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'Scrap public pensions,' says pensions guru

Dave Harvey | 09:50 UK time, Wednesday, 8 September 2010

It was the battle Mrs Thatcher ducked.

"Leave it for another government," the former PM was reported to murmur, when presented with a civil service dossier marked "Public Sector Pensions."

The Iron Lady, famed for relishing a fight with miners or Argentinians, flinched when it came to dinner ladies' nest eggs.

Mark Dampier, Head of Research at Hargreaves Lansdown in Bristol

Well, now a man has picked up the dossier she dared not open. A man respected throughout the City of London for his financial savvy. As it happens, a rather affable man who doesn't usually go looking for trouble.

"I'm afraid my unpopular measure is simply, we must stop public pensions now, and replace them with private pension plans."

Mark Dampier is Head of Research for Hargreaves Lansdown, the massively successful investment brokers based in Bristol. The firm recently reported an 18% rise in pre-tax profits, they've signed up 48,000 new clients and now look after £17.5bn of people's money. So these people understand money.

Much of their expertise is in pensions or other ways of saving for your retirement. And Mark Dampier has long banged on about the need for more people to save. Never stops cajoling journalists like me to encourage youngsters to think about the dark day the pay check stops coming and they still have bills to pay.

So Mr Dampier is not "anti-pension". Far from it. What's he got against special pensions for firefighters and French teachers then, bin men and brigadiers?

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You can watch his whole argument here, if you like, as he sets it out on a special Points West Debate on the Spending Review, to be broadcast on Thursday evening, 9 Sept, BBC One, at 10:35. It will also be on the iPlayer, here.

I was at the recording, and I can tell you Mr Dampier didn't go down well. A teacher accused him of "raiding the poor to rescue the country from the mistakes of rich bankers". Council union people asked him if he'd like to work for twelve grand a year, and then have a fat cat steal his pension. A policeman, of 50, said millions of public servants like him had worked unstintingly in the national interest, and didn't deserve to be treated like this.

It's a lively debate, ahead of its time, and well worth watching.

The Points West Debate on Spending Cuts, filmed in Filton College, north of Bristol

"I wasn't surprised at the reaction," Mark Dampier told me afterwards, "but if anything it makes me more convinced."

Now of course he's not arguing teachers and nurses should be left with nothing, nor that people in their 50s should have the promised pension ripped from them just as they reach retirement. Future staff, he says, should have the same pensions as everyone else in the private sector, no more and no less.

What struck me was that this is an argument where the two sides pass like ships in the night. The public sector reaction is fueled by understandable emotion. Betrayal, anger, envy are everywhere. But Mr Dampier's argument is simply cold financial logic.

In 2008-9 the Treasury paid out £13,387m to NHS Pensioners. It was over a tenth of the total NHS budget of £119bn. (You can see the figures for yourself here , halfway down page 6). Since one in four public sector workers are in the NHS, a rough total for the national pension bill for retired government staff would be in the order of £50bn.

The point is, it's a lot of money. And public sector pensions are much more generous than private ones. Here's how Mark Dampier explains that:

"Take for example a nurse earning £25,000 a year. Currently she pays 6.5% of her salary towards her pension - that's £1,600 a year. We taxpayers then promise her a further 14% on top. Overall, £3,500 goes towards her pension each year.

Then take someone working in the private sector, a shop worker perhaps, also on £25,000 a year. On average employees like this pay 6% of their salary towards a pension - equating to just £1,500 a year - less than half what the nurse receives. How can that be right?"

Will his radical plan ever happen? That depends on a political calculation. Teachers unions, council unions, police officers and nurses can all be relied on to oppose change, perfectly understandably. But for every public sector worker in the UK, four people work for private firms.

So for every person furious at Mr Dampier's proposal, there will be four people who pay the bill he's trying to cut.

He know's it is unpopular, possibly brutal. But is there an option?

The rest of this argument is for you. Have your say, then come back and read what others say. Mark Dampier himself will read this page, and respond. I know it's an emotive issue. In 20 years in journalism, I've never reported a proposal Mrs T considered too hot to touch. Over to you then...


  • Comment number 1.

    Our Union Barons are now planning actions to show the Govt just who is in charge of the Country..
    We may as well sort this long needed problem at the same time. Bit like going to the dentist and having em all out - painful but gets it over with.

  • Comment number 2.

    Makes logical sense to me, and no-one loses out:
    - current public sector get to keep their ridiculously generous pensions that should never have been agreed in the first place, so they are happy
    (note the level of understanding the private sector are being asked to bear here, not to be taken lightly)
    - and new public sector workers are in same boat as the Private sector, i.e we're all finally on a level playing field, so they can grumble to themselves at missing the boat, but have no grounds to complain.

    Implement asap.

  • Comment number 3.

    The 'investment bankers'would say this wouldn't they? They have already raided most private pension funds to fuel their greed and would dearly love to get their hands on the billions of pounds in public pensions so that they can cream this off for themselves too. Surely the important thing to do is to take pensions out of the financial sector gamblers' pots altogether and to work towards bringing private sector pensions up to the reasonable (but rarely gold plated) standards of the public sector?

  • Comment number 4.

    What Mark Dampier doesn't mention is that the senior management in companies (ie people just like him) are creaming off at the expense of their employees. They may have reduced their employees pension entitlements from final salary to defined contributions but what they are shy about telling you is they have made sure that their pensions are generous in the extreme and well protected. What Mark failed to mention is that public sector pensions are currenty under review. Everyone is expecting they will be substantially reduced to be more in line with the private sector. So that just leaves the senior management in companies such as Mark Dampier. What does he think about their pensions?

  • Comment number 5.

    As a now retired firefighter, I would have been delighted to have the same pay and conditions as the firefighters in the private sector, just along the road from my station was the local oil refinary, when incidents of any consequence happened as they did from time to time, we local authority firefighters did exactly the same job sometimes more than our private sector colleagues, except we paid eleven percent of pay for our pensions, only this april do our private sector collegues now pay a whopping one percent! (incidentally they got a rise to pay for their pensions)for a very similar pension, my pay when taken into consideration of all the perks my private sector colleague has is approximately half theirs!
    My private sector colleague will rarely if ever attend a road traffic collision unless involved in it, my private sector collegue will rarel if ever have to drive for up to forty minutes through traffic to get to an incident, my private sector colleague will never attend fires where children die, local authority fire fighters have a much more diverse job than their private sector collegues so give us the same pay and pension, we would have no complaints only praise!
    You really want the public sector for nothing thats your real point!
    Not forgetting the vested interest of hargreaves lansdown who stand to make themselves even greater profits.

    I accept that many private sector pensions are in difficulty, much of this could be laid at politicians who raided pension funds, then managers who took pension holidays instead of continuing with their share of payments in the last two decades.

