Cameron hints at phasing out of public sector pensions

Opposition leader David Cameron MP has signalled that an incoming Conservative government would phase out generous final salary public sector pensions. Such a move would affect up to 5 million public sector workers in the UK, and has been proposed in response to the increasing tax imposed on private sector workers to support public pension schemes.

At a meeting of the Greater Manchester Chamber of Commerce, Cameron's intent was to "move increasingly towards defined contribution rather than final salary schemes" for the public sector.

Continued...

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Comments

whether right or wrong

AnonymousUser | | Permalink

I do feel that public sector workers I know really do not grasp what an asset their pensions are. Have they ever seriously costed out what you would need to pay into a private pension to get the same?

I've been paying into a private pension for 12 years and frankly it has been a disaster investment wise - of course that could be down to my incompetence - but either way - public sector workers are not also required to be investment experts able either to choose the best investments or the most competent IFA to get the returns they need to have something to live on when they retire.

DMGbus's picture

A higher rate taxpayer at age 49 from public sector money

DMGbus | | Permalink

I once had a client who was retired from the public sector (not a high level / management level) and he went back to do a desk based job with his former employer.

At age 49 the combination of pension plus salary for part-time desk job was such that he paid higher rate tax.

At least it meant that I got 40% tax relief for him on the losses arising from the business that he ran !

Not before time

Anonymous | | Permalink

As an ex Revenue employee (but not enough years for a Gov't pension) I say bring it on Cameron.

I am fed up of listening to friends still in the Revenue moaning about the level of their guaranteed pensions which they haven't paid a penny towards.

They claim that their salaries have been kept down for donkeys years but i don't buy it.They have never aspired to move up through the grades,never taken the internal exams.Where else could sthey earn more I keep asking - no answer.Where else could they take 6 months off on full pay because of stress.Not to mention the generous holidays.

The recent moves to stop Revenue staff hanging cuddly toys from 'their' computers,keeping lots of personal clutter on their desks and displaying 'fun' posters, has been met with protests.'Welcome to the real world' I keep telling them!

Reality check

neileg | | Permalink

As some of you may know, I work in the public sector. I assure you that I don't get £40k. As far as I am aware, there are only a very small number of accountants in my authority that earn over £40k. When you consider that our turnover is well in excess of £1bn including capital schemes, then I don't think that's excessive. Oh, and we work a 37.5 hour week.

Bear in mind that most public sector employees are in a contributory scheme and usually from a much younger age than my experience in the private sector, even in sectors with good pension schemes. That means that the pension has been accumulating for more years

Having said that, I do accept that for the public sector to continue with final salary pensions when the private sector can't afford it is not supportable.

Public Sector Pay

MikeBellisimo | | Permalink

I'm not aware of a rush from Public to Private sector and so the T's & C's must be classed as reasonable.

Right now, a job for life on average-good money with a final salary pension and a 35hr working week and flexitime and generous sick pay etc. etc. looks pretty damn desirable.

DMGbus's picture

£25k qualified, private sector (or £40k public sector ?

DMGbus | | Permalink

Just to prove that £40k is an example generous private sector pay for a qualified, here's the extract of an eMail received from a recruitment agency this afternoon...

"Cost Accountant / Management Accountant
£25,000+ West Midlands/Staffordshire/Shropshire
An exceptional candidate who was recently placed by Hays and has glowing references. Sadly due to the relocation of the business, this candidate has been made redundant and is available for an immediate start. Due to the current economic climate, this qualified accountant is very flexible on salary and offers superb value for money. With a conscientious attitude, this person just wants to get straight back to work and commit to doing a good solid job."

"Low public sector salaries" myth

Anonymous | | Permalink

I see that some one (or two) seem to be trying to perpetuate the myth of public sector "low salaries".
Agreed at highest levels but that should concern no-one; but at grass routes level there are plenty of qualifieds at "less than £40,000" in the private sector.
Re: reference to bus drivers payrises they probably deserve more than public sector as they are on perhaps HALF your salaries / wages and get interviews with management if they were to take anything like public sector sick leave.

If you can't beat 'em, join ,em

Anonymous | | Permalink

The only problem is that you private sector guys won't be able to live on our salaries. You won't get your subsidised cars, no free coffee at the office, salaries under £40k for qualifieds, 1% rises giving us less extra cash than our local bus drivers got.

Still, there's a pension that keeps getting worth less and less to look forward to.

If anyone wants to swap...

Gov Pensions

andy moore | | Permalink

All those years as a civil servant.? Only doing basic grade work? I think a 10k pension is a good result for your contributions. I know lots of folk who have done unskilled jobs, like yours, and would be thrilled with your tax payer under written pension.

Should have happened years ago

Anonymous | | Permalink

Well done Mr Cameron - lets hope this happens in the near future. Defined contribution schemes are not sustainable - private sector employees had this forced on them years ago and it's about time the public sector stopped having such a financial advantage. A lot of younger and lower middle age private sector workers now expect not to be able to retire as they'll never be able to afford to - it's unfair that these people contribute more to private sector pensions through their taxes than they can afford to put into one for themselves.

k.bonney2's picture

Good shout Mr Cameron

k.bonney2 | | Permalink

Defined contribution is the way to go. The only people who contribute are those who want to contribute. Those who contribute reap what they sow. No question of one group of taxpayers (e.g. the self employed) subsidising another (e.g. public sector employees). No major disappointments when employers fail. Definitely the way to go.

But we cannot go back on the promises we have made to existing public sector workers. New joiners should be offered DC only.

An end to a two-tier society, haves and have nots

Anonymous | | Permalink

As a means of social engineering, ie. the end of the nonesense of "haves" (public sector pensioners) and "have nots" (private sector pensioners) it has to be a positive move to bring the public sector workers into the real world.

As for the argument that public sector workers "get lower pay" to compensate for their gilt-edged pensions never seen any facts to prove this.

Public sector employees also tend to have other "keep quiet about" benefits...
...job for life even if not competent ?
...suspend on full pay for a year if do something wrong whilst investigated ?
...take more sick leave than the private sector (lack of loyalty to employer as job security not threatened by poor performance / dedication / lack of commercial pressure ?)
...job change requirements - can't take it, so get massive compensation for "stress"
...perfectly happy to do a job at a stated salary level then years later claim £'000s for "equality" issues claiming to have been "underpaid"

I'm happy with the suggestion..

Anonymous | | Permalink

.. as long as we can have private sector pay while we're working.