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How should public sector pensions be reformed?

11:10 UK time, Thursday, 7 October 2010

Workers with public sector pension schemes should pay higher contributions, says an independent commission led by Lord Hutton. Do you agree?

The former Labour minister was asked to look into the cost of public sector pensions. Workers covered include those in the civil service, NHS, and local government. Such pensions are costing more money because people are living longer.

As well as asking people to pay more contributions into their pension plan, the commission is also considering changing the scheme from a final salary structure to a career-average structure. The pension age might also be extended beyond the current level - typically 65. The commission's final report will be published in time for the 2011 Budget.

Public sector workers argue that they have taken lower pay than they could get in the private sector in order to benefit from a better pension provision.

Should the pension age for public sector workers be increased? Should public sector workers pay more towards their pension? How can public sector pensions be made more affordable? Are you a public sector worker? What do you think about the recommendations?

This debate is now closed. Thank you for your comments.

Q&A Key report on pensions

Full guide to public sector pensions

Comments

Page 1 of 8

  • Comment number 1.

    The basics of the report are, short term:

    Employee should pay more in, as a percentage of their salary.
    The pension should be based on a career average instead of final salary.
    Other options may gain short-term, but would cost more long-term.

    Based on this I think the report is reasonable - it suggests that Civil Servants should pay their way, more in line with historical values, and they should get a fairer return, not a final salary that takes no account of previous service grades, while the framework should not be meddled with just for the sake of it - that is too costly to the tax-payer in the long run.

    What more can I say without starting a "them and us" moan that achieves nothing apart from a smile on the lips of the moderators.

  • Comment number 2.

    Well, the Daily Mail told me that everybody in the public sector is in an overpaid non-job and receives a bigger bonus than the Prime Minister, so they probably shouldn't be entitled to a pension at all, or any wages - just give 'em a public flogging then sednd them home without any supper.

    Persecution agendas aside, how about signing everybody in the country into a non-voluntary employeee contribution scheme from the first day of their first job for the rest of their working lives - give people no choice but to have some provision for their retirement.

  • Comment number 3.

    How about making the folks who want to receive one pay for it? I pay for mine, everyone I know pays for theirs (in full). Why on earth should we also be paying for someone elses. Sorry folks but the days of being bribed to vote correctly are now over, the our pot is empty, so unless you start putting your money in your pot it will also be empty when you retire.

  • Comment number 4.

    If you can get better pay in the private sector please feel free to do so!

  • Comment number 5.

    The lower pay in the public sector compared to the private sector has been exposed as a myth. So, why are the pensions so much better in the public sector then? The private sector are the wealth creators and we are repeatedly stuffed over pensions, its not fair and it has to change.

  • Comment number 6.

    Oh good, another HYS topic whereby public sector employees are smashed over the head again.

    Paying more for my pension in these difficult economic times is fine by me and I certainly don't expect it to be a final salary pension by the time I need it (when I'm 67 by the way - yep just like other people of my age in the private sector). However, its worth remembering, private sector people, as you indulge in your usual public sector bashing, that rather than wanting to drag our pension provisions down to your level, its possible that you could fight for your pensions to be as 'gold plated' (cough, cough) as ours.

    But then, that would mean making an effort to stand up for your rights wouldn't it and its so much easier to be bitter and wanting other people to 'suffer' as you do.

  • Comment number 7.

    I contributed to a police pension for 10 years before leaving in the late 1980s. That pension is now frozen until I attain the age of 60yrs. Had I remained in service I would have been eligible for retirement after thirty years on full pension at age 50. I therefore have to wait for a full ten years before receiving any of my (obviously proportional - I understand that entirely) pension and I cannot transfer it's value or receive a refund of contributions either. I know that I am not alone in this, and I am also by no means certain that if the age for public sector pension eligibility is moved beyond 60 yrs that my own entitlement won't be delayed accordingly. The whole situation is hardly fair but that is the law at present and one area in which I personally would welcome reform.

  • Comment number 8.

    This should have been done years ago but of course gutless Labour ran away from all the hard decisions and just kept throwing our money at things. As for the argument that Public Sector workers have taken lower pay in order to benefit from a better pension, that myth has already been dispelled. Also, considering the private sector has been having payrises lower than inflation and payfreezes for approx 5 years, plus there are the companies that have asked people to reduce their pay or working hours to cut costs, I think it's now the other way round. We all have to pay for Labour's profligate waste and, whereas the rich have to shoulder a higher burden, so should the overpaid, underworking and mollycoddled public sector who have had it too good for far too long. Can we please have an undercover report into local governments to expose all the waste and the lazy staff who work less than their hours and then we can start to reveal the proof to show what it's really like. I suppose old bovver boy Bob Crowe will be wheeled out to spout his tedious socialist, 'I don't live in the real world' whinging. Stiff upper lip guys. Surely even you remember those days Bob?

  • Comment number 9.

    Melysion,

    "Paying more for my pension in these difficult economic times is fine by me and I certainly don't expect it to be a final salary pension by the time I need it (when I'm 67 by the way - yep just like other people of my age in the private sector). However, its worth remembering, private sector people, as you indulge in your usual public sector bashing, that rather than wanting to drag our pension provisions down to your level, its possible that you could fight for your pensions to be as 'gold plated' (cough, cough) as ours.
    "

    I could afford to make my pension to be as good as yours were I not paying for yours.

  • Comment number 10.

    2. At 11:28am on 07 Oct 2010, Horse wrote:
    "how about signing everybody in the country into a non-voluntary employeee contribution scheme from the first day of their first job for the rest of their working lives - give people no choice but to have some provision for their retirement."

    er... National Insurance? We pay into that all the time we work and it is supposed to provide a basic pension we can live on for the rest of our days. Its there already, no need to add anything.
    There are then options for adding to that - an employer provided scheme of one sort or another, a personal pension scheme, or if you remember it SERPS (state earnings related pension scheme). So you can optionally top up the basic (enough to live on) pension.

    The arguement here is whether we as employers (all tax payers employ the public sector people - police, teachers, civil servants etc.) are being too generous with the employer pension scheme we offer. I am inclinded to think we are very much too generous. But we are also far too generous when it comes to employing 'managers' at hugely inflated salaries - often justified to 'attract the best' despite the fact that it is very very clear we fail to employ the best (a good relatively recent example being the head of social services willing to take the money for being 'in charge' but not willing to take the responsibility when it all went wrong, or my local council who has had the same useless individual in charge but trebled their wages).

  • Comment number 11.

    6. At 11:42am on 07 Oct 2010, melysion wrote:

    But then, that would mean making an effort to stand up for your rights wouldn't it and its so much easier to be bitter and wanting other people to 'suffer' as you do.

    ---

    What standing up for your rights?

    Rather than just whining about hard done by you are?

    What are you?

    Some kind of communist?

  • Comment number 12.

    Not all public sector pensions are the same.
    The NHS scheme (the largest) actually takes in more in contributions than it pays out and Nursing and associated staff Unions have agreed already to higher contributions and an increase in retirement age from 60 to 65.



    It is unrealistic at a time when public sector workers are receiving pay cuts and higher taxes to expect higher contributions (where are they to find the money)

    70% in the public sector are women,hit by the Tory attack on children as well.

    Some schemes require reform but I would bet folding money that those already reformed will be made worse by any supposed improvements!

  • Comment number 13.

    Making the public sector work till they are 65 like the rest of us would help. The armed forces , police and fire service should not be made to work till they are 65 but the rest should. Ending final salery pensions would help My final salery pension like thousends of other in the private sector was changed so I will get less when I retire but through my taxes I still pay for huge public sector final salery pensions. Lets just have a level playing field between private and public pensions.

  • Comment number 14.

    I dread to think what's going to happen by the time my generation (I'm a little over 30) want to retire.

    The final salary pensions of yesteryear are nothing but an amusing anecdote of what used to be. The pensions pot we have seem to lose masses of value whenever there's a crash and gain far too little in the good times. By the time I reach 65 I'm sure the general age of retirement will have crept up to 75, and relying on any sort of a decent government pension seems like a bad joke.