    Surely the ambition should be that all have a decent pension in retirement, after all do some not claim that Britain is about the fourth wealthiest nation in the world, yet many can not have dignity as they get older!

  • Comment number 6.

    He's right. Public servants of all types have for decades been quietly larding their pensions to a degree that looks more like kleptocracy than responsible and fair remuneration.

    It's no good pleading injustice when the civil servant who has earned an equivalent salary to their private sector counterpart (which frankly they now do) can retire early to live on an index linked income funded by dipping into the assets of people worse off.

    The private sector does not consist of bankers on £250k a year, it is mainly office and support workers on nearer £25k.

  • Comment number 7.

    Speaking as someone who has worked in both the public and private sectors, I have no problem with this, as long as pension entitlements which have already been built up are protected. You can't retroactively cut the benefits of twenty years' service in half, because there's no way people can be expected to predict that sort of thing and protect themselves from it. However, there's no reason why future pension entitlements shouldn't be built up at the same rate as the private sector, because people will know about the cut in advance and be able to save extra money into a private pension if they wish.

    Of course, the generous pension is what compensates for the lower salaries of the public sector, so the economic benefit of cutting that provision may well prove to be a mirage. The Government will either have to increase its salaries to compensate, or make do with a lower calibre of personnel as the best people head for greener pastures.

  • Comment number 8.

    At last, someone speaking some sense, lets have a level playing field for once for everybody before I get too old

  • Comment number 9.

    And who will step into provide these pensions and sell pension products -let me guess organisations such as Hargreaves Lansdowne who take a fee of 1% etc of the managed fund. When the value of this falls their is no risk to them but the pensioners lose their savings! Mark Dampier works for an investment broker i.e. a salesman for financial products.

    Even when the stock market performs well these products are poor value due to the fees. See quote from recent article in the telegraph...

    "British savers are retiring with pension pots worth 50 per cent less than some of their European counterparts, despite having invested the same amount of money, because of an array of hidden charges, one of the country’s leading pension fund manager says today

    Mr Pitt Watson, a senior executive at Hermes Fund Managers, says that a range of little-known fees and levies typically wipe more than £100,000 off the value of a middle-class worker’s private pension"

    See below for full article

    The big scandal is poor and risky pensions for private sector employees not decent pensions for public sector employees!

    Mark Dampier talks of a shop work getting a lower pension than a nurse and argues that this is unfair.

    Well the fact is once the shop worker has retired the company has no further obligations for them! But the government on the other hand has an obligation to both the nurse and the shop worker. If the shop workers pensions is poor it will be topped up by the government in the form of pension tax credit and also supplemented by the state pension.

    "I wasn't surprised at the reaction," Mark Dampier told me afterwards, "but if anything it makes me more convinced."
    This is such a poor argument it is frankly ridiculous!!! Convinced about something because it is unpopular - if we follow this logic (that if its unpopular it must be right) we should get going with a new poll tax and possibly start fighting another war - anyone for invading Iran?

  • Comment number 10.

    Mark Dampier is either wrong or being misleading for the sake of effect:

    "Take for example a nurse earning £25,000 a year. Currently she pays 6.5 per cent of her salary towards her pension - that's £1,600 a year. We taxpayers then promise her a further 14 per cent on top. Overall, £3,500 goes towards her pension each year."

    Ignoring the sexism implicit in that sentence, it is not true on those figures that taxpayers are promising a further 14% on top - £3500 is 14% of £25,000 - so the taxpayer is making up the pension from 6.5% to 14%.

    This is rather less - an extra 7.5% from the employer (taxpayer). While this doesn't substantially change the argument, it does weaken it by halving the 'headline' figure of 14% from taxpayers. Traditionally, public sector pay has been markedly lower than private sector pay and part of the trade-off has been employer contributions to pensions and (in theory) job security.

    Having said that, it is now true that there is a more equal playing field between private and public pay, so maybe we should begin to rethink the relative pension provisions for future employees - but that could go either way - if a considerate and compassionate society decided that a decent level of employer contribution was required from the private sector (who would have to adjust salaries accordingly - and the public sector would then follow suit), then neither side would have to suffer in their dotage - but then, this is hardly the time for consideration and compassion, we are led to believe.

  • Comment number 11.

    As a serving teacher (with less than 4 years to go until I reaching the retirement age of 60) I have sympathy with the need for government to deal with the issue of public sector pensions. I am also (inevitably) relieved that most suggestions would not have a major impact on my pension on the quire reasonable grounds that it is now far too late for me to change arrangements now. I would accept an increase in my pension contributions as going someway to reduce the need for taxpayers to fund my pension. I would also accept that it is reasonable to expect public sector retirement ages to rise (as has already been agreed and implemented for new entrants several years ago, by the way).

    What I do not accept is that this should all be done without any compensating incentives. As has already been mentioned by earlier contributors, public sector pensions - generous as they are in the current economic climate - are part of an overall contract with our employers and any changes have to be viewed in that light. I cannot earn a bonus no matter how well my students perform in their examinations. I am not paid for the extra-curricular activities I undertake to enhance my students educational experience. I have no wish to be paid for either of these but I do expect that these aspects of my work should be remembered when renumeration (including pensions) are considered.

  • Comment number 12.

    Where to start with this nonsense? I suppose the first thing to make clear is a few facts:
    1. The NHS pension scheme is currently in surplus and pays in about £2bn to the treasury. The average female pension is £4,000 per year.
    2. Most, if not all schemes, have in the past been similarly in surplus and have paid billions into the exchequer.
    3. Virtually all the 'gold-plated' schemes have already been massively reformed so the only further change would be to remove benefits that have already been promised. I think the MPs may have the last such generous scheme left.
    4. One reason why there is such an apparent overspend in the future is that these estimates are based on cutting the number of public employees. One sure way to make a scheme more expensive is to lose 600,000 contributors!

    I find it amazing that so much space is given to the suggestions of someone who has a very vested interest in his proposals, especially when no space is given to the facts that undermine his arguments.

    Now who was it went for a cosy chat in No 10 over how to report the cuts?

  • Comment number 13.

    The example of a nurse and a shop worker both earning £25,000 is a good one. People in the public sector have good pensions relative to our wages true but it is effectively deferred salary. A nurse will have studied for 3 years to gain her basic qualification which happens to be a degree and will be responsible for continuing professional development as part of her UKCC registration (License to practice)She is responsible for life and death situations The guy in the shop earns the same but has no such responsibilities nor expected to have the same degree of education and skill set. If public sector pensions are dismissed, then the state should expect to pay more for its workforce to keep their salaries in line with their private sector peers

  • Comment number 14.

    "A man respected throughout the City of London for his financial savvy" thinks a shop worker earns £25,000 a year?

    They'd be lucky to earn half that.

