordon’s little raid. This being the case, where do they get their funds from?
With the massive increase in the public sector during the last government it has been generally possible for the current contributions to fund current pensions but with the planned reduction in the public sector workforce this will no longer be the case. This will leave a pension black hole similar to that suffered by the private sector after Gordon started his annual raid.
The next question is, “how will the public sector fill this black hole”?
The only way for them to do this and carry on with their “gold-plated pensions” is for the Government to fill the gap. By that I mean the taxpayer, the majority of whom are the people in the private sector who have had their pensions destroyed.
When you also take into account that the state pension age has had to be increased accordingly, I would agree that the private sector employees are jealous and a little angry about this attitude of the public sector employees.
Graham Burns
Newport
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A fair assessment, what also tends to grind with people in the private sector is that in general they pay more in percentage terms of their salary than the public sector do and then get lower returns. What some would say is a lose-lose situation.
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Can you please exclude the Local Government Scheme from your comments. This scheme is funded by investment of employee and employer contributions and is not taken from general taxation. You may have noticed that Staffordshire LG pension fund just purchased a rather plush office block in Central London as an investment.
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Sorry have I missed something. Who is the employer? I think it maybe the council who is funded by central government and local community charges and various other income like business rates, parking fees etc. The local government scheme may have some surplus at the moment and can invest in office blocks, but the real issue the future cost.
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Sorry barbara your wrong i pay 11 percent soon to rise to 14.2 percent . no bupa , company car, no bonuses , funny never heard anyone moaning about public sector 3 years ago , dee dumbs
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Thats because the world has changed and we all have to change with it or go bust!
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i worked in private sector for 8 years and paid only 6% into my pension, now at the police i pay 9% into my pension
i believe some of the actual policement pay 11%
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Police and fire brigade pay contributions at a higher rate due to their comparitavely early retirement age. However, there is no management investment fund for the police and the employer contribution is taken direct from taxation.
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Rather lazy way to win an argument, far more to it than that .
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The writer is obviously not acquainted with Lord Hutton’s pension review which makes this article almost meaningless.
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Gold plated pensions for kitchen assistants in schools barely over £2,000 a year? with the average LGPS pension being 4,000 per annum? hardly goldplated Mr Burns? Please look at the facts before making silly assumptions.
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jelous
why would i be jelous of them, they are about to get hammered by the government
soon they will be begging for any pension at all
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The letter writer has apparently fallen for all the tabloid propaganda about private pension schemes. The facts are somewhat different.
Firstly, Gordon Brown did not take any tax from private sector pension schemes. Instead he removed the tax relief on company contributions to large pension schemes – so rather than taking existing money away, he simply stopped giving additional taxpayers’ money to these schemes.
Why did he do that? Well, at the time many large companies had stopped putting money into their schemes – so confident were they in their stability that they had decided to take a ‘contribution holiday’. Clearly, if no contributions were going in, there was little point in offering tax relief on such contributions, so the taxpayers’ money was used elsewhere.
The reason that many private sector schemes failed was because the employers didn’t put away money when the going was good, instead giving that money to shareholders and fat cat directors – if your pension was damaged in this way you have no-one but your employer to blame.
It’s worth pointing out that the average ‘gold-plated’ public sector pension is less than £7,000 per annum, and that to achieve the maximum of 50% of salary you would need to have worked for a full 40 years in the public service in most cases.
For new starters in the public service, and those with only a few years service, pensions had already been reduced and contributions made higher under the last government – by negotiation.
It’s also worth pointing out that the cost of individual tax relief for private sector pension contributions is still greater than the cost of the whole of public sector pensions – so the notion that the government give nothing to private sector pensions is incorrect.
Finally – it’s true that people are jealous of public sector pensions, and prone to great exaggeration when describing the benefits, but to reduce everyone to a lowest common denominator benefits no-one – except perhaps the millionaires who are most definitely not ‘all in this together’ with the rest of us.
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Rightly so the public are jelous!
We all pay into public sector pensions but only the workers get anything out of them!
they should be given their pension in shares each year and if they get lucky the market will be strong if they get unlucky tough, thats what we get in the private sector
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You choose a private sector job over a public sector job. The facts have always been there – seems an irrational standpoint?