    Maybe I'll start playing the lottery.

  • Comment number 15.

    Public sector employees should consider themselves fortunate. I lost most of my pension back in 1997 when Clown put through fiscal policies to diminish the growth potential in pension funds. This lead to an explosion in house prices (boom), and the resulting recession (bust) for which we are now paying through austerity measures. Thanks Clown, you should have listened to Frank Field.

  • Comment number 16.

    "I could afford to make my pension to be as good as yours were I not paying for yours."

    Rubbish. You'd be paying the same amount of tax regardles sof whether you are paying for my pension or not. Do you seriously think that if all public pensions ceased to be you'd find a tax refund come your way?

    Of course not.

    I also think you'll find that I pay a fair amount towrds my own pension. And - look here - I see tax coming out of my pay packet too.

    Either fight for your own pension rights or get on with it. I'm getting extremely tired of bitter private sector people moaning their lot

  • Comment number 17.

    The starting point is that people get paid a salary in exchange for doing their job. Once people retire they are no longer doing a job. There is actually no logical reason why an employer (public or private) should then be expected to pay for them when they are no longer giving anything in exchange. There is still less reason why people in the private sector should be expected to pay for public sector workers to get pensions greater than those private workers will get themselves – that is plain unfair. There is also no reason (apart from the real value of their own contributions) why someone on a higher salary when they were working should get a higher pension than someone on a lower salary when they retire - at that point they are worth the same to their former employer, nil. Unaffordable private sector pensions also need to be slashed - companies are going out of business (damaging the economy) to pay for pensions when they could instead be creating jobs (boosting the economy). The best solution would be to scrap public sector pensions completely and impose a cap on the level of private sector pensions and simply double or triple the state pension – that would fulfil the socially desirable purpose of allowing all people in retirement a living income while at the same time allowing the economy to function without the pensions albatross around its neck.

  • Comment number 18.

    One thing that is apparent is there is no such thing as A (note the capitals) public service pension there are a variety of pensions some of which are extremely good, others less so. It should also be noted that the opinion is that there is no such thing as a gold plated pension and that MPs pensions are not included (I assume they are NOT public servants).
    I certainly think that an opportunity has been missed though. Whilst it will be necessary to pay from the public purse for a number of years it would have made sense that now there are increase contributions from the members (though we are not yet sure how much they will increase) these should be put in a separate pot where the Gov. cannot raid them and then claim the private sector is supporting the public sector. I would also think that ALL public sector employees should be on the same terms (MPs included).
    Despite what some people think it shows the public sector pensions are not as lucrative for most public service employees(ave £7800 pa) as they thought and they are not as big a drain on the country's finanaces as the likes of the Mail like to portray.

  • Comment number 19.

    The public sector should be in line with everyone else , they may not get big wages but they mostly have job security ... and that means a lot these days , people in the private sector pay into a pension ( if they are lucky enough to have an employer who has a pension fund . lots of jobs do not offer a pension or pay good wages . then along comes the robber baron and takes away lots of pension funds from the private sector to be fair he should have robbed everyone in both camps.but that may have affected the mps .

  • Comment number 20.

    10. At 11:49am on 07 Oct 2010, anotherfakename wrote:
    2. At 11:28am on 07 Oct 2010, Horse wrote:
    "how about signing everybody in the country into a non-voluntary employeee contribution scheme from the first day of their first job for the rest of their working lives - give people no choice but to have some provision for their retirement."

    er... National Insurance? We pay into that all the time we work and it is supposed to provide a basic pension we can live on for the rest of our days.

    ----

    But the NI contribution also goes towards various benefit pots and other miscellani.

    I'm talking about a dedicated pension payment, with the whole countries payments going into the same pension pot, maximising growth and minimising admin costs, which is long way from what happens now.

  • Comment number 21.

    5. At 11:36am on 07 Oct 2010, Bunglebear wrote:
    "The private sector are the wealth creators"

    Erm, not quite, I agree the public sector aren't creating anything (apart from headaches and bills for the rest of us) but quite a bit of the private sector creates no wealth either .... in fact the ONLY people that create wealth are those who create things - manufacture and farming. This is why this country is going so fast down the toilet. China and Germany continue to power ahead because they have governments that respect manufacturing, a media that supports and revels in manufacturing and none of the stupid 'we can make money with banking, arts, services' rubbish we have here...
    Banks do NOT make money, they leach money out of profitable companies and private people - nothing, not a penny piece is made by them.
    Services are taking money from those that make things in return for doing something to help them - in time most who make something realise they can perform this service cheaper themselves.
    Arts are just pretty, and pointless - pity the BBC still refuses to notice that.


    All in all about 20% of the working age population have a real job doing something in the private sector - about 5% of the working population create wealth, the rest of the population merely recycles it, often getting very rich byt leaching some off.

  • Comment number 22.

    "5. At 11:36am on 07 Oct 2010, Bunglebear wrote:

    The lower pay in the public sector compared to the private sector has been exposed as a myth. So, why are the pensions so much better in the public sector then? The private sector are the wealth creators and we are repeatedly stuffed over pensions, its not fair and it has to change."

    Stating that it has been 'exposed as a myth' is not the same as it actually having been demonstrated as such (a well stated opinion is not the same as actual proof - cite a source).

    In my estimation (and that's all it is), public sector pay levels are only demonstrably commensurate with private sector pay when the extra benefits of public sector employment are taken into account - this includes better pension plans. A reduction in the value of these plans amounts to a reduction in the value of the remuneration that public sector employees receive for their work - i.e. a pay cut.

    In addition to this, the private sector are not the 'wealth creators', they are the organisations that take advantage of the infrastructure and society provided by the public sector in order to make profit for themselves.

    Try running a private sector enterprise without publicly provided assets such as:

    Educated employees who also receive free healthcare and get to work on free roads.

    Premises protected by police and fire services.

    Subsidised rail and road transport for goods.

    I suspect profit margins might be considerably thinner (I have mentioned before on similar HYS topics - not too may profitable IT consultancies running out of Mogadishu these days, are there ?).

    Public and private sector enterprises are symbiotic in their existence, private sector employees who regard themselves as being the only ones doing all the work are delusional.

    In so far as public sector pensions are concerned, I actually agree that a 'career average' scheme would be fairer than final salary one but a contract exists between those employees who have entered into a final salary scheme already and their employer - is it fair that the conditions of that contract should be changed without recourse to compensation ?

    It is not dissimilar to having been mis-sold a dodgy private pension - "we told you one thing when we took your money but we knew all along it was a lie" - why would public sector employees be denied the right to sue their pension provider for this mis-selling in the same way that a private pension provider can be ?

  • Comment number 23.

    6. At 11:42am on 07 Oct 2010, melysion wrote:
    "rather than wanting to drag our pension provisions down to your level, its possible that you could fight for your pensions to be as 'gold plated' (cough, cough) as ours"

    If you think it through a bit though, that entirely fails to address the issue, doesn't it? Reforms are necessary because public sector pensions are no longer affordable.

  • Comment number 24.



    "Rubbish. You'd be paying the same amount of tax regardles sof whether you are paying for my pension or not. Do you seriously think that if all public pensions ceased to be you'd find a tax refund come your way"

    A perfect example of socialist justification for wasted taxes. It's OK as if we didn't waste it on this we would only have to waste it on something else. The suggestion that there is a connection between public spending and taxation meets a cry of indignant derision.

  • Comment number 25.

    17. At 11:57am on 07 Oct 2010, Steve wrote:
    The starting point is that people get paid a salary in exchange for doing their job. Once people retire they are no longer doing a job. There is actually no logical reason why an employer (public or private) should then be expected to pay for them when they are no longer giving anything in exchange.

    ##################################################

    Agree completely.

    ALL employment related pension schemes are just a tax dodge, plain and simple.