    He's completely clueless and out of touch. It's hardly surprising the City of London destroyed the economy if this is what passes for informed opinion and "financial savvy".

  • Comment number 15.

    11. old_n_grey

    1 - I am too (but I've already got my hands on my pension, which makes me lucky).

    2 - You're right, of course, to point out that such changes will not affect people's existing pension rights (that would be a far too dangerous course to try), so we're talking here of new employees to the public sector.

    There is a good argument to be had about all pensions and how they are dealt with - on the one hand, should all employees be 'forced' to contribute (along with their employers) towards a reasonable pension - not something that many people under 30-40 (even 50) ever think about. So, is there a 'duty-of-care' argument there for the government?

    On the other hand, should we just say: 'it's your fault, you should have thought of it - we paid you well enough'?

    Proponents will split either way of the divide on philosophical / political opinions, but it seems sensible to me that a government could rightly say, in order to avoid picking up the tab later, that reasonable pension provision should be built in to employees' pay in the same way that national insurance is (or am I straying a bit too far left-wing here?).

    Your point about lack of opportunities for bonus payments is also correct - as you say, there needs to be a compensatory system to deal with this equitably - whether that is reflected in pension provision or elsewhere is part of the interesting discussion.

  • Comment number 16.

    13. LynnMD

    I don't think the example of the nurse and shop worker is a good one, as I explained above - but I think your overall point is excellent - what sort of a society are we where we pay a nurse with all the incumbent responsibility and high-level training the same as a shop worker?

    'If I ruled the world ....' - you'd be better paid than me (PS. not a shop worker).

  • Comment number 17.

    Private sector pensions are affected by the performance of the underlying investments and by the the interest rate paid on gilts. People who retired on private pensions twenty years ago will have a significantly better pension (for comparable contributions) than people retiring now. This is because the stock market peaked then and because gilt rates have fallen ever since.
    The effect of this is that there is a kind of ‘lottery’ with a private sector pension. In my opinion, this is unfair to these who retire when things are bad. Public sector pensions avoid this lottery and provide a predictable pension, which the private option does not.
    Thus I believe there is a strong case to retain the present structure for public sector pensions.
    For the example given of the shop worker, a major factor affecting the pension is the contribution level, which seems low compared to the NHS worker.
    I believe that we will all need to make bigger contributions to balance the books but the mechanisms used must be fair, give a predicable return and avoid paying large ‘commissions’ to financial advisors and fund managers.

  • Comment number 18.

    So Mark Dampier, who is a major beneficiary of the public flotation of the company for which he works, thinks public sector workers should have the same pensions as private sector workers. But no public sector worker can expect to be rewarded with cheap or free shares / options in the enterprises for which they work. How will that inequity be addressed?

    Private pensions are underfunded not least because many companies took 'contributions holidays' in the good times, and then cried poor in the bad times. It was not workers who failed to make adequate provision for retirement but their employers.

    Mr Dampier's company, Hargreaves Lansdown, has been an aggressive promoter of Self-invested personal pensions (SIPPs), so he has a naked self-interest in the proposals he advances, especially since HL's charging structure pushes the unsuspecting into the arms of fundmanagers who will charge 1.5 to 2% per annum for holding shares that would cost nothing to hold outside a SIPP. It is a moot point whether we should all be forced to depend on the casino of the stock market to provide for retirement, but the outrageous lottery of enforced purchase of annuities might then be avoided.

    But if this, the 5th wealthiest nation in the world, really cannot afford to provide proper pensions for those who provide its public services, then let us do away with pensions and their paternalistic restrictions and performance-crippling charges altogether, and simply give people tax incentives to save for wahtever purpose they choose. Just don't be surprised when emigration is high on their list of priorities!

  • Comment number 19.

    I'm about to retire from an academic, at the age of 60. I'd like to make a couple of points. Firstly, public service salaries are generally much lower than in the private sector, and the admittedly generous pension allowance is some compensation for this. Presumably, we're all relieved that there are people who chose to be nurses rather than Bob Diamond. Secondly, I did take up options to buy extra years and extra pension, which has meant that, for many years, my salary has been considerably less than it might have been. I was, as it were, saving for my pension. These options are open to others. Perhaps one solution might be to pay far more equitable salaries to one and all, instead of having the obscene pay differentiation (what's Bob Diamond going to DO with £21 million?) that currently prevails.

  • Comment number 20.

    There are so many sheep out there believing everything employers, Government & newspapers tell them - no wonder the bankers & Dampier are laughing all the way to retirement.

    Throughout history, gains made by working people in relation to health, education and working conditions have always been fought for through collective action or the threat off – this time around protecting our hard earned rights will be no different – class matters no matter how you paint it, just wait and see.

  • Comment number 21.

    Yes, make it a level playing field. Let the private sector, upgrade their employees pensions, to the same level as the public sector.

    Public sector workers will support that. The public sector workers are understanding, and generous. They, like the rest of the country, already pay for the Chief Executives of large companies, some of whom are earning in excess of £10M pa.

    Let the people of this country be well off in old age. Don't let's get dragged down to the lowest common denomiater. Upgrade the private sector pensions NOW!

  • Comment number 22.

    No, it is not financial logic with irrefutable sense. Mr Dampier is only looking at the small narrow picture that is pensions.

    You can't compare public sector pensions with private sector pensions without considering the disparity in wages and terms and conditions etc.

    Mark Dampier compares a nurse on 25K with a shop keeper on the same. This isn't a true comparison at all! If anything it should be a public sector nurse on 22K compared to a private sector nurse on 27K. The public sector nurse receives 25 days off a year plus public holidays and the private sector nurse receives 25 days including public holidays. The public sector nurses receives no perks. The private sector nurse receives health benefits, bonuses, discounts and more.

    So, from my real life analogy above you can see, Mark Dampier, the only benefit to working in the public sector are the additional days off a year and the generous pension. Take the generous pension away and the workforce leaves, simple economics really isn't it?

  • Comment number 23.

    Mr Dampier

    Other comments have pointed out that public sector workers are less well paid than equivalent private sector workers. Most studies have concluded this, and guaranteed benefit public sector pensions are a perk that so some way to addressing this.

    The point here is that the public sector finds it cheaper to guarantee future payments than the private sector does, so valuing public sector pensions in the same way as private pensions is meaningless. The public sector has a very secure source of future income from tax, and can also borrow money at much lower rates of interest than private sector companies. Therefore is makes sense for the Government to offer this benefit in lieu of greater pay.

    In short, especially in a period where pubic sector pay is being frozen to deal with the deficit now, it does make sense to compensate workers with better benefits in the future.

  • Comment number 24.