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We always get the ‘bleat’ from the public sector about the average private sector pension being less than 7,000, but we are never told what hours those employees do or what they get paid to attain these ‘poor’ amounts, which is also piffle as even that equates to 134.62 per week which on top of your state pension is hardly living in poverty is it ?, especially when at that age a lot of people will be mortgage free and also in receipt of many other benefits of being that age.
It would be nice to know what it would take someone in the private sector to pay into a pension to gain such a ‘poor’ pension as these public sector receive ??, considerably more no doubt.
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Lets hope you do pay more; after all it’s the pure greed of the private sector that has caused all this mess. Perhaps you would consider selling your second property to beef up your poor pension or stopping your firms car or perhaps saying no to your free BUPA account etc. etc.
P.S. No bleat’s about my public pension whatsoever. It was worked for.
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Still no answer to the original point that I raised….surprise, surprise.
BTW no 2nd property no company car, BUPA actually goes against your tax code.
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I think you’ll find I replied in some detail. And no, I’m not a public servant…
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And the point was? All I see is sour grapes, a conjectrual maths question and no surprise.
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No one hides the rules of public sector pension schemes nor public sector salaries – all are publicly available if you can draw yourself away from the tabloid propaganda.
In the Civil Service, before the changes made by the last goverment, which reduced the value of the pension and increased both contributions and the age at which it fully matured, the rule was that you gained 1/80th of salary for each year worked, up to a maximum of 40/80ths – so if you retired on a final salary of £20,000 after 40 years’ service you’d have a pension of £10,000 per annum, if you had 20 years service on that salary it would be £5,000 per annum and so on.
If you examine the salary figures for someone retiring now after 40 years service on that original scheme, you would find that for almost all of those 40 years the salary in the civil service has sat behind the curve when compared with comparable private sector jobs – especially in the late 80s and early 90s when double-digit pay awards were common in the private sector but public servants got low single-figure percentage rises – so it’s swings and roundabouts over a prolonged period.
I can understand the ire of those in private sector final salary schemes who lost out – but blame your greedy employers – not public servants – it was your employer who chose to divert the cash they should have been investing in your schemes to shareholders and directors instead – and ask yourselves ‘what did I do to protest?’
To give some idea of salaries – the level that used to be known as Clerical Officer (minimum of 5 good ‘O’ levels to gain employment back in my day) would today be paid somewhere around £15k per year, junior managers (the old Exeuctive Officer grade) perhaps up to the mid £20ks over a period of time, and those on more senior grades (e.g. the old Principal or Senior Principal level, perhaps up to somewhere in the £40-45k region – obviously there are far fewer of these roles – if you were to walk into a Jobcentre, Tax office etc. you would be almost exclusively be dealing with those in the lower grades). All of these are for full time work.
Despite tabloid rumours to the contrary, public servants often work extra hours for no pay, they don’t wear bowler hats, nor do they have a tea trolley that comes around.
If you are really ‘interested’ in what the Civil Service does, and what the pay and terms and conditions are – then simply Google them – it’s all out there…!
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Damn right im jelous I work hard have two kids to feed and I get sweet FA off the taxpayer whilst they get a GUARENTEED minimum fixed income for life on retirement, if they live to 90 or 100 as many do now this is equivalent to half a million pounds or more, its rediculous, they must be cut because its just not right, its like benefits people they get more than me for doing nothing, its my taxes if people like me in the private sector stopped wokring all the oaps’ council workers and dole scroungers would STARVE, i need a pension too – who will pay for me?
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Just an idea, perhaps you could maybe invest in a pension scheme? Maybe be prudent to consider that sweet FA (the taxpayer) will be funding your state pension, your current child benefit and all your other tax credits. Sort of redefines the term ‘dole scrounger’?
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And assuming that Steve has made no additional provision for pension, he will in due course benefit from the minimum income guarantee available to pensioners, all of which is funded by the taxpayer – so the suggestion that he gets nothing is nonsense.
It’s also worth noting that the bill for tax loopholes and subsidies for the richest individuals and employers in the country actually exceeds the entire benefits budget – so the rich cost us more than the poor!