    We 'give' you some money, you 'contribute' some of yours, and the taxman doesn't get his cut.

    All employer pension schemes should either be taxed in full, as income, (both employer + employee contributions). They would dissapear overnight. If you want a pension then put your money aside as you earn it, after tax.

    The most economical method of paying a pension is by the state, (2% administration charges). Whereas the private/employer schemes cost a fortune (10-20% on average).

    So lets stop the merry-go-round and all get off.





  • Comment number 26.

    IF there's going to be a change, reducing the Employer Contribution and not increasing the employee contribution would probably be the way to go.

    I'm paying in to a public penion and my deducted contribution is about the national average. The department's contribution is way above however.

  • Comment number 27.

    Making the public sector work till they are 65 like the rest of us would help. The armed forces , police and fire service should not be made to work till they are 65 but the rest should.

    -----
    The richest 1% with 40% of the Wealth in the UK don't normally work until the age of 30, if at all, let alone 65!
    How about Paramedics,Prison Officers,street cleaners, there are many jobs in the public sector that are physically demanding just as there are in the private sector,many captains of industry are safely ensconced in there tax havens well before the age of 65!

  • Comment number 28.

    The public sector job that has the very best pension scheme, by far, is that of an MP. MPs qualify for a pension after a three years. The pension is coupled to an out of proportion, (compared to other public sector workers),golden handshake. This pension is index linked and is paid in any part of the world that the recipent is domiciled.
    Given the track record for expenses abuse shouldn't MPs pensions be the first to come under the belt tightening review?
    However, MPs do not regard themselves as being in the public sector and therefore not subject to the cuts. If they are not public sector could someone tell the nation who it is that is paying their inflated wages.

  • Comment number 29.

    "8. At 11:47am on 07 Oct 2010, Nik wrote:

    ..... so should the overpaid, underworking and mollycoddled public sector who have had it too good for far too long."

    The second largest public sector pension pot is the NHS England and Wales pot. So the "overpaid, underworking and mollycoddled" workers you are talking about are (like me) mostly nurses.

    How much would you charge to clean another human being's back side ? To sit with them as they die ? Most nurses do it every day for £25k a year.

    I would be interested to hear what horrific private sector job you do that makes this look like it's over paid and mollycoddled.

  • Comment number 30.

    First the tories want to slash jobs in the public sector, now they want to slash our pensions. Absolutely disgraceful is what it is and we will not accept it.

    People who work in the public sector are doing a great service to the country and we are lower paid than those in the private sector. The least we should expect is a decent pension.

  • Comment number 31.

    I know.... why dont we just pass on the costs to the next generation after all thats what the 50's baby bomers have done to us!

  • Comment number 32.

    Reform is long overdue. Well done the coalition for having the balls to do something Labour couldn't or wouldn't do.

    Future generations will be more prosperous due to a little hardship now, so stop being so selfish and think of the greater good for the country.

  • Comment number 33.

    Public sector pensions are a nice easy target for the Government. A large percentage of PS workers do not receive anything like the headline rates that appeared in the media a few weeks ago. My husband earns well under the national average wage having worked for 30 years for the MOD.

    I just hope the Government don't move the goalposts for those within 10 years of retirement - but I won't hold my breath.

  • Comment number 34.

    Having looked at the amount that some of these people are contributing to their pensions and comparing it to the Railway Industry it is pretty obvious why there is a pensions shortfall!

    When you see employees contributing about half of what we are expected to contribute as a percentage and the Employer also contributing less as a percentage is it any surprise that things are in a mess! This must have been obvious for years, but nobody has got off their backsides and done anything about it.

    What is required is to bring the contributions up to a reasonable level over a reasonable timeframe say 2 years or so.

  • Comment number 35.

    the usual bashing of public sector workers i see... why dont all these people bashing us who work in the private sector get jobs in the public sector instead ? obviously we get big salaries , job security , massive pension and sit about all day doing nothing so i dont understand why they would still be working in the private sector?

    Could it be that all public sector workers dont earn inflated salaries and have great working conditions? keep reading the Daily Mail and you'll convince yourself we are all in pinstripe suits having lunches on taxpayers money. It could be when you lose your private sector job you may have to rely on us layabouts to pay your benefits , ( if they havent sacked the 600,000 of us they are proposing )

  • Comment number 36.

    The last government cowardly avoided this problem despite its growing importance, no doubt because of public sector union pressure.

    It really cannot be left any longer, public sector workers must realise this.

    Of course the usual cases of public workers receiving minimal pensions will be wheeled out, but the truth is that their are many public workers whose pension pots are likely to exceed £1m during their lifetime.

    Some of the biggest pension liabilities are police officers 30 years in service, 30 years on a high pension. A police inspector or sergeant could easily take over £1m in pension during their retirement.

    This is why we have total public sector pension liabilities over £1 trillion thats about £34,000 for every taxpayer in the UK. It is said there are over 17000 public workers with potenial pension liabilities over £1,000,000. We simply cannot afford it.

  • Comment number 37.

    "30. At 12:15pm on 07 Oct 2010, thelevellers wrote:
    First the tories want to slash jobs in the public sector, now they want to slash our pensions. Absolutely disgraceful is what it is and we will not accept it."

    The proposals were made by a former Labour minister, not a Tory.

  • Comment number 38.

    I work in financial services. The bank that the Government currently holds a 40% stake in. Contrary to most people's perception most prople who work in retail banking do not earn a fortune. Earlier this year the bank changed the basis of the pension scheme, without negotiation, so that if you wanted to retire on the same pension as before you would have to work longer, pay more in, or both. The unions representing the bank's workers, including UNITE, took no action This creeping dismantling of the benefits of private sector pensions has been going on now for several years almost under the RADAR. The Hutton report is an extension of this into the Public Sector. Public and Private pension funds are in the mess they're in due to two reasons:

    1. Gordon Brown's disasterous one-off windfall tax on the pension funds when Labour took office in 1997. This passed unnoticed by most people at the time but now is really coming home to roost.

    2. The FSA ordering pension funds to 're-balance' their investment portfolio's at the bottom of the stock market. This meant when the market recovered the pension funds didn't see their balance sheets recover. Instead they had more funds invested in low risk but low interest deposits. The FSA was introduced by, you've got it, Gordon Brown.

    In addition the UK's state pension provision after 13 years of Labour is the worst in the developed world. Who was Chancellor and then PM during the whole of this period. I'll give you one guess!

    My only disappointment about Gordon being booted out of number 10 is that he didn't have to sort this mess out.

    Overall we will all be poorer long into our old age. Well done Gordon!

  • Comment number 39.

    The public sector pension is £1 TRILLION of the £3 TRILLION debt OFF the books the last incompetent 'government' left US with. This, along with the £1 TRILLION of debt ON the books. Something HAS to be done and the measures that Mr Hutton has announced are fair for the people paying the bill - US, the UK taxpayer. The good times are over for some period of time, the legacy of incompetent governance of OUR country by the left who ALWAYS leave US in a mess (this time it HUGE).

  • Comment number 40.


    Public sector pension schemes have had a very good run .. But it is now time that they All fall inline with the rest of the country.

    The pension schemes should be "Sold off" or annuities Bought .. The tax payer cannot afford should featherbed anymore

  • Comment number 41.

    30. At 12:15pm on 07 Oct 2010, thelevellers wrote:
    First the tories want to slash jobs in the public sector, now they want to slash our pensions. Absolutely disgraceful is what it is and we will not accept it.

    People who work in the public sector are doing a great service to the country and we are lower paid than those in the private sector. The least we should expect is a decent pension.

    .........................................................

    People in the public sector are doing a great job but so are people in the private sector. People in the private sector have had their final salery pensions ended and some have been left with nothing after 13 years of Brown I never heard one union leader complain when union members in the private sectors pensions were going down the toilet.

  • Comment number 42.

    There does seem to be an impression that as a public sector worker I don't contribute towards my pension? Well I can assure you that I do and my monthly contributions hurt like any other pension contributions. In addition I of course am also a taxpayer just like you.

