Public sector workers will have to pay more for their pensions

The unions wont like it and this will lead to a great deal of unrest but it needs to be done.

We, the public, simply cannot afford to keep propping up the Civil Service "gold plated" pension scheme. Especialy when in comparison private sector pensions seem to be so poor.

I have been campaigning for this for years; bring it on. As a private sector employee I am sick of paying for public sector pensions on top of my own. People need to pay pensions themselves, not rely on the taxpayer. I am standing by to fight any union resistance to this also with an active dialogue to my MP and membership of the TPA. When this advice is released I expect the government to take action and make this happen; stopping the civil service gravy train draining our national prosperity.

All very well but will Candyfloss Clegg and Cameron have the balls to take on the Unions and push these long overdue reforms through? - doubtful methinks

GOOD!!

I'm not here to subsidise their reirement.

Capping pension payments sounds like a good idea. Getting people to pay more or giving them the choice is better and what about the MP's pension, they appear to have the holy grail of all pensions........unless some one knows otherwise.

I totally agree with Rob here. It is about time that we wkae up to the black hole we are living in and realise that we just cannot afford this any longer. Our children will suffer for the greed of many, so its about time we bite the bullet morally and financially

You would think all public sector employees should be on the same level of contributions.

The NHS by the way pay 15%(6% employee) and the scheme is based on 1/80ths for every year upto 40 years on a final salary scheme and 1/60ths on average salary.

They need to go after the civil service with their gold plated pensions first.

I'm a police officer and I have paid 11% of my wages into my public sector pension for 27 years. At todays rate, that would equate to a £90,000 pension pot. Imagine if that had been invested, I would be worth a fortune. Lets not forget the stock market has grown by an average 5% per year for the last 50 years.

Guys, it not the fault of public sector that the pensions were set out this way. It would be grossly unfair to try to mess with anyones pension now, but I can certainly see your point as a private sector employee. Perhaps future public sector employees will need to fund their own scheme, but I really don't think current employees should have to bail out the bankers, we didn't lose the countries finances and we certainly won't roll over and let anyone take out hard eanrded pensions away.

re Mike b, sorry but you would not be, that is the myth people have, you are not alone.

It is the indexing of your pension which makes it so expensive, not the fraction of your salary you get at outset.

Today it takes a pot of about £30,000 to provide indexed income of £1,000, however this indexing would be limited unlike the public sector pensions.

So if your £90,000 invested had grown to £180,000 you would have £6,000 per year and no lump sum.

You would require an invested sum of over half a million pounds to get an £18,000 per year pension and no lump sum.

The average non public sector's pension pot according to Panarama last night is around £38,000 but they are paying for yours too.

Personally I would like to see - for new public sector pension members a cap on the benefits of around £8,000 at today's money and let them provide the rest, as someone said, if the public sector are not in the same boat as the private sector then government etc will never understand the issue.

They do have a valid point here as pension schemes and investment providers are often viewed as the enemy but those in charge of regulating and government control do not depend on them so are happy for them to take all of the blame in society, when clearly £38,000 will buy almost nothing.

Andrew, wrong. You and I have been subsidising the PS pensions and will for many years. Brown took well into 6 figures from my pot for that purpose, so he gets an indexed pension for life, infinitely superior to what I would have had, even if he hadn't robbed my pot.

FAO) Mike B

You ahve a better pension than most and I think early retirment too if im correct

you say you have put £90000 over the past 27 years I guess if it ws invested in a personal pension it would give you about £250K to £300K at best

This would give you a pension of around £9750 Pa with an escalation of 3% at aged 60

Your totaly wrong my freind you have a lot better pension than most and you get death in service widows pension and if you were injured a pension

A normal PC could never afford a penison to give you the benfits you have for 11% of your salary

You dont know your born you reallyb dont

To the landlord,

Does your £250-300k calculation for Mike B's pension pot include the employers contribution? I don't think so. The article itself states that final salary schemes have employer contributions of 16.6 %. So even if we assumed the employer paid 11% into the pension pot, the final amount would be more than doubled.