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yeah steve really? A persion who works (for the public good) and pays taxes for 40 years is comparable to a dole scrounger?
I think that is disgusting, outrageous, potentially libelous comments
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Police and Fire pay 11% of their salary each month for 30 years in order to receive a pension (fact) how many of the whiners on here either invest or save that much each month??
The fact that the authorities do not invest all the 11% is down to government rules, the money is spent on schools, roads, bins etc.
If people want a pension buy one, The option of joining the Police or the Fire Service is open to all as is the option to invest 11% of your income to secure your future in later years.
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Soon they will have to pay 14% of their pay into the scheme instead – thats a lot of money when the government takes 40% already through NI and tax
What do they expect people to live off in the present, let alone the future?
We are going to have some serious pensioner poverty in the future i tell you…
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Peter, you semm to be living in the past.
Realistically, how many officers with 40 years service do you think retire on a final salary of just £20,000?
You state, “Principal or Senior Principal level, perhaps up to somewhere in the £40-45k region.”
This site http://www.walthamforest.gov.uk/index/jobs/jobs-at-lbwf/payscales.htm ,
Suggests more like up to £65K level.
Even a pension of £10k, I would guess, would be far better than a lot of private sector pensions.
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Roadrunner,
The maximum pension benefit under the Principal Civil Service Pension Scheme was 50% (40/80ths) of salary. Since changes were made by the last government that has reduced (not increased) – and will further reduce with the changes to an average rather than final salary pension. So it’s a maximum of 50% of final salary.
So in answer to your question ‘How many officers with 40 years service do you think retire on a final salary of just £20,000?’ I would say, unequivocally ‘All of them!’
Whilst the tabloid press likes to pretend that higher levels are payable – there’s no evidence to support this – I note you’ve presented none to support your claim.
Your quotes from Waltham Forest relate to Local Government – not the Civil Service – perhaps you don’t know the difference?
As such, the Waltham Forest description of Principal Officer has no equivalence with the Civil Service Grade of Principal or Senior Principal, and is probably a more senior grade, perhaps aligned with the Assistant Secretary level in the senior parts of the Civil Service.
Posts at these levels, whether in the Civil Service or in Local Government are few and far between – and should not been seen as in any way representative of what the vast majority of public sector workers receive – no matter what nonsense your Daily Mail would have you believe.
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Peter you do seem to be very confused.
I don’t think that ALL public servants will be on 20K when they finally retire, do you really believe that?
The article is about PUBLIC SERVANTS not just civil servants which is your invention not mine and I think I would rather believe the Waltham councils’ own pay scale, than one that you have imagined too.
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Oh Peter, in case you are still confused, by a “final salary when they retire”, I mean as their last salary at the point of retirement, not when they ARE actually retired.
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The other point is, Peter that public sector workers who are employed by councils, probably far outway civil servants, so represent a far larger amount of public sector workers and relative pay scales, than the civil servants, that you prefer to refer to, when talking about public sector workers.
This link will help you brush up on civil service pay scales… http://www.civilservant.org.uk/pay.shtml
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A Police Officer and a Firefighter pay about £300 per month into their pension, they do this for 30 years so they pay in over £100000 during their career – during which they will risk their life and do all the things that most people will not do but expect Police/Fire Officers to do at the drop of a hat whenever a member of the public dials 999.
All of the £300 per month per officer is spent on schools/roads/hospitals/bins etc every month every year so the whining tax payer is actually getting the benifit of the use of 11% of these officers salary every month,
So can anyone tell me why they are so jealous of public servants who give up 11% of their salary every month for 30 years? if the money is spent by the council rather than invest it whos fault is that? The officer? The council? or the tax payer who enjoys the benifit of all that money?
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This is not exactly relevant but I’d just like to quietly comment that those of us that pay tax and have kids have also (in most cases) received all our maternity care/benefits and education paid for via our taxes. The system may not always be fair and not always run as well as it could but it’s not right to say we get nothing.
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Do half of private sector workers actually realise that large proportion of the contracts you receive are FROM the public sector?
Public sector pensions are not gold plated. Workers receive considerably less compared to their private sector counterparts. Put down the tabloid and actually look into it before making such ridiculous claims.
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