    Yep, great example nurse on £25,000 gets the same salary as a shopworker. Ever wondered why she's still a nurse and not doing a far less stressful unskilled job in a shop for the same cash.....maybe its the half decent pension! People are getting so carried away with public cutbacks for what will prove a temporary blip in history and people seem to forget the fact that the country is in so much debt because over £1 trillion of taxpayers money was used to bail out the banking industry. Get yourself worked up about ridiculous bankers bonus payments not nurses pensions.

    Incidentally bonus payments sourced directly from the £1 trillion bailout money and the Bank of Englands ineffective quantitative easing programme (wheres all this additional cash created by QE gone btw? - Answer bankers backpockets/QE is the banks recent collosal profits btw, while devaluing the currency for the rest of us). How else could the banks be posting such great profits in a declining real economy? We're all being taken for mugs by the financial industry

  • Comment number 25.

    Exactly what you'd expect from a 'financier' respected by the 'City'. I've worked for over 20 years as a civil servant so would stand to lose a large prportion of the contributions and benefits accrued. I would have no way to rebuild that lost money and would end up drawing on a state pension if it falls below a certain level.
    To simplistically compare a 'shop worker' with a nurse is totally niave and ridiculous. Most civil servants work for far less than that paid for similar skills and ability in private industry, the pensions and benefits of the public pension and other terms and conditions do a little to rebuild that gap.
    20 years ago a nurse, policeman and generally most civil servants were paid a far higher wage when compared to the private sector than today. Over the past 20 years most civil service pay rises have barely kept up with inflation, private wages have been far more generous. It used to be that a job in the 'government' was a job for life with a high standard of living and respect, nowadays most of the media see the public service as a necessary evil, and revel in the fact they are having to cut staff and have a 2 or 3 year wage freeze.
    Private companies also offer employees very generous bonuses, stock options or shares in the company, using the 'shop worker' analogy a well known supermarket pays its staff a cut of the profits as a reward for the success of the business. Meanwhile most civil servants are lucky if they get paid the actual full wage for the job they are doing. It took me 10 years to progress from my starting wage to the actual full wage for the job I was doing, even though I got very high performance marks nearly every year.
    Each and every civil servant has signed an employment contract and deserves that to be honoured. How many of the public in the private sector would be happy to have their existing contract torn up in front of their eyes and replaced with one that cuts their leave allowance in half or makes them work weekends and night shifts. Most civil servants earn less than 20K a year so to suggest they all get thousands paid into their pensions every year is very misleading.

  • Comment number 26.

    There will always be a 'Private vs Public ' argument. However there seems to be an apartheid when it comes to Public Service workers, a kind of envious hate amongst the private sector workers - a seeming illusion that public workers have a cushy number. For myself, I have ran my own business for over 20 years, and in my experience the vast majority of public workers are poorly paid, and overburdened by short staffing levels and vast collective amounts of unpaid overtime, restricted opportunity for advancement, and little chance of promotion. So why do these (in my opinion) unsung heroes put up with unpaid overtime et al ? Easy. it's called a public employee pension ! So if the conDem government want have even higher costs than present, by all means scrap public workers pensions, but be prepared for private sector level wages and pay the proper - private going rate for overtime. Even if if the govt. were to countenance the extra costs of these, the jobs of Nurses, Policemen, Teachers and other vital and dedicted workers would be so unattractive, that recruitment would always be a problem. No matter where the number crunchers come from, Hargreaves Lansdown or elsewhere, the common sense of how things work in the real world in this instance, should be heeded above number crunchers and brainless politicians.

  • Comment number 27.

    Mr Dampier might be well respected in the City of London, but as a humble ex-college lecturer I would question his calculations concerning the costs of "public worker pensions". In the example quoted, the nurse on £25,000pa the "taxpayer contribution" indicate equates to £1,900pa. Compare that to the additional cost of an "agency nurse", with a self-funded private pension, and I think even Mr Dampier (with his obvious self-interest in private pensions) would find the £1,900 investment very reasonable.

    I recollect when Margaret Thatcher attempted to tempt public sector workers away from superannuation to annuity pension. Several of my colleagues found many years later that the monies they transfered from their "public pension scheme" into their "new private pension scheme" had been taken-up in ongoing commision and other expenses - thus greatly reducing their pension value. All too often we hear from "respected experts" views that hide undeclared vested interests - continually the "private sector" tries to gain profit from "public sector activities". What Margaret Thatcher, and now, with gay abandon, the new "coalition of political chummies" are ignoring is the dependence of the "private sector worker" on the activities provided by "public sector workers". In Mr Dampier's example, do we really want an Americanised Public Health Service - which in America is not that public as the majority of the population live in fear of the personal cost of "illness". Pensions are constituent of most workers' contracts of employment - stipulations made to contributions and expected outcomes. As with all market forces at times of shortage the contracts benefit the recipient - and this country has a history of shortages of nurses, doctors, teachers, and various other public service providers. It was a previous Conservative government that went round the Caribbean extolling the benefits of life in Britain to provide bus drivers, nurses and other poorly paid service jobs. One Enoch Powell was quite active in the propoganda in enticing people to this nation.

    Look at the range of "privatised public services" that now fail to provide - care of the elderly; care of pre-school children; public transport; water, gas, electricity utilities - all are pricing poorer users out of their services. Anicdotally, in 1983 an aunt and uncle returned from "privatised" America because they could not afford the "healthcare costs" that were imminent in their old age.

    The cost of "public services" are a burden on all, but as with all things the burden falls proportionately more on the poorly paid. The taxation system continually favours those who take most from the financial pot - why not ask Mr Dampier what his, probably non-contributory pension costs those who use his services and expertise. In my experience bank employees have had subsidised mortgages; managerial staff have subsidised private education for their children; and in the main have non-contributory pensions. I do not see Mr Dampier questioning the burden on the "cost of goods and services" that these incur.

    Your article intimates at private sector jealousy of public sector benefits, but takes little regard of private sector perks, historical bonuses (admittedly increasingly appearing in swathes of the public sector), that have increasingly priced British goods out of world markets. Or would Mr Dampier progress to "union bashing" and blaming greedy workers, and their increasing rights, rather than looking closer to home for the cause of much of this countries financial ills.

    At present about 7% of the school population attend private schools, by the time these pupils progress towards A level studies this increases to 18%. Yet, at the major Russell Group universities they represent in excess of 47% of students. Politicians have grand schemes for funding university education, Mr Cable is trying to "privatise/commercialise" scientific research - insisting it should be self-funding. Then why are those who choose to pay for the privileges that private school education provides (demonstrably access to Russell Group universities) not required to pay for the privilege of world renowned university education. The choices are made by those who most benefit from a system that is more a reflection of our Norman "baronial structure" than a 21st century nation trying to progress in an increasingly technology reliant world.