    My employer contributes to my pension, my employer is the Government, they pay me to wotk for taxpayers (again, of which I am one).

    I've seen what my projected pension will be at 55, 60 & 65 and I can tell you that it is laughable, so don't worry, I can't see myself being able to retire on it at any of those ages and that's before any changes are made.

    If there wasn't a recruitment freeze (which in my Dept there has been for ages) prior to massive cuts (which again there was last year and the year before that...) then I would invite any Private Sector workers to come and join me to bask in the glory of our "job security" and "gold plated pensions".

    I wish people would stop using the term "wealth creators" as well. It's a ridiculous term. Still, I guess if i get the chop at least I know there are millions of jobs available as a "wealth creator"! I thought about becoming a wealth creator once but the pensions were rubbish.....

  • Comment number 43.

    Some statistics from the office for national statistics for people to digest:
    For the working age population....
    Only 70.6% are employed at all
    Only 51.1% are employed full time
    Only 36.5% are employed by the private sector

    Even if ALL the private sector were making wealth (as against working in a bank, as a solicitor, an accountant, or in the service sector) then only 1 in 3 of our working age population makes wealth - the rest take it, and thats before we consider the population as a whole....

    When you check the overall population (62 million) and the number in the working age group (41 million) it seems that only around 24% of the population as a whole is producing wealth - every wealth producing person is supporting 3 others.... thats if all those in the private sector create wealth - and we know its not the whole story....

    No wonder the UK is in a mess eh? Pity the BBC with all of its resources can't manage to do this sort of trivial analysis and give the population some real information.

  • Comment number 44.

    The basic point which the report fails to address is that for many schemes (not all, I think the NHS scheme being one which does not fall into this catagory) the civil services schemes are being run in a way which is not open to the private sector.

    If the private sector has a final salary scheme all contributions are held in a fund and if the investment returns are not sufficient to deliver the returns necessary to meet the pensions payable the employer has to pay more contributions in. The effect of the most recent changes in law is to make such schemes utterly uneconomic for the private sector so in effect the last Lab govt has abolished such schemes in the private sector (as demonstrated by the number of schemes closed to new entrants or simply closed outright).

    I have a simple request which is the law which applies to private sector must apply to the public sector as well. So if govt effectively abolishes final salary schemes in the private sector they must also do so in the public sector.

    All too many public sector schemes are simply Ponzi schemes which ultimately have to bailed out by the taxpayer. What should happen is that all public sector schemes must have dedicated funds and the amount of contributions being made by the employer (ie govt) per year must be clearly identified. I suspect that the cost of that would quickly result in all public sector final salary schemes being converted into defined contribution (money purchase) schemes as has happened in the private sector.

    Of course the unions and the usual left wing posters will be up in arms about this and claim I am robbing the poorly paid - rubbish. I have said nothing about what rate govt should make employer contributions. That is a matter between the unions and govt to discuss. I will be interested to see what level of employer contributions would be required to maintain equivalency to what the final salary schemes current promise public sector employees - I have a sneaking suspicion it will be equal to 25% or more base salary.

  • Comment number 45.

    Obviously New Labour has taken advantage of its period in power to sneak huge benefits across to its supporters at the cost of everyone else. Benefits the country can't afford.

    These should now be set aside by the government of the day as unreasonable, and as being a fraud on the general population, and a fair system should be substituted ex post facto.

    Labour supporters don't like it? Well, tough. The rest of us aren't mug enough to let you get away with it.

  • Comment number 46.

    @AnotherFakeName #21

    "but quite a bit of the private sector creates no wealth either .... in fact the ONLY people that create wealth are those who create things - manufacture and farming."

    Not actually true, economically. There is no difference between a service and manufacturing a thing. If I pay you for either, you still get money. In theory, we could make Britain the call centre of the world and still bring in cash even though we produce nothing. Or how about training people from other countries and providing for their needs while they are here? Tourism? Obviously that is not practically possible but the principle is correct.

  • Comment number 47.

    It's yet another attempt to further increase the divide between the poor and the super-rich.

    'People' are living longer but only some people. Whilst the life expectancy of poor people decreases the life expectancy of the wealthy is increasing. That's the real driver for pension reform: the wealthy want the poor to pay for their increased life expectancy. Because those who have the least will be lucky if they ever reach the retirement age. Ordinary manual workers will pay NI/pension contributions all of their working lives and will be lucky to get anything back out of the system.

    Hutton wants to replace final salary schemes with career average salaries. I can see his argument re: that those who retire on good salaries may nto have paid any more contributions to someone with a smaller wage packet but this anomoly is being overstated. The current anomoly is far fairer than allowing someone to have their pension income linked to what they earned as an apprentice or office junior when they began their employment 45 years earlier. Final salaries reflect the approximate cost-of-living at the time of retirement and it also gives the employee greater certainty on what retirement income they will receive.

    The fact is: there are some hugely wealthy individuals within the UK and they need to start paying out more in income tax to help fund a society that is cohesive and fairer for all it's citizens. Hutton wants to reverse that concept.

  • Comment number 48.

    I was under the impression that pensions were a legally binding contract between employer and employee. And that changing any of the conditions would be a matter of negotiation - not diktat by the employer.

    I foresee a lot of legal challenges.

  • Comment number 49.

    To be honest, I think it should be reformed, but the days of a full public sector pension went years ago (well for regular public sector works that is)..

    And seeming this is the tax payers money we're talking about, I personally think it should be a matched pension (like for like) upto 15-20% of their annual salery, so the pension contributions increase with their pay/productivity/responsability - not based on their final salery because you'd think after 25-30 years in public sector you'd expect they'd be on a decent wage after going up in the ranks..

    For the young public sector workers who don't contribute to their pension, i think a minimal contribution would be acceptable until they decide they want to part with their own money when they have a family or become of age where they start thinking about their long term future.

  • Comment number 50.

    It is crime to watch Lord Hutton's report coverage, as well as the British Politicians worrying about the Pension, the modality of payments. Discussion also covers a very handful of Private Sector firm's contribution [comparative size against workers of independent small to medium size,part-time & flexible workers, teachers/tutors of independent F/E colleges (hourly paid), super market workers etc the largest private sector workers]. Who is worried about this largest group????? Who is worried about how much they need to live after
    their retirement???? For politician, these group are important to gain their electoral seats. Just consider the impact if this group step to the road demanding remedy????

  • Comment number 51.

    "A perfect example of socialist justification for wasted taxes. It's OK as if we didn't waste it on this we would only have to waste it on something else. The suggestion that there is a connection between public spending and taxation meets a cry of indignant derision."

    I'm not justifying anything. I'm simply stating a fact. You would not get a tax reduction if you stopped 'paying' for my pension and therefore you would still 'not be able to afford' to pay into your own. I'm not saying thats right or wrong. Its just a fact.

    If you read my first post carefully, I have already stated that, due to harsh economic times, I agree that some reform of public pensions are necessary. I guess I'm just objecting to the bitterness of private sector workers towards people like myself. I mean, heck, you are all getting what you wanted aren't you? Thousands of us are going to be losing our jobs soon. Why are you still complaining and desperate to make us 'suffer' all the more? And whats wrong with trying to improve everyones standard of living, rather than downgrading to the lowest common denominator? Yes, I know, its difficult given the present economic climate but you guys would still be braying for our pensions to be cut (or indeed abolished completely I imagine) if times were good, rather than demanding you get a good deal as well. If that make me a socialist, then so be it. I'd rather be a 'socialist' and give an damn about others than bitter and wanting to dump pain on my fellow citizens.

    And, no, I don't have a 'non-job'. I've worked darn hard to get where I am and, yes, I'd be getting paid a LOT MORE in the private sector for doing much the same thing. I don't deserve your derision.

  • Comment number 52.