There is a self-righteous 'private sector' attitude around pensions. I have a recollection of reading figures that the average private sector pension contribution, as a percentage, is lower than the public sector. People can make prudent decisions to increase their pension contributions up to public sector levels if they want to, but appear to want to bring people down to their level.

There are millions of private sector workers who choose to invest in share save schemes, that result in reduced tax paid, and allows them to make capital gains in the vast majority of cases. There is a subtle government subsidy there, so should we stop them as well?

It seems to me that you want the shop floor workers to have reduced income in their old age. Beggar thy neighbour.

All Public Sector Pensions should be made paid-up with immediate effect and replaced with a money purchase scheme i.e NEST

New Labour said that their new NEST scheme would provide a decent pension for all auto enrolled private sector workers who were not already in a company pension. Therefore ALL public sector workers should have no problems joining it as they will get the same "decent" pension as their private sector brothers and the Unions should have no problem supporting such a fantastic New Labour pension scheme for their members

Some folk on here need to revisit their maths and read the article instead of assuming that all public sector workers pay less and get more than private sectors. Blinkered commentary springs to mind. For my tuppence worth, scrap all employer schemes and let everyone go private, the market will adjust to attract business and we can forget these stupid public -v- private sector arguments. Citywire itself needs to refocus on its core business and stop writing such rubbish, there's been too much of it from poorly equipped commentators of late.

Agree Mickey,

Everyone should be in their own scheme, the employees in the public sector can have their employer's pension contribution as a bonus to their wage if they think they will have the same benefits, job sorted, everyone is happy.

re dislexic landlord

3% escalation is a much poorer system than they have it is not comparable at all.

They can get 15% and have done in the late 70s.

Your figure will be much lower with RPI indexation instead of 3% and even then the indexing isnt as good as theirs.

It is £30k of pension pot for every £1,000 income, I can assure you, it was £27,000 for every £1,050 until annuity returns dropped.

Spot on Mickey.

Believe me the NHS is haemorrhaging money in alot worse ways than paying pensions. PFI for one. £300 for a towel rail!! There are no locks on any doors in our dept (X-ray) because they were deemed an unnecessary costly extra. Everyone is too PC to question anyone about their eligibility for treatment based on their immigrationstatus / ethnicity. Sad day - i think you'll find a lot of docs will emigrate.

Leave public sector alone: can you tell me what you do when you are sick, or need the help of the police, or need to travel on buses, trains, trams etc.

What happens when you get so ill you are laid off work, or you need the help of doctors & nurses?

Or what happens when there is mass exodus of teachers - were will you send your brat to school.

I suppose if you are better off than most, you would probably send yours to a school hundreds of miles away, using public funds to subsidise the cost of schooling your children!

The public sector employees (in their majority) excepting the civil servants & the liars, & fraudsters in government should take the brunt of the cuts, because they have allowed rotten scoundrels to use the system they developed to get us into this state - why don't you get some money of Fred Goodwin - his pension pot is in 6/7 figures - how long did he work for the banks to get this money.

Public sector workers contribute for anything from 5 - over 40 years of their life, for what is a modest amount in their retirement.

This is just sour grapes from the private sector, who cannot recognise that this capitalistic exploitative mechanism to get the most from employees for the least pay has been something that has caused their situation, not public sector workers in their millions who do contribute to their pension scheme.

The NHS does not pay 16% - it is usually 6% employee contribution, & 3% employer contrbution - how this equates to 16% is why we are in the state we find ourselves - testosterone filled idiots; lacking basic arithmetic, who think they can do no wrong, who still will get millions in their bonuses this xmas - get your money back from these sources, leave public sector pensions alone!!!!!!

Citywire says its website is about providing "independent advice on making the most of your money". Could Citywire explain to me how these type of articles achieve that purpose. Articles such as this one seem to be designed to inflame public opinion and nothing else. Perhaps you should not mislead people as to what you are about and be truthful that you are some sort of general run of the mill financial information service or even a campaigning group given some of the other articles.