    Privilege of pension rights - why not attend to the greater abuses of privilege that exist in draining resources from the nation. Inland Revenue demands for taxes that have been miscalculated, £1.8bn over and £2.1bn under charged, a net gain of £300m to the Revenue. How much is lost through tax avoidance, by private organisations and individuals, and how much brighter would the British (even world) economy be if all taxes were paid. Maybe Mr Dampier and his expertise should be targeted towards that much larger problem.

  • Comment number 28.

    Interesting to see Mark Dampier straying into Tom McPhail's territory.

  • Comment number 29.

    Firstly let me say that I have both public and private pension pots. I cannot understand how my public sector one appears to grow by 15 - 25% each year when my private one struggles to grow at all.I do think that all new public sector employees should have a reduced pension arangement. However I also think that something needs to be done to encourage people to save for old age or we will be in a dire situation in 20 to 40 years time.
    Personally I have given up on pension as too inflexable when my employment appears to change every year and I have no idea if I will want to retire at 55 (to look after eldery parents) or 75 because I am still enjoying working.

  • Comment number 30.

    At last, someone with some sense! In the old days the public sector had less pay but better pensions than the private sector - it made sense.

    Today, the public sector have better pay, better pensions and better 'perks'. The public sector bang on about bankers pay when they mention cuts - but they need to wake up - not everyone in this country is a banker. In fact is a very tiny percentage are and it is the average person like me who has to pay these completely unfair bills.

    Hopefully common sense will rise to the top and these justified pension reforms take place - well done Mark Dampier - you have my complete support.

    It seems anyone who works in the public sector believes they are better than, and deserve more than, those in the private sector!

    Once we have reformed pensions, someone needs to tackle the public sector 'perks'. Why do most of the public sector recieve 6 months or more full pay maternity yet the private sector just have 6 weeks at 90%?

    These proposals are reasonable and fair to the country as a whole.

    May I suggest just one last thing. It is unfair to hit those that are due to retire in the next 10-15 years however I think it would be fair to introduce a pension cap for these people, especially some of the very high earners in the public sector who earn more than £40,000 a year or more.

    Unions can go on about bankers getting us into this mess but it is the unions that force through pay rises and perks with threats of implementing strikes and I would argue it is their greed that has given this country more of a headache in terms of costs going forward than any bank has.

  • Comment number 31.

    Final salary pensions are just another part of the gravy train for public sector workers. Bankers get their bonuses, million and millions more get theirs courtesy of the taxpayer long into retirement.

    Stop them now and save the country a fortune. IF we are in an age of austerity then surely it is the right thing to do

  • Comment number 32.

    A guy whose salary is hundred of thousands or more (and that comes from people pensions) saying that pensions of those earning 10-100 times less than him must be reduced because there are not not enough money ...

    Bloody bankers

  • Comment number 33.

    "...less than half what the nurse receives. How can that be right?"

    Because nurses help save peoples lives! The big issue should be, why do people who drive a desk in local authorities get the same pension rights as nurses, teachers and the police? It is these individuals, who do jobs the same as those in industry, who should be treated the same as those in industry.

  • Comment number 34.

    there have been a few misinderstandings. First,HL doesnt have any special executive pension plan. We all have self invested pension plans, something i believe everyone should have,the MPs should take a lead here by taking one.Nor are pension plans expensive as they were once,Dan sites the article from the daily Telegraph,but much of this was out of date.HL has been at the fore front of reducing charges for pensions and many other financial products. I am NOT suggesting that public sector employees don't get what they have already accrued,just that we phrase out the existing schemes and replace them with what the rest of us have,contributions from employers can still be made into a personal pension,but the levels would then be transparent for all to see. At present they are probably close to 25%/30%,which is being paid for by all the taxpayers, a level which is costing us all a fortune.This liability is standing at about £1trn and going up!! The really bad joke for many public sector workers is there is NO fund,your contributions are merely helping to pay for those who have already retired. At least my way you end up with your own fund. Your pension is largely based on a politicians promise, can you really sleep at night with that thought?!

  • Comment number 35.

    Weredoomed's comments are interesting, but he of course benefited from one of the most generous (and flexible) of public sector schemes.
    Firefighters are able to access their pension long before many others and will therefore draw considerably more over their lifetimes than the average pensioner. I wonder if Weredoomed considered that?
    Also, as they retire earlier, they are often able to (should they wish or be able) continue to work and even start another career.It is alos not unheard of (I have known many as do many people I know) for a firefighter to moonlight between shift patterns.
    Now, I know it is a dangerous job and often causes people to have to retire from that job early, but that is not a good argument on its own.
    That is a decision made when entering the service, and is goes with the territory. Its the same decision soldiers make who also put their lives at risk. Yet soldiers's pensions (unless you're an officer) are poor. In fact, they compare (un)favourably with much of the private sector.
    While I agree many want to get the public sector on the cheap, Weredoomed should count his blessings that he was in a scheme that provided so generously for his future.
    However, to all those who think stopping final salary pensions will save money in the long term, I ask this: where do you think those people will turn for money in retirement? When they lose their 'gold-plated' pension schemes, the millions (yes, millions) of workers who earn between the minimum wage and national average salary levels, will undoubtedly turn to the state, and so, Craig and others, the taxpayer will continue to foot the bill.
    Remove the excesses by all means, but don't confuse the pensions of those in executive roles with those of other public sector staff.

    Oh, and for the record, I'm a private sector worker, and always have been.

  • Comment number 36.

    Fisrly Mark is a very rich man, and it is all very well a very rich man telling the working class to save. It is very difficult, our money is either going on over inflated rents, courtesy of 'buy to letters', or over inflated house prices, again courtesy of the greed of 'buy to letters', and 'cheap' money over the last decade. The baby boomer generation have a lot to answer for, leaving my younger generation with the legacy of crippling debt, just to fuel their short term greed.

    It is a disgrace that this very rich baby boomer, dares tell me that he now wants to get rid of my public pension.

  • Comment number 37.

    Mark Dampier: "We all have self invested pension plans, something i believe everyone should have"

    Please Mark if you could explain how much profit your company makes from helping people make investments for their pensions then we could all agree that your company would have a lot to gain if all public sector pensions went private!

    The above article I quote is not out of date it is from August this year.

    The pensions that your industry have provided for pensioners have performed really poorly with massive fees taken by fund managers - rather than admit the failure in this arena you attack the public sector pensions and say they should be poor too!

    Jeremy Grantham an experienced and consistently high performing fund manager in the US has written about this extensively in his newsletters for GMO.

    If public sector pensions move to the system you advocate this would mean government would borrow money which would then be given to fund managers who would take a cut and then reinvest a significant chunk of the money in government bonds such as inflation linked gilts. This circular investment situation would be frankly ridiculous - the only gainers from the situation would be brokers (such as Hargreaves Lansdowne) and fund managers.

