Morning Line: How far dare the government go on public pensions?

Finally a politican brave enough to speak the truth.

It is unfortunate that this article is wrong in its reference to what OBR says about the Local Government Pension Scheme. OBR actually quotes that scheme as an example of a contribution-based funded scheme, like private sector schemes, in contrast to the unfunded schemse for, for example, national civil servants. The quote is

5.36 Public service pensions are occupational pension schemes that form part of the remuneration of current public sector employees but represent a long-term liability to make future payments to pensioners. Occupational pension schemes may collect contributions and use them to build up a fund of assets to match the liabilities of the scheme (the net present

value of future payments to pensioners, in respect of rights accrued to date) to ensure they are sustainable in the long term. When pensions come to be paid, they are financed from the fund. This approach is operated in the private sector and in parts of the public sector, notably by the Local Government Pension Scheme.

How can they think of asking existing members to share in the financial pain being felt in the private sector, when it is the private sector who have got us into this mess in the first place. Public sector jobs are not paid the same wage for those doing the same jobs in the private sector, the only advantage we have is security and a fair pension - take this away and you will rid the public sector of any talent to make the huge changes needed for efficencies and money saving. It is only now when the private sector is in a mess that they turn their attention to the public sector and want the security instead of the huge salaries they previously enjoyed which aren't there anymore. You can't have it both ways.. Nick Clegg you are an embarassment to your party, a man who does not stick by his principles, so desperate he is for power at any cost!

They should not change the terms retrospectively, So people with x years service at nth of salary should get x times n of there pension up to the current time. But this then should be stopped and freezed for current employees and a new deal with contributions from the employee's wage needs to be organised.

Sorry, Michael, you are quite right, now corrected.

Tony

Oh Nancy!!! Could you please advise all readers which planet you are from as earthly reality is clearly not your strongpoint.

Members of Parliament pension arrangements are gold plated so perhaps they should set a good example by reforming their very generous arrangements first

I'm sorry Nancy, but the plain fact is that many public-sector jobs are now paid at least as well as private sector equivalents. We have recently lost an employee to a civil service role because we couldn't afford to match the 20% pay rise she was offered. This was before taking into account the other benefits (flexi-time, more holiday, generous final-salary pension, etc.). Interestingly we haven't lost anyone to a similar private-sector role since 2007, despite not being able to afford a general pay-rise for the last two years.

Perhaps we should be concerned that the talent needed to get the private-sector growing again is wasting away sitting in public-sector non-jobs, counting down the years to a comfortable and early retirement.

Nancy Caver, a couple more comments on your erudite contribution to the debate.

1. You say "...it is the private sector who have got us into this mess in the first place..." Do you mean financial services which only make up about 10% of GDP. Even then, I don't think financial services (incompetently regulated by the public sector) have wasted quite so much money as Gordon's incontinent spending on an incompetent and inefficient public sector. Also, you should realise that it's the private sector (which you public sector employees clearly despise) that pays for your salary, benefits and pension.

2. You say "...rid the public sector of any talent to make the huge changes needed for efficencies and money saving..." Is this the talent that caused the innefficiencies and money waste in the first place? If you had been doing your jobs properly over the last 13 years then you wouldn't have wasted all the extra money that was thrown at you by Gordon Brown.

Your post should enjoy wider distribution so those of us who pay for the public sector can understand your attitude and poor grasp of reality.

As member of the teachers pension could I make 2 suggestions.

1) All accrued benefits are respected and any changes are not retrospective - this would at least reduce some the obvious backlash.

2) Going forward one thing that people need to decide is what they mean by a public pension. There is a large variation in all the schemes some far more generous than others. I suggest that a standardised pension for all public sector workers should be adopted ( including MP,s Civil servants etc).

This will would give greater clarity so that when this emotive topic is discussed all commentators are speaking about the same thing. The benefits could be more easily calculated and overheads/ costs reduced for running the schemes ( and a lot of pension administrators made redundant) yet I have never seen this proposed.

To Tony Bonsignore - thanks for making the change.

Now, hopefully the debate will switch to the three separate issues of

1) how to fund those public secotr pensions which are currently unfunded

2) how to adjust the benefits which are offered by funded schemes (public and private) to what is affordable in the long term and

3) how to encourage everyone to save enough for their pensions by forgoing salary now.

Don't blame the people in defined benefit schems for the problem - they generally got into them, as I did, by luck not judgement.

The problem not even being discussed at the moment is encouraging younger people to save enough for their pensions now that good pension schemes in which you were enrolled without choice are falling by the wayside.

The new government scheme to come in from 2012 (NEST?) is far too modest in concept and contributions to tackle the problem.

SIPPs and their low-cost equivalents are the mechanism for doing this but they need the return of the 10% tax credit to be attractive enough.

I think as a nation we have to accept that we are effectively bankrupt. Like any private employer who goes bankrupt can't pay its creditors, country can not keep its promise to its employees.

We are a small nation who is trying to leave beyond its means.

Public sector workers have to accept that country has made a big loss and they will have to pay for it. They may have joined public sector because of promise of security and good pension but circumstances have changed.

This is just beginning of the end. We are on the downward spiral and government is just trying to explain this to us.

I am very pleased that government has accepted this reality and now they are trying their best for everyone to understand this.

Those of us in the private sector need to ask ourselves: Why should we save for two pensions, our own and his (public sector), when he is perfectly capable of taking ownership and personal responsibility for his own pension?

Actuaries Hymans Robertson, calculate some 26 per cent of council tax receipts now goes towards public sector pensions, and there's every possibility this figure will rise over the next five years, as age-related costs continue to feed in.

I object to the Government acknowledging the demise of the Defined Benefit Pension Scheme in the private sector, then telling those workers we all need to save more and not to expect to retire before the age of 70, while at the same time the Government and public sector unions expect private sector workers to pay taxes to fund public sector pensions so that they can retire well before 70 on a guaranteed index linked scheme for life. How fair is that?

The time has come for the public sector to share in the provate sector pain and to remember they don't create wealth they only spend it!

Simon, don't send your kids to the school I teach at, because I'll refuse to teach them.

Dan 2247, the civil service no longer offers new entrants a final salary scheme but one based on a career average!

I have paid into my public sector scheme for 35 years, When i collect it, it is not enough to live on so will need to carry on working just to makes ends meet. I get fed up of hearing it is gold plated and I am getting something for nothing. I was advised at the beginning of my career by a banks insurance agent not to take out a private pension as the works pension was the best. Sound advice that anyone would take. Any private schemes I have saved in have been expensive and lost me large amounts of money. With the track record of the private sector who would want to save with any of them.