Civil Servants pay 1.5% towards their final salary pension, doubling it would be 3%. The actual cost is nearer 20% per annum and rising. Time for radical rethink. In this financial environment and a future where there will be significantly less working than those pre work or retired there can be no justification for the public subsidising public sector´s workers pensions. If civil servants want to have a pension based on earnings then they should be prepared to pay the full cost.

RAISING RETIREMENT AGE MAKES THE MOST SENSE

But could employees be given a choice of a raised retirement age instead of higher contributions?

Surely we need to both raise contributions to their actual cost and raise the retirement age to 65+

It is depressing to see that this is turning into a private sector vs public sector arguement. There should be no mud-sliging or criticism levied at each other.

The facts are, sadly, that change needs to be made now for the benefit of future generations. People need to accept this, but wont.

What we should be doing is directing the anger at those who truely deserve it, these being the Government at the time, the greedy bankers who caused a lot of this mess and the FSA who failed miserably to prevent this and regulate the banks properly.

Its the guys at the bottom who I feel sorry for as we had no control over the financial disaster, but we are all ultimately paying for it. Note that the banks are back to their big bonus culture!

Can any one confirm please if MPS as a whole are also public sector workers? or are they of a different sector and what might that be? Because not much mention about their gold plated pension schemes.

Politicians & civil servants get huge renumeration - get their pensions reduced as a start, & maybe other public sector workers who actually make a larger contribution to their pension will not take to the streets in protest.

This coalition government will fall on its own sword - first the policy on taking child benefit away from parents; next the announcement that married tax allowance will go up - its chops & changes, that make very little difference to the amount of money stays in the treasury while affecting tax payers a lot.

We know from past history that the tories like to cut, cut, cut - why are we surprised? This is what you get for voting tory, & now for even thinking of voting libdem - they were going nowhere before, at least with a coalition government, they can say they were in government.

Looking back on these days of spending cuts, we will have forgotten what mrs t did to the miners & their families, or what GO did to the working population with this spending cuts - but, will we ever learn?

The tories are a party for the rich - has anyone noticed the big boys in the financial world are still getting away with huge bonuses? They are the ones who should be facing cuts - but they do not really live in our world, do they? They live in conditions where their income is protected, are their bonuses taxed?

RoseG

You seem full of criticism of what our Government intends to do but apart from "tax the bonuses", which I agree with, you offer no real alternatives to what the coalition are doing to try to clean up the mess left by Labour who have left the country in ruin, again.

If you can think of better ways to raise the hundreds of billions required then please do share them with us.

Final salary pension schemes were originally seen as a form of 'deferred pay / salary'. Somewhere alongt he road that has been forgotten. I can totally understand FS beneficiaries being annoyed tehir pension scheme will be tinkered with, however the financial facts of life are such that final salary schemes have been mismanaged by governmnet and employers (inadeqaute funding levels during the good years) to the point they are no longer financially viable, unless retirement dates are put back to c age 85 for men and c87 for women.

Leading by example would help and I would respect this governmnet more if it closed the generous pension scheme MP's and PM's benefit from.

Level playing fields after all!

It is not that public pensions are too high.

The problem is that public sector pay is too high.

Doctors 70k to 80k plus

Heads of schools even more

Deputy heads 60K plus

No week end work

Managers in local authorities similar.

etc etc etc etc

From john o groates to lands end the gravey train rolls

Im sorry to say that its not cuts in pensions..... but big cuts in pay that is required...together with a huge amount of redundancies for white collar staff earning more than say the teachers main scale.

Main scale teachers,police,joiners,bin men etc no problem ........managers and executives get rid of them.

Why are so people inflamed about the public service pension being 'gold plated'. It is only an index linked pension, no more and no less.

It also appears that the private sector pension is neither index linked. Ok, quite a few of them have been closed by the senior management of the companies to save money(?) How about the pensions received by the Senior managers/Directors/CEOs of the large companies, they have been lined all the time with generous pension provision. Just look at the renumeration section of the company's annual reports. £m and £m have been awarded to directors and just peanuts then passed down to the real workers. So, you wish to moan about the PS pension, please balance all aspects of the issue.

Another thoughts, for those moan about the PS pensions, why do they consider a job working in the public sector. Any volunteer??