  • Comment number 38.

    Why not compare a public sector nurse with a private sector nurse?

    Of course, you would need to look at the total employment package, but as a start you could include their relative salaries, financial bonuses, perks such as free/cheap private health insurance, share incentive schemes, etc.

    This could then be used to find a total for an hourly rate of remuneration.

    The same method of direct comparison could also be used for many other public sector jobs.

    So, returning to my original question - why not compare nurses with nurses? Answer - Mr Dampier probably has done and hasn't liked the answer!

  • Comment number 39.

    Mr Dampier's argument is nonsense and I think disingenuous. The employer’s contribution should rightly be considered part of an employee’s salary. A fair comparison, therefore , is to compare the total employment cost – i.e. salary + NI + employer's pension contribution - for equivalent jobs in both the private and public sectors. I doubt any fair comparison would have private sector workers doing worse than those in the public sector. The irony is that by working in the public sector an individual is opting, whether he knows it or not, to save more of his salary. The very thing that Mr Dampier says he wants.

  • Comment number 40.

    As some have rightly pointed out this guy would stand to gain considerably from this.

    I think given that private pensions are rubbish and extremely expensive at best is not an argument that all pensions should leave people in a position where they need to rely on the state pension despite lining the likes of Mark Dampier's pockets through unjustifiably high charges and management fees. I am sure it works out at about 40% with some policies go to the bankers not the annuity holder.

    I work in the Private Sector, and do feel that some jobs such as running after criminals may actually be a young guys game and performs an invaluable public and economic service. The police contractually agree not to perform industrial action and in return pay very large pension contributions but also expect the state, taxpayers, and corporates who benefit to contribute.

    The persistent undervaluation of both the social and economic contribution that police, teachers, and many others perform really gets on my nerves. The fact that they defer much of their potential earnings for retirement seems quite rational, And people who seem to think public sector is overpaid they should perhaps look at their own workloads and decide if maybe their envy is based on the fact they are underpaid and generally being exploited to a far higher degree. Because the private sector are really bad except with the most senior employees I for one do not think as a society we should follow that path with public servants and essentially screw them as hard as possible.

    The entire premise of this is that somehow private pensions are good or provide a decent standard of living in retirement is a fallacy. The history of the private pensions industry is awful in this country and state/taxpayers often has to pick up the pieces. In fact large amounts of those publicly pensioned employees are working to enhance the position of those exploited by the private pensions industry and private employers.

    Why do we want to emulate the worst aspects of private sector practice in the public sector? Yeah money is tight, but only if you are a slave to this market rather than its master.

  • Comment number 41.

    Dark Vector: "Of course, the generous pension is what compensates for the lower salaries of the public sector,"

    Hmmm, and there lies the problem - the expectation of a lower salary has gone, hence the endless strikes to get X% increases per year. I remember reading about binmen being on 30K (quick google backed that up, - that says it all. The public sector want pay equivalent to everyone else, but also keep the more than generous pension - you can't have it all without disadvantaging the private sector, hence private sector annoyance.

  • Comment number 42.

    What he forgets to add is that most employers contribute to encourage/reward their staff.

    My former employer paid double my contribution up to a maximum of 12%, so that makes 18%, not six.

  • Comment number 43.

    And as for all those thinking Hargreaves Lansdown are simply out to make money from this, that's irrational and niaive - to suggest that, and ignore this massive issue, is to stick your head in the sand.
    This issue needs to be resolved now, it can't go on - understand: we can't afford the current situation.

  • Comment number 44.

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

  • Comment number 45.

    For far too long the Government has avoided the key issues on pension saving for the UK workforce, choosing in stead to make pensions one of the most complicated areas of financial consideration. Scrapping Public sector pensions and creating a level playing field with simplified rules is far far overdue.Time for this Government to act is at hand.

  • Comment number 46.

    Mark Dampier really should reveal the pension details of senior executives like himself. We wouldn't want him to be accussed of hypocrisy now! Why do the rich and powerful always expect the sacrifices to be made by the less well paid ?. As for the whole tone of this article can the journalist please try to hide his awe of people such as Dampier. It was the banking and finance industry and their greed that got us into this mess.

  • Comment number 47.

    from Mark dampier. Dan its what the article says thats out of date not the article, and Martin it is the younger generation thats going to have to pay the older generations bills and public sector pensions will be a huge bill for the younger set.To some of the others i say the poltics of envy always cause greater problems. There are around 4 workers to every public sector worker,they are not all bankers,and they are paying for your pensions and the bill is rising every year.

  • Comment number 48.

    34. At 09:59am on 09 Sep 2010, mark dampier wrote:

    Hi Mark ... (even if it's not really you ...)
    This whole area is a minefield ... public and private.
    1. Private Sector SIPPs can go down as well as up ... what happens if you're one of the unlucky ones? Work till you drop?
    2. Public sector pensions require a supplement from the taxpayer of £10bn a year ... and this is only going to go up as the public sector shrinks in size. A significant chunk of this £10bn will come from private sector pensioners getting a pittance in comparison to a public sector final salary scheme. How can this be fair?
    3. Private Sector Annuity plans are a complete rip off. The best you can get on a non-index linked plan is 5%. That means that you need to be retired for 20 years before you start spending any of 'their' money. Meanwhile the annuity company sits on your interest, which (at say 4%) will amount to half your original lump sum over 20 years. Free money for them. Why do government regulations not allow me more freedom with my pension pot ... the local building society is a far more appealing option?
    4. Increasing the retirment age might be an option to ease the burden for some types of employment; but for those still in manual jobs, their life expectancy has not risen in the last 50 years; and in some areas it has even dropped. Even if they were willing, would they be able to work for longer?
    5. The equity markets, on which most private sector pensions depend have seen negative growth over the last 10-15 years. Even now after a reasobable rally, FTSE is 1500 points off its highs of the late 90's. This is not unusual ... it took the Dow 25 years (and a world war) to recover to its pre-1929 values. Growth is not guaranteed.

    Unfortunately, there are no easy answers. If we want to work for 40 years and retire for 20, we probably need to be putting 30% of our salary away a year ... but who would you trust the 30% to?

  • Comment number 49.

    I am a retired teacher. I suffered since 1976 from severe anxiety, panic attacks and agoraphobia. I struggled on in my job, using tranquillisers, and hardly took a day's absence. I set up a small business and left teaching in 1986 after 13 years service. I was perfectly entitled to claim my pension then because my health was really poor but I did not; instead I managed on my small earnings from my business. When I was no longer able to run my small business I lived off my savings until they ran out and then applied for ill-health retirement to obtain my pension. At that time I had already been awarded both mobility and care allowances for Disability Living Allowance (about £1800 per annum) after fighting for 3 years the intransigent DWP (who insisted for 3 years I was perfectly normal but then left the tribunal minutes before I entered and told the tribunal that they fully accepted my case); I think that award and my GP's medical report showed clearly the extent of my illness. However, Teachers' pensions refused to pay me an ill-health pension on the grounds that I could work at home (but, of course, made no suggestions as to what form of work I could obtain at home). This was only 3 years prior to my actual retirement age so large sums of money were not involved.