    In this new age of "fairness", will someone please tell me what is fair about some of being forced to pay for the pension of others, thus leaving many unable to provide pensions for themsleves. We are all supposed to be equaly in our wondeful "democratic" country, so how can some retire on a pension at much earlier age than others?

    The only answer is to either make pensions contributions compulsory (say 10% of salary)& what you put in is what you get out on retirement, or forget the entire pension industry & let everyone fend for himself on retirement. We have got to stop expecting someone else to pay for our lifestyles. It's unaffordable & more importantly, it's immoral.

  • Comment number 53.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 54.

    I have worked in the NHS for most of my working life - no, not as an overpaid manager before you ask. During that time salaries have, indeed, increased but how many people remember all the strikes for equal pay in the 70s and 80s? It is only recently, and thanks largely to Labour that we get a wage comparable with the private sector. Some of that levelling is also due to the failing economy meaning that private sector organisations are paying less. It is still the case that many could get better wages in the private sector. Yes, there has been greather job security in the public sector but also, believe it or not, many of us have worked in the NHS because it's a service. Many of we old school members still refer the the Service - capital deliberate - and hate talk of 'customers'. Many do the job because it is doing something worthwhile.

    Should we in the NHS lose out on the increased pension we were promised when we did work for lower pay and longer hours covering unfilled posts because the Tories cut the budgets, simply because Labour latterly topped up salaries?

    If the country can't afford what was promised people - which is rubbish - then can I refuse to pay my credit card bill at the end of the month, because I can't afford it? A deal is a deal, anything else is a breach of contract.

  • Comment number 55.

    The simple fact is that many, probably most, taxpayers do not have a problem with the police, armed services, nurses/medics/auxiliary nurses/doctors and firefighters pensions or early retiral. This group should be removed from any discussion and their pensions rights "ring fenced".

    What I, and I believe most of the taxpayers, do not want to pay for are basically office workers sitting on their ar*es doing nothing jobs and then going on to early retirement on final salary pensions. Most of these jobs were created by the last government and do nothing other than grease the wheels of the huge and costly state. They do nothing and contribute nothing to the economy. The state has bureaucrats and their minions working away doing nothing but reports on useless studies and programs. These "workers" think that they are doing something usefull but in truth they don't. They do not do anything other than eat up resources, pump out useless information and throw up red-tape obstacles for those in private industry and the aforementioned public servants that do something.

    These "workers" have to wake up to the fact that we cannot afford them anymore - they had their good times under Brown and Blair now it is time to face reality.

    "Taxpayers" are those that produce things that are sold and then pay tax to the government.

  • Comment number 56.

    I am not to happy at the moment. I didn't vIse the finacial crises that caused the economy to melt down and Government debt to balloon as we taxpayers paid out £1trillion to bail out the greedy, evil bankers. I joined the civil service to improve society and contribute.

    For my service I am in a job that I have enjoyed but has paid considerably less than I can get doing something else. That has all changed now and I have had child benefit taken away (worth £20,000 to me over the next 15 years). Like everybody else, VAT increase will cost me about £10,000 over the next 20 years). A two year pay freeze will cost about £50,000 over my lifetime). Changing the linkage for
    my pension from RPI to CPI will cost about £40,000. The Government has used primary legislation to slash the value of my compensation packages (costing me about £40000 if I die in service or am made redundant). Next Huttons pension reforms will likely raise my pension contributions by maybe 5% costing another £50000).

    Overall me and my wife (who is also a civil servant) have been hit with about £300,000 in lost revenue and increased costs.

    Compare this with the people who caused the crisis. They personally have none of this happen to them , earn many many times what I earn and contribute nothing to society.

    Sadly I have decided to leave my job today. A job that makes an important contribution to the public good and that I enjoy and am god at.

    Before I go I hope I can avoid feeling bitter enough not to sabotage things

  • Comment number 57.

    16. At 11:56am on 07 Oct 2010, melysion wrote:

    "I could afford to make my pension to be as good as yours were I not paying for yours."

    Rubbish. You'd be paying the same amount of tax regardles sof whether you are paying for my pension or not. Do you seriously think that if all public pensions ceased to be you'd find a tax refund come your way?

    Of course not.

    I also think you'll find that I pay a fair amount towrds my own pension. And - look here - I see tax coming out of my pay packet too.

    Either fight for your own pension rights or get on with it. I'm getting extremely tired of bitter private sector people moaning their lot
    ---------------------------------------------

    Maybe you should be not so much "extremely tired of bitter private sector people moaning their lot" as a tad worried. After all, there are between three and four times as many people in the UK private sector as public (apologies I don't have the exact figures but it's ball park). It's quite possible many of them might feel rather unconcerned if, as a consequence of a struggle over pensions, an unsympathic government were to trash your unions and carve huge chunks out of the public sector.
    [I posit this as a theory only of course, it is not necessarily my own view - just in case the usual (ideologically-driven) suspects accuse me of fomenting class warfare.]

  • Comment number 58.

    I see Hutton has reported as instructed. What a surprise that once again the lowest paid will suffer for the "good of the country". Yet again it's a promise of "jam tomorrow" from the bunch of millionaires who call themselves our government.

    Bash the public sector yet again. I don't suppose that the members of the "great and the good" who toil in the media and as politicians and have "platinum pensions" are going to have their income slashed as well? Thought not. Typical of the "do as I say not as I do" mentality of the top 10% of earners who own 90% of the countries wealth.

    Like the disappearing final pension schemes in the private sector it will only be the workforce that lose them not the directors and managers. They'll still wander off with "golden handshakes" however poorly they have performed.

  • Comment number 59.

    3. At 11:34am on 07 Oct 2010, RightWingIDBanned wrote:
    How about making the folks who want to receive one pay for it? I pay for mine, everyone I know pays for theirs (in full). Why on earth should we also be paying for someone elses. Sorry folks but the days of being bribed to vote correctly are now over, the our pot is empty, so unless you start putting your money in your pot it will also be empty when you retire.

    Another braindead who believes the Daily Mail.

    I PAID 11% of my GROSS salary for 30 years to qualify for my Fire Service pension. Why do so many idiots think that public service pensions are non-conctribuary. I left school age 15 on Friday and started work on the following Monday and for the next 50 years paid tax, National Insurance and pension contributions. I have never received a penny in any benefit during my working life or since retiring.
    As for making public service employees work longer, what a load of rubbish. Not many Firefighters would be fit enough for the job at that age. Hard physical work takes it's toll on the human body so you pen pushers moaning about Public Services don't be sick, don't be old and dont have children.

  • Comment number 60.

    Perhaps the point missed by most People is, 90% of the problem with Penions is and was Goverment created. 10% was electrol retoric, by and large all Goverments between them have left us up the smelly creek with out a paddle.
    Camoron's blamining the Labour party forgets bad Pension interference
    started with Thacher and its been down hill since and I don't see it getting better. In the Mail or The Express 90% of Pension fund taken by fund Managers. It should have read Robbed but, I suppect fund Managers are mostly Mail and Express readers. And we are expected to pay more, the question I ask is WHY. If I was starting my working careerer I would avoid pensions and look for a alternative.

  • Comment number 61.

    Numbers 28 and 36 are both correct. The reality is the country cannot afford the current scheme, it's not going to be able to meet it's commitments in years to come and those who do not benefit from it cannot afford - or be expected - to subsidise it. It is for the beneficaries to meet the short fall, not the public at large, and this includes no increase in Council Tax to pay for the employers contributions.

    The very, very first changes should be made by those in The Palace of Westminster. They should be setting the example for the rest of country, whats good for them is whats right for the rest of us so lets start there. I have no particular political affiliations so it's not aimed at any party but I do believe that our leaders should lead by example so lets start with them.

  • Comment number 62.

    this morning on today we had the classic response from a trade union leader a teaching one at that saying that the figures don't add up well they may not for her judging by the standard of education in our schools

  • Comment number 63.