There is a lot of misinformed comment here. For example, there was a root and branch reform of civil service pensions in 2007, and people joining the civil service after that cannot have a final salary scheme: they can only have an average salary defined benefit scheme or else a defined contribution scheme (with higher employee contributions than those quoted above). For example, it is only in the last few years that public sector salaries have become comparable with private sector ones in some cases, and most long-term public employees have served for many years in the knowledge that their considerably lower salaries were at least in part made up for by relatively good job security and pension benefits (until the late 1980s this was actually formalised in the pay negotiations for the civil service under what was known as the Priestley Commission principle of pay comparability with the private sector, where comparisons were abated to allow for this: the system was abandoned by Thatcher). For example, it is of course true that a huge pot is required at the moment to generate a reasonable pension; this is because interest rates have crashed as a result of the banking crisis, and it is reasonable to suppose that before too long ROI rates will gradually return to their long-term level of 4%-7%, which will mean that a reasonable pension is generated by a much smaller fund. For example, it is not true that public sector pensions are unfunded: around half of public employees are in local government, where pensions have funds rather than following the pay-as-you-go principle. And so on...

Correspondents ignore the fact that the unfunded liability of the Public Sector Pensions is costing 3 billion pounds per year and this will rise to nine billion if we do nothing about it. The shortfall is being paid by other tax payers, most of whom have no employer pension and will have to retire at 68 whilst PS employees retire at 60, in the main. This is blatently unfair and unafordable.

Pension Man

Why do we need to come up with solutions when the shite has hit the fan - if any organisation cannot plan its spending, & balance this against its income, why should ordinary joe blogg pay the price with job losses, pay freezes/cuts, but the people who make the decisions, who are responsible for the monitoring, & regulatory functions sit back & do nothing to control excesses.

If you want solutions, here are a few:

Firstly, get rid of expense claims for MPs, including MEP - we the public, who work long distances away from home do not have travel expenses, do not have subsidised meals or drinks, we do not have housing expenses met - get rid of the perks, & you will notice that only those who then enter politics will be those who actually want to do the job, not take the job because the pay & perks are more than any ordinary person will ever dream of in their lifetime.

Get rid of the many politicians - we note the DC has made promises to reduce the numbers of politicians, but when will he be addressing this promise???? NEVER - he, like any politician worth his salt, promises one thing, but actually goes on to do as he pleases - Libdems should be ashamed of themselves for going along with tory party ideology, just so they can be in POWER!!!

Secondly, reduce the numbers of civil servants, take a look at their pensions/perks, & make cuts where necessary.

Turner (FSA), King (BOE), & all others who were in charge of the regulatory functions regarding the banks should forgo their pensions/salaries, jobs which they only have not because they are actually capable of doing the job, but because of their connections at westminster - give the job to someone who can actually do the sums, & actually go to work rather than relying on some dimwit to make decisions on their behalf.

Thirdly, but not third in importance - get rid of the banks who cannot cope without being bailed out - there are plenty of banks, why do we need so many, when all they do is keep our money in their accounts, & charge us for the privilege.

As for investment banking, this is a very unethical way of getting money for our economy - we rely very heavily on these cretins to keep our economy afloat - bring back more manufacturing, bring back more jobs with local influence & affect - currently nearly 85-90% of manufacturing jobs in the UK are owned by foreign companies - why can we not invest in our industries - mrs t sold our utilities off, now they are making profits like never before: bring in higher taxation for the utilities.

Get Mr Tata to invest his money in his own country - India needs investment in its own infrastructure. Foreign owners of industry in the UK have let down the UK workers, they have lost their lifetimes savings (including pensions) because these foreign owners of industry are even more ruthless than our governments - no care for the workers, or their future - who in their right minds would work for them???

Tax footballers earnings - if they live & work here, get them to cough up the taxes - people like beckham, while being hailed as fantastic, do nothing for the UK economy. Lewis Hamilton, & the likes pay your taxes to the UK, not hide away in some tax haven.