    I then applied for incapacity benefit but was told that as I had lived off my savings for the last two years then I had made no NI payments so did not qualify. I had paid about 35 years of NI contributions but did not qualify for help; had I paid only two years (the most recent two) then I would have qualified.

    My DLA payment was given to me "indefinitely" but now I am told I will have to reapply in the next few years; this is because the Government wants to take that money away from me to repair the damage caused by the fat cats whilst allowing them to keep their huge bonuses.

    I should obtain my State pension in 5 years BUT it is possible the Government will increase the age of retirement before I get to 65.

    So, this is what I think:

    1. Take no notice of what they tell you about not affecting pensions of existing Public Servants. The Government is prepared to change things as they wish and at very short notice. Words like "promise" and "indefinite" mean nothing.
    2. Public Servants will not be helped when they are ill. The Government has appointed firms to run Public Service pensions on the basis that those firms keep their lucrative contracts only if they screw everyone who dares apply for early retirement.
    3. The poor, the ill and the elderly will suffer most in the spending cuts. When (or "if") the public finances return to normal then we will have cut spending to such an extent that there will be billions of pounds available in a future Budget .... it will be given to the rich. We will be told this is because these are the people who will make our economy grow (really? I thought they were the ones who just destroyed it) and that their wealth will "trickle down" (I agree, the hugely expensive wines they consume will trickle down their throats by the gallon).
    4. The people of this country should not stand idly by and see their standards of living decimated while allowing the wealthy to improve theirs. This is a fight as big as that fought by the Unions when they were first formed. Note that Thatcher tried to destroy the Unions .... but she left one alone ... it is the National Farmers Union .... I know, of course, that it is a different form of Union but my point is that she did nothing to hurt the wealthy (and any reader of this who thinks farmers are poor needs to wake up ... that is the propaganda they promote via the media owned by the farming landowners with the help of the extremely wealthy farmers/landowners known as the Royal Family. It works because people are so gullible).
    5. The Government will attempt to turn the public against public servants, the ill, the elderly, the disabled and the immigrants* (who do jobs at very low pay that most of us will not do); they will divide our nation. They will attack the poor and help the rich. People will stand idly by at their peril.

    (* Do you know that the Government is restricting all groups of immigrants EXCEPT the wealthy, who are allowed to settle here without any restrictions. Most of these wealthy people settle in London, push up house prices, and become the chums of Government Ministers and MPs. So you can be a poor immigrant who is willing to wipe the bottoms of someone with dementia but they are being told to stay away or you can be a wealthy fat cat who lends his Villa to an MP for his summer hols and you are being encouraged to settle here. If you don't think this matters then wait until you are elderly and find no one willing to work in our care homes).

  • Comment number 50.

    Unfunded, defined benefit pensions are a pyramid scheme: for everyone drawing a pension from a scheme, we need several people paying into the scheme through pension contributions or taxes. To keep the pyramid standing, we need to keep expanding the state exponentially (to get more pension contributions) and welcoming large numbers of immigrants (to get more tax payers). We can't keep doing those things for ever. Better a managed transition to funded, defined contribution schemes than the chaos of letting the pyramid collapse.

  • Comment number 51.

    Just a quick note to thank everyone for taking part in this debate. I thought it would divide people, and it clearly does.

    Remember, if you are in the West Country you can see the TV debate on this subject, which Mark Dampier kicks off, tonight - Thursday 9 Sept - at 10:30 after the Ten O'Clock news. If not, you can catch it on the iPlayer from tomorrow, here:

  • Comment number 52.

    read this, how about these fat cats pensions and salaries being sorted out, at the same time. I am sick of this greedy country, and the working classes being indoctrinated, doing nothing about it. WAKE UP, WE NEED TO STAND UP AND RISE AGAINST THESE WRONGS

  • Comment number 53.

    To be honest the whole system stinks, I can't wait until I die, I wish I had the courage to commit suicide

  • Comment number 54.

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

  • Comment number 55.

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

  • Comment number 56.

    • The inequality of this is the key point. I’m sure Mr Dampier has a nice generous pension package, and yet he has no problem telling those that work in the public sector that the, trivial pension levels in comparison, are too high. He also works for an investment broker. In what way is he contributing to society as a whole, compared to nurses, teachers, firemen, policemen etc. If his type of job was deleted would society notice? It sure would if any of the public sector jobs were. Furthermore, why does them comparison with the private sector not include the board rooms of the country? Where pensions are so high its obscene. The higher the level of inequality the more the masses will protest, and its never been higher.

  • Comment number 57.

    Hargreaves Landsdown have a vested interest in encouraging people to take private pensions. If these pensions were more transparent and gave decent returns then they would attract more investors. But for the average working man the returns are poor and the providers difficult to deal with.

    Surely we should be aiming to increase the value of the poorest pensions instead of reducing the value of the best? If this was the case then HL etc. would have to give better returns for their customers and would attract more investors, instead of relying on the government to drive employees to the current crop of pension providers. That is easy money for them!

    MPs should lead the way, and opt out of their current scheme, if the current pension providers are so good.

  • Comment number 58.

    I can see the cold logic and the hot feelings in this matter.
    One way to look at it is that private pensions (for most employees) are not good enough, so shouldn't we also be dealing with that issue too?

    Yes something has to be done and yes it will take at least 20 years to bring about, but we need to make a start now. My only concern about getting rid of public sector pensions and making everyone have private pension schemes is that there are too many companies over the last 20 years have taken pension holidays, this must NOT BE ALLOWED ANYMORE! All pension funds should be continuously added to at all times, and no breaks allowed.

    In the future I believe everyone will have the same type of pensions and therefore a more level playing field, but what is good economic medicine for the goose needs to be like wise for the gander, in other words top excecutives also need to have their final salary pensions taken away too. Many of the private companies today that have taken their staff off final salary or similar schemes still have final salary pensions for their executives - smacks of Animal Farm to me!

    All pesnsions should be based on the employee putting 7% of salary into the pot, with the company putting in at least another 7%. This rate should be the same for ALL employess, managers and executives too, they get paid enough anyway to be able to save several hundred thousand pounds over their working life to top up any pension plan they have.

    The other thing is if the Government are going to be saving 100s of billions of pounds every year then are we to get a guarantee from them that there will never be any more private pension fund collapses, that governemnt money can be put to one side (along with appropriate amount from private industry too) to ensure people still get their pensions in the future?