    As a Public Sector worker I look forward to my future Pay rise... Well if it's a Myth that we take a lower wage because we understand the long term benefits, then I'll be expecting my wage to rise in line with the "Actual Wage" Statement we get each year showing the financial benefits of a Public Sector Pension.

    I entered the Public Sector 11 years ago under a contract, I expect my employer to honour that contract.

  • Comment number 64.

    "You do a menial job. Maybe it's a rubbish and thankless menial job, but the world does not owe you a living, nor any gratitude. You should put what you do in some perspective, because no-one cares about what you do, and no-one thinks it's a great service."

    Interesting. Are you really suggesting that doctors, nurses, fire officers, police officers, teachers, scientists ... are you REALLY suggesting that these are all menial jobs? Oh dear.

    You are aware that all the above are public sector jobs, yes?

  • Comment number 65.

    Of course MP's pensions and those of government ministers are also public service pensions. We are constantly told by the politicians that nobody wants to grind everybody down to the same level, rather that they want to level things up. Well of course we would all like to be levelled up to enjoy the sort of pensions that Westminster grants itself but in reality even at the best of times I can't see that happening but if public service pensions are to be given the hard treatment then let us start with doing a good job on those at Westminster before we even touch or look at anybody else's.

    When it comes to private sector pensions let us do two major things.


    Firstly reform the dodgy dealings of the financial sector where so many outsiders pensions are used as a glorious milch cow to be bled down to a pittance with huge fees and commissions, some of our continental cousins get far more efficient and cheaper treatment from their financial sectors with far better levels resulting in the pensions paid, it is time the politicians introduced legislation to limit the amount that their friends in the financial houses can bleed off these schemes. Self regulation will not be good enough.

    Secondly company pension schemes need a lot more protection from the uses made of them by their operators. The worst depradations on such schemes were those like Bob Maxwells raid on the Daily Mirror schemes funds. But in reality these schemes have been used over the years by many conpanies and finance houses as a cheap source for borrowing funds. They should all be protected by trusts that operate them in the interests of the putative and actual pensioners. Where their funds are invested they should be invested for the benefit of the members of the scheme and for the benefit of the employers who should be prepared to pay the market rate for capital, we are after all so frequently told that markets are good for us. There are already some private pension funds operated by trusts, they should all be so, by law. Furthermore the employers contributions should not be reduced during the good times, these are the times when these funds accummulate enough to be secure during the hard times.

    The calculation of the age at which pensions come into payment, in both the public and private sectors, should take into account the nature of the work in which the employees are involved. The physical demands placed upon individuals vary considerably and it is little wonder that those whose working lifestyle consists largely of sitting and talking are freqeuntly prepared to continue working beyond the normal retirement age. However there are still out there in the real world many whose work is physically and/or stressfully demanding as well as those in high risk positions such the armed forces, police, firefighters and of course seafarers.

  • Comment number 66.

    We ought to be looking at fair ways of ensuring that everyone has sufficient to live on in their old age.

    That may well mean increasing contributions from both employee and employer. It may mean working longer... although that seems a bit hard, we spend too much of our lives working as it is.

    I'm wondering how such as the Teachers' Pension Scheme are going to avoid massive lawsuits for breach of contract - if not prosecution for fraud - if they renege on the obligations which they have incurred by accepting substantial employee contributions throughout each person's service.

    Bleating, "Oh, we have no money to pay" is not acceptable: at least, the taxman doesn't accept that excuse when trying to put his hand in my pocket!

    What is not acceptable is asking for higher payments over a longer period and failing to pay out a proper pension at the end of it. People have for far too long allowed themselves to be defrauded out of decent pensions, it is time to require employers and pension providers to step up and pay their share as well.

  • Comment number 67.

    "The lower pay in the public sector compared to the private sector has been exposed as a myth." - news to me. I quit Local Government a few years ago having got fed up with the abuse you get from just about every member of society. Found a new job with the private sector, doing almost identical work, and earning 30% more from day one. Plus I get something else from my new job - respect for what I do.

    Go back to public service? Never - I can't understand why so many people still do, unless it's for the same reasons I had when I started out - trying to do a job that made a difference, rather than just a profit. The good pension is about the only thing that is keeping many long-term Local Government workers in their jobs ... if you think LG workers are bad now, wait till you lose all the good ones because you took away the little comfort that they had - a reasonable pension at the end of it.

  • Comment number 68.

    One overlooked point about public sector pay:

    When talking about "affordability" one important point is never mentioned by the Government.

    A private sector employer hands over the net pay to its employees and sends the tax and NIC off to HMRC.

    With Government employees the State, as employer, hands over the net pay to its employees and pays the tax and National Insurance Contributions BACK into its own coffers.

    In effect, the State gets its employees for the price of the net take-home pay of the employees - unlike the private employer which loses the gross amount. Private employers would LOVE to pay the tax and NIC it deducts from its employees pay back into their own bank account!!


  • Comment number 69.

    "Should Public Sector Pensions be reformed"? is the HYS question.

    Hmm, let me think about who, in the public sector, have the biggest pensions of all without a lifetime of serving the public and perhaps putting their lives at risk for others or dedicated to saving others ... oh yes:-

    1)Local authority CEOs, plus golden parachutes.

    2)University CEOs, plus golden parachutes.

    3)Disgraced MPs after the expenses crimes who are still on 'sick pay' and 're-location' allowances and pension.

    4)NHS hospital CEOs, plus golden parachutes/handshakes to go to another hospital to create more chaos and incompetence.

    It took a few minutes to list those: perhaps other, more knowledgeable HYS posters can list other 'over-pensioned' and over-paid idiots too who won't be turning up at an emergency?






  • Comment number 70.

    You can bet all unions will be jumping about calling for strikes.

    The public sector has always had an excellent pension, far better than the private sector. Surely it should be based on the same terms as the commercial sector.

    Its only fair!

  • Comment number 71.

    29. At 12:13pm on 07 Oct 2010, Simon Hill wrote:

    "8. At 11:47am on 07 Oct 2010, Nik wrote:

    ..... so should the overpaid, underworking and mollycoddled public sector who have had it too good for far too long."

    The second largest public sector pension pot is the NHS England and Wales pot. So the "overpaid, underworking and mollycoddled" workers you are talking about are (like me) mostly nurses.

    How much would you charge to clean another human being's back side ? To sit with them as they die ? Most nurses do it every day for £25k a year.

    -----------------------
    I have the greatest respect for most nurses (notice the use of the word 'most' since it's always difficult to comment in HYS without some degree of generalisation) but would you stand up for the salaries that doctors and consultants receive and do you genuinely believe you need as many managers as you have at your place of work? You may be hard-working and on a low salary but can you say that about all of your colleagues? Personally I think good nurses should be paid a lot more and everybody else paid a lot less as it's the nurses that do most of the work (yes I've worked in a hospital and have friends who are nurses). Of course, if the BMA actually struck off all the incompetent, negligent and dangerous doctors there'd be more money to go round but that's a different topic.

    I did a job I hated for 7 years but that was because I had school fees to pay for my stepdaughter and evening classes to attend to try and further my career but that was all my choice. Just as you have the choice to find another job if you don't like wiping peoples backsides for £25k a year. Don't get me wrong, I respect the work you do but we can't all go around complaining about the choices we make and doing a job you don't enjoy for the sake of some pot of gold at the end of it seems like a waste of the best years of your life. I guess it's all about personal choice



    -----------------------------------------------------------
    6. At 11:42am on 07 Oct 2010, melysion wrote:

    ..... its possible that you could fight for your pensions to be as 'gold plated' (cough, cough) as ours.