These are just some of my ideas on how we can live in a fairer world - but I doubt any of these will meet with the approval of those in government because there is no actual aspiration for there to be a fairere world - just a world which favours the rich, while punishing the hard working moderate income families across the UK - they do not have the ability or the income to benefit from tax havens, neither do they have the ability to be signed up as self employed with the assistance of good accountants who can ensure that they pay as less tax as possible.

I know of someone who works in finance, who has her rent paid, her travel expense, her food & clothing all tax deductable - she pays very little in the way of tax, while being able to fund one adult child through university in the USA, one child in private education in the UK, & still able to keep a roof over her head, even while her hubby has lost his job in the banking industry - if you know how, you can make the taxman look an idiot - unfortunately, we all do not have the ability to go self employed!!!

mike b says "At todays rate, that would equate to a £90,000 pension pot. Imagine if that had been invested, I would be worth a fortune."

I have news for you, Mr B. Assuming an annuity rate of 5%, that would give you a pension of just under £5,000 per year. I assume that your pension is considerably more than this. Now do you see the issue - most of us have to invest much more than you to end up with an equivalent pension.

My personal theory is that this is all a dastardly plot :

Reduce the civil servants' pensions and make them treble their contributions.

The civil servants will go on strike.

No-one will notice.

Rose G ideas I suppose.

The problem is if a public sector worker earns £30k for example and has the maximum pension under the 80th scheme, they require an equivalent pension pot of £450,000 for income and £45,000 lump sum which is almost half a million pounds.

So that is a job paying £30k, sickness benefits not available anywhere else in industry and half a million pounds at the end of it, paid for by the tax payer.

While I think it is a shame for the likes of teachers who work hard, hold a lot of responsibility, arent over paid so their pension benefits are not excessive, or nurses.

For the likes of highly paid medical staff and those staff who do very ordinary work the same as many prvate firms do, it is far too expensive because the bill is given to the tax payer.

If those staff want to fund that scheme themselves all from their wages then fair enough, but i can tell you if they got the full bill they would not want the pension.

Probably the big mistake was those in the public sector who starting trying to peg their wages against the most ridiculous 'equivalent' jobs in the private sector.

Most of the top management jobs in private industry pay around £50k and offer a Mondeo type car, a small contribution to a private pension scheme and little else, and these are people in charge of hundreds of people and millions upon millions of pounds expenditure.

In financial services the high ranking managers only typically earn £70k about the same as a large primary school head teacher.

To select individuals from society who own businesses and work in them, or own shares in a business and are managers or obscure jobs, which are so rare that people only ever seem to quote the one job - investment banker- then match a public sector wage to these roles has probably choked the golden goose for everyone.

If the work had remained lowly paid, but with a brilliant pension and sickness benefits and a much more secure future and it is believe me, as I have been in one industry which no longer exists and four businesses which are no more then maybe it would have remained under the public's radar.

But the UK's public sector has become the biggest employer in Europe and expensive as well.

It has to end, the public cannot afford it and unfortunately Labour's spending put the final nail in to the coffin.

Incidentally I am not Tory either.

In reference to the original article, the NHS pension sceme has already effectively been reformed to a career average scheme. Those members who have not moved to the new scheme are on 1/40th accrual. Also, it is has now been revealed that the NHS pension scheme is £2 Billion in surplus. So dont lump all public sector workers together. ie a one size fits all fix may be unfair!

Re R Murray.

So you think they are reforming them just for the sake of it and the NHS can remain as it is and be funded by member's contributions?

It is the £4bn tax payers support this year rising to £11bn in 10 years time which is the problem for all of the public sector pensions, the NHS one is part of the cost.

The financial services industry think it is terrible that private final salary pensions have gone because they are unaffordable too. However the tax payer cannot pay more tax to fund public sector workers pensions than they do their own.

There is a massive problem and it is no good pretending it is not there.

The NHS pension scheme is the largest unfunded pension scheme in Western Europe. I don't want to be paying for my doctor's retirement pension because he earns 5 times more than I do and he is financially capable of funding his own pension plan. That in essence is why unfunded private sector pensions schemes are wrong.

Furthermore there are thousands of people working in the public sector whose decisison to work there was the pension scheme. I don't wish to offend anyone but just how stupid is that?

Good points David!