    But then, that would mean making an effort to stand up for your rights wouldn't it and its so much easier to be bitter and wanting other people to 'suffer' as you do.
    ------------------------------------
    I won't make the point that the private sector having gold-plated pensions would actually make the problem worse as somebody else has pointed out that obvious flaw. I would however point out that we in the private sector don't belong to Unions so have to fight our own battles or simply find another job if we're not happy (see above). Why don't you try fighting for something you feel you deserve completely on your own and see how you get on? If you still have your job (remember don't involved the unions) and your job prospects haven't been affected in any way but you've failed to get what you wanted then you obviously haven't made enough effort to stand up for your rights have you. Anyway, what are these 'rights' exactly as we certainly don't have rights to gold-plated, final salary schemes in the private sector but I'm sure a lot of HYS readers would be interested to know what these 'rights' are that we've all been missing. Or are you just showing how out of touch with the non-public sector you are?

  • Comment number 72.

    Totally impractical.

    How are people to pay more when taxes are being increased, tax credits reduced and we have hyper inflation on the high street.

    The government must finance the deficit not push the cost of the previous lot's ineptitude on the tax payer. However, ConDemn was also inept in opposition so must take some of the blame.

  • Comment number 73.

    I work in Local Gov. I pay 7% of my salary every month into the Pension. I don't get it free from the Tax Payer. I get paid less than others in the public sector for my job but I do enjoy my work however the cost of everything going up and pay freezes it is hard... I don't know who said we can retire at 60 because I have been told I have to work until I am 68 like everyone in the private sector. I think there is a definite balance between those who are the lower paid workers and the higher paid in the public sector.

  • Comment number 74.

    Let me put things another way.....

    My father left school at 14 and worked until the day he died (aged 70). That's 51 years of paying into the system and just a bit over four years of taking out.

    A professional, being university educated (paid for by people like my father) will have worked for fewer years but, living to around 81, the professional can have 15 years of taking from the system - if they choose not to retire early - a choice that is rarely available to most British workers.

    How about Hutton tackling that inherent unfairness?

  • Comment number 75.

    30. At 12:15pm on 07 Oct 2010, thelevellers wrote:
    First the tories want to slash jobs in the public sector, now they want to slash our pensions. Absolutely disgraceful is what it is and we will not accept it.

    People who work in the public sector are doing a great service to the country and we are lower paid than those in the private sector. The least we should expect is a decent pension.


    Er... There's nothing stopping you from making additional voluntary contributions through a private scheme... http://www.pensioncheck.co.uk/additional-voluntary-contributions.htm

  • Comment number 76.

    17. At 11:57am on 07 Oct 2010, Steve wrote:
    The starting point is that people get paid a salary in exchange for doing their job. Once people retire they are no longer doing a job. There is actually no logical reason why an employer (public or private) should then be expected to pay for them when they are no longer giving anything in exchange.

    ##################################################

    Agree completely.

    ALL employment related pension schemes are just a tax dodge, plain and simple.

    We 'give' you some money, you 'contribute' some of yours, and the taxman doesn't get his cut.

    All employer pension schemes should either be taxed in full, as income, (both employer + employee contributions). They would dissapear overnight. If you want a pension then put your money aside as you earn it, after tax.

    The most economical method of paying a pension is by the state, (2% administration charges). Whereas the private/employer schemes cost a fortune (10-20% on average).

    So lets stop the merry-go-round and all get off.

    You pay tax on your pension each month when you have retired. I wish people would check their facts.

  • Comment number 77.

    Of course public sector workers should pay more and of course they should retire at the same time as the rest of us. Those of us in the private sector have already seen our final salary pension schemes ended as well as having a pay freeze and in some cases a salary cut. That is life and it is time the public sector realised that and got on with it.

    Brendan Barbour's comments on Radio 4 this morning indicate how little he knows about financial reality - it is time he got a grip on reality and understood that in their present form public sector pensions are not affordable.

  • Comment number 78.

    I think the quote on the BBC site says it all: He says that these pensions are far from "gold-plated", with the average pension in payment currently at a "modest" £7,800 a year

    A quick check on an annuity calculator suggests this modest pension would cost a male aged 60 with inflation protection and 2/3s benefit to a surviving spouse around £275k

    I wonder how many people on £12k a year expect to retire with a defined contribution pension pot of £275k?

  • Comment number 79.

    4. At 11:35am on 07 Oct 2010, RightWingIDBanned wrote:
    If you can get better pay in the private sector please feel free to do so!

    Equally if the public sector is so cushy well paid, with so called gold plated pensions, you could go for one of these amazing jobs!

    I worked in the emergency services for thirty years throughout that time alng the road about three or four miles the equivilant job received alomost not quite double the pay! The reason I stayed and never went there for a job was I wanted to serve my community! Dave is not the first to think about the big society either, incidentally I paid eleven percent of pay for my pension my private sector equivilant only htis year pays one percent of pay for a very similar pension! I have never had a bonus in my career, but my collegues and I only helped to save lifes, save property and renedered humanitarian services, I suppose we never made money like those in banking, although we never tried to bankrupt the country either unless you are saying we are with our pensions.

  • Comment number 80.

    Bubglebear, Huttons pay comparisons are very deeply flawed. He is only compared median salaries in public and private sector.

    Total reward (pay and pensions included together) for full time employees is higher in the public sector than the private sector, predominently due to the larger proportion of employees who do not belong to employee pension schemes in the private sector

    A comparison of total reward on a like for like basis, comparing full time employees with pensions on both sectors, shows that total rewards are higher in the private sector than in the public sector. Distributional analysis shows that the gap between private sector and public sector is particularly marked at the top of the distribution.

    The total reward comparison underemphasises the value of other benefits that many private sector workers get that public sector workers don't. For instance perk cars, private medical insurance, bonuses, equity transfers and long term incentives.

    Public sector workers tend to be employed in large organisations (hospitals, government, coucils) or pay is centrally managed (teachers, doctors, police). Large organisations tend to pay higher rates than smaller employers such as sole traders, retailers etc seen in the private sector. Comparison of the median gross salaries as by Hutton ignores this effect.

    The public sector is also not a uniform employment Market and large differences in pay levels are seen for different sectors and tyes of work. For instance, the median qouted by Hutton as his evidence public sector weekly median pay is £539 against private sector being £465). To emphasise this effect civil service median weekly pay is below both at £444. The civil service has also received 10% lower pay increases than both rhe private and public sector over the last 10 years.

    For interest, if youbdova like for like comparison by only comparing people who get pensions the private sector median total reward (pension plus pay) is £717 per week , public sector is £645, and civil service is £526.

  • Comment number 81.

    It is not a matter of how public sector pensions are reformed but the amount it costs the taxpayer must be dramatically reduced. The employees could pay a greater percentage of their salary as contributions. The final salary schemes could be altered to an average earned throughout their employment. The retirement age could be increased. Thee could be a cap on the amount anyone can receive as a state employee pension.Any or all of the above could be altered to reduce costs. In the military senior officers were promoted just before retirement so their pension was increased, I expect other ruses were and are used in other parts of the public sector as those handing out the money are also in a position to benefit.

  • Comment number 82.

    Companies took pension contribution holidays while the stock markets boomed and their pension funds were in surplus, they raided the pension funds and took the surpluses to pay dividends and themselves bonuses.
    When the FSA and Government tightened the pension funds liabilities rules, the company directors responded by closing or downgrading their final salary schemes(of course they kept their own final salary schemes)while telling everyone else they were no longer affordable.
    It has been suggested that everyone should have their own pension fund, into which they pay as much as they like, during their working life, their pension will then depend on how much people put in. Frank Field is in favour on that idea. He suggests the personal pension pot should be adminstered by the private financial services industry.
    Has he been asleep for the last 30 years?

  • Comment number 83.

    The lowest paid public sector workers deserve every penny of the deal they get and they are quite right to assert that they have accepted lower pay than private sector workers because of that deal. However the higher paid public sector workers most certainly cannot claim that and I would cap public sector pension deals equivalent to paying an annual income above the higher rate tax threshhold so that any amount above that is not paid for with public money.

  • Comment number 84.

    I am a Civil Servant and our pension scheme was reformed in 2007 to make it more 'sustainable'. Prior to the Hutton Review public sector pensions are forecast to fall from 1.9% of GDP in 2010/11 to 1.4% in 2060 so I don't think they need further reform at the moment. The public sector seems to be paying disproportionately for a recession not of their making. A 2 year pay freeze, up to 700,000 job losses (at considerably reduced redundancy terms) and now a further attack on our pensions. When the current government came to power they also changed the uprating of current and future pensions by CPI rather than RPI (CPI is invariably lower) so this could mean a 15-20% reduction in pension received. What the government needs to concentrate on is compelling the private sector to provide decent pensions for their workers. Big business and the government are trying to rip us all off so don't lets fall for these divide and conquer tactics. The private and public sector should stand together and demand decent pensions. We are after all one of the richest countries with a temporary deficit problem which will reduce over time.

  • Comment number 85.

    How should public sector pensions be reformed?
    Easy, become an MP and you can vote yourself a pay and pension rise.
    Am i right in saying that an MP with only 15 years’ service can retire on an annual pension of £24,000.....Alright for some.
    Am i also right in saying that if an MP changes his role he gets another pension?
    Seems to me its one rule for us and one for them......Nothing changes.

  • Comment number 86.

    48. At 12:44pm on 07 Oct 2010, Wyn wrote:
    "I was under the impression that pensions were a legally binding contract between employer and employee. And that changing any of the conditions would be a matter of negotiation - not diktat by the employer.

    I foresee a lot of legal challenges."

    You are right of course and Labour have been found to have acted unlawfully by the high courts in the past for trying to impose contract changes unlawfully.

  • Comment number 87.

    Hutton's shorthand of referring to public sector employees and taxpayers as separate groups is misleading and grist to those eager to demonise the public sector workers. Public sector employees are also taxpayers, and Huttons needs to emphasise this point, and ensure that readers don't lose sight of it.

  • Comment number 88.

    2. At 11:28am on 07 Oct 2010, Horse wrote:
    Well, the Daily Mail told me that everybody in the public sector is in an overpaid non-job and receives a bigger bonus than the Prime Minister, so they probably shouldn't be entitled to a pension at all, or any wages - just give 'em a public flogging then sednd them home without any supper.

    Persecution agendas aside, how about signing everybody in the country into a non-voluntary employeee contribution scheme from the first day of their first job for the rest of their working lives - give people no choice but to have some provision for their retirement.

    ======================
    I'd like to read that article. Can you tell me what day it was printed?

    That said, I think your solution is almost right. All employers (inc self employed) should have to run a pension scheme which either they, the employee or both contribute a minimum % of salary to. Whilst I prefer not to see the state too much involved, perhaps the govt could sponsor a scheme for smaller companies which is farmed out to a number of major pension providers.

  • Comment number 89.

    "Maybe you should be not so much "extremely tired of bitter private sector people moaning their lot" as a tad worried."

    And you think public sector workers aren't worried? Thousands of us are about to be made redundant.

  • Comment number 90.

    6. At 11:42am on 07 Oct 2010, melysion wrote:
    ... However, its worth remembering, private sector people, as you indulge in your usual public sector bashing, that rather than wanting to drag our pension provisions down to your level, its possible that you could fight for your pensions to be as 'gold plated' (cough, cough) as ours.

    But then, that would mean making an effort to stand up for your rights wouldn't it and its so much easier to be bitter and wanting other people to 'suffer' as you do
    ==================
    It's quite simple. If the private sector continued to operate pensions like the public sector, most businesses would go bust. The reason the public sector offers them is that the public sector can't go bust - it's bailed out by the public

  • Comment number 91.

    Ah the establishment wins again. They now have all the 'common' people fighting amongst themselves while the rich and the good take aims to reduce their tax liabilty before standing up and telling us all 'We are in this together'

    Very sad!

  • Comment number 92.

    For all you Public Sector workers who are unhappy about ANY changes need a reality check.

    Go and see an Independant Financial Adviser and see what your actual contributions would buy - then you'll reaslise what a good thing you have.

    My wife pays 7% into her NHS scheme, lets say the NHS contributes 13% making 20% - after 40 years of contributions would it buy an index linked 50% final salary payout - I doubt it.

    Even if her contribution was 10% it would be a good deal!

    This isn't about a Labour or Tory bashing BUT this change HAS to happen.

    Public Sector pensions need to be self funding.

  • Comment number 93.

    Yes let's expose the myth that civil servants are poorly paid:


    Average civil service pay is £22,850 a year, compared to £24,970 in the private sector.

    35,000 (7%) civil servants are paid less than £15,000 a year.

    40.5% of civil servants - 210,000 people - are paid £20,000 or less.

    And 63% of civil servants - 330,000 staff - earn less than £25,000 a year.



    Correct me if I'm wrong the reason we have to balance the books is the fact of the tens of billions of pounds that the government had to bail out the private sector banks with...

  • Comment number 94.

    At 11:28am on 07 Oct 2010, Horse wrote:
    Well, the Daily Mail told me that everybody in the public sector is in an overpaid non-job and receives a bigger bonus than the Prime Minister, so they probably shouldn't be entitled to a pension at all, or any wages - just give 'em a public flogging then sednd them home without any supper.

    Must have been a different version of the Daily Mail to that most read then!

  • Comment number 95.

    I have worked in various Public Sector roles for the past 33 years. My pension is by no means anything special. The lump sum is rubbish and the annual pension entitlement appalling. I wish I knew exactly who is creaming off all the benefits. I still have 15 years to work and can not seeing anything improving. Every time you think you know what you are entitled to someone changes the goal posts for instance changing the state retirement age, increasing contributions etc. With no pay rise and an increase in contributions, pay and display parking to go to work and increases in Council Tax I have effectively received a pay cut with the added comfort of perhaps losing my job along with many other public service workers. Why can't these changes just effect people in the top 1/3rd of pay scales? The cuts and increases will not effect them as much as employees like myself. My role in the 'commercial world' attracts a far greater salary and much better benefits, but stupidly I thought I was putting something back into the Country. We are not allowed to receive any benefits, payments in kind (i.e. bottle of wine at Christmas) or anything that is classed as an inducement, no free perks whatsoever from our employers (i.e. Christmas parties etc) If anyone can tell me the benefits of a somewhat diminished pension and paying even more into it, which I don't mind doing, then please let me know. We are not all Police Officers with 20+ years service on all sorts of allowances, pay offs and a secure job for life. I agree with many comments made here by other No: 54.

  • Comment number 96.

    Here we go again with the usual 'why should I pay their pensions when I pay my own'. Every time I go and buy something or have a tradesman do some work I am paying their pension as this is a cost in the charge for the goods or services that I buy. The only difference with the public sector is that the money comes from tax as this is how we all pay for the services provided by all of the public sector.

    The discussion should be on how to improve private sector pensions and not how to reduce the quality of public sector pensions. We are all going to have to work for longer so let’s ensure there is enough money to enjoy the shorter time spent in retirement instead of cutting pensions and finding no one can afford to retire.

  • Comment number 97.

    12. At 11:53am on 07 Oct 2010, steve wrote:
    70% in the public sector are women,hit by the Tory attack on children as well.
    =========================================
    So, these 70% are all paying 40% tax are they?

  • Comment number 98.

    Without public services the country would grind to a halt, working in the public sector was once highly regarded well respected job choice, successive governbents have downgraded the worth of the public sector and ruined it.
    No they should not pay more.

  • Comment number 99.

    Simple. We need one central scheme that collects pension contributions from every employee, both public and private and invests them sensibly until they are are needed by the person putting them in. Those who put in more get more out and vice versa. What we don't want is the ponzi scheme of National Insurance and the soft option that for some reason employers should pick up the tab.

  • Comment number 100.

    Just make the public sector pensions system fully contributory and open to all. Then bump up state sector salaries to reflect the true cost of contributions. Since we are ALL going to fund the payouts, through our taxes, we should ALL be allowed to join.

    Of course state sector salaries ‘bumped up’ to reflect the real benefits paid could be a bit of an embarrassment to out ‘poor’ town hall fat cats.

 

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