  • Comment number 59.

    As always seems to be the case with a contentious topic such as public sector pensions, the comments fall into 2 very stark camps; scrap them all or keep them all.
    Thankfully, John Hutton's Public Sector Pension Commission will be able to analyse the many alternatives to the 'all-or-nothing' approach. The status quo cannot continue financially, it is simply unsustainable, so any changes have to be focussed on delivering for those who need it most.

    The simplist approach is to 'cap' the pension that can be provided by the public sector schemes, e.g. £40,000 p.a. The number of huge pensions that are now being underwritten by the taxpayer is growing rapidly, this represents a disproportionate cost.
    High-earning public sector employees are increasingly receiving private sector style bonus packages as well as their 'gilt-edged' pensions, so if they need to save more they have the disposable income to utilise Mr Dampier's SIPPs as well, if they so choose. So the cap does not hurt them and it does not disadvantage the teachers, policemen, nurses etc. who deserve the reward of a public sector pension for their service.

    There is more than one answer. We need to have a 'grown-up' conversation about the extent of services that we, the public, want and then target the taxpayers' resources to providing those the best way we can, with well-paid and well-motivated staff.

  • Comment number 60.

    I am outraged by the comments of this man Dampier.

    "Take for example a nurse earning £25,000 a year. Currently she pays 6.5% of her salary towards her pension - that's £1,600 a year. We taxpayers then promise her a further 14% on top. Overall, £3,500 goes towards her pension each year.
    Then take someone working in the private sector, a shop worker perhaps, also on £25,000 a year. On average employees like this pay 6% of their salary towards a pension - equating to just £1,500 a year - less than half what the nurse receives. How can that be right?"

    By Mr Dampier's own example, he expects a fully qualified nurse who has probably studied medicine for 4 years and has another ten years of experience to be earning the same as a "shop worker". This is a joke. The only reason the nurse is only on £25k in the first place is because consecutive governments have negotiated to keep their pay down with the understanding that this would be compensated for by having a decent pension. This is what the unions fought for over decades and is enshrined into Public Sector contracts. So now our friend Mr Dampier (who himself is likely to have a very nice pension thank you) wants to strip the workers of their entitlements? And who exactly would be best placed to step in and offer his services once the Public Sector pensions are raided? Oh, it's Mr Dampier and his cronies again.

    Wake up Great Britain and stand up for your rights. Now.

    If you don't, you will regret it. While you struggle to pay your bills in retirement the likes of Mr Dampier will be sunning themselves in the Bahamas, paid for ultimately by you.

  • Comment number 61.

    Who is this guy Dampier?

    I watched his speech again and for someone who is supposed to be "Head of Research for a massively successful investment broker" he is surprisingly ill informed on Public Sector Pensions as other comments from here will confirm.

    Are these the kind of people we want in charge of our pensions, either public or private? If they were as "massively successful" as they claim, why are most of my private sector colleagues all complaining about the state of their private pensions which have all been dipped by banks, brokers, directors, the government and the like.

    I'm sure Mr Dampier is a fine upstanding citizen but he certainly has nothing to offer to this debate other than blatant self interest. I don't know what Mr Dampier's pension arrangements are, but I'll bet his views would be very different if someone suggested that HIS pension be scrapped.

  • Comment number 62.

    Andy (#23)

    The concept of promising better benefits in future to help offset the pain of low benefits/wages now is a good one in principle - however, it assumes that the cost of those better benefits in the future can be borne when the time comes.

    My understanding is that this is essentially one of the big problems. The amount of money tied up in future promises is growing rather than shrinking, whilst the capacity to meet those promises is shrinking rather than growing due to changes in life expectancy, new generations being smaller in number than previous generations, etc.

    A secondary issue is the sense of entitlement the current system has given. People who've paid contributions for (x) years feel they've earned the promised rewards, even though their contributions actually went to paying for past workers' current pensions and their future rewards are all based on future workers picking up the bill.

    Nothing they've contributed has gone into a 'pot' to be drawn from in the future in the same way that a personal pension would. As such, we can end up with the inequitable situation where the government promises current workers pensions of, purely for example, £10,000 per year based on them having paid 5% of their salary.

    The future workers paying for this may then need to pay, again purely for example, 10% of their salary to get £10,000 per head as they need to cover the shortfall caused by demographics. And the amount they receive has a corresponding impact on the following generation.

    The disconnect between those funding and those receiving pensions was invisible provided younger generations were always larger than the older ones, as it wasn't a problem. Now the situation is reversing, to solve it requires a) plugging the population gap with immigration, b) forcing the younger generations to overcontribute to make up the shortfall in what was promised to previous generations (which they won't receive themselves), or c) reducing the rewards promised to older generations to match what can be afforded based on the same level of contributions by the younger generation. Or a mix of all three.

    Currently the favoured approach is essentially b)...and whilst I don't necessarily agree completely with Mark Dampier, I think he's right to warn of the assumption that the current young and future generations will be happy to accept 100% of the cost in order to uphold the commitments that the previous generations are asking for.

    Even if that's the case doesn't mean the time bomb won't explode at some point in the future. Better to solve it now, IMO.

  • Comment number 63.

    Lets take a simple family of 3 (grandpa, dad, son).
    Grandpa (age 80) has worked all his life as a civil servant, paid his taxes and pension contributions and is now retired on a public sector pension. He doesn’t have a pension pot as his pension contributions into the pot during his working life were used to pay the pensions of his father and grandfather before him. However, he is sure that his son’s contributions from his working life will come indirectly to him.
    Dad (age 60) has also only recently retired and worked all his life as a private shopkeeper. He also paid all his taxes but his pension contributions were saved privately to provide a pension pot for himself; which he now uses in retirement. Therefore he is self sufficient.
    Grandpa expected his son’s contributions to pay for his pension but now he must rely on his grandson.
    Grandson (age 40) is currently unemployed…therefore not contributing anything; even worse, he is actually claiming money.
    Now lets flex the example… in the UK, there could be 3 Grandpas, 2 Dads and 1 Grandson. Who will pay the Grandpas their pension.
    Solution 1: taxes will increase to tax the Grandpas, Dads and Grandsons
    Solution 2: everyone start saving for their own pensions in their own pots

  • Comment number 64.

    I work in the private sector and my wife in the public sector.

    So I’ve no axe to grind either way.

    But I think perhaps I may just use this sharp knife.

    If you want equality of pensions between public and private sector, why not go the whole hog and simply equalise all pensions based on the number of years worked.

    You want equality of pensions Mr Dampier? Perhaps this is your moment.

    On the other hand if you abolished the debt based creation of Government funding, Public Sector pensions may become affordable. After all we wouldn’t be paying interest of 5% on £1 trillion.

    For those who don’t understand watch the first two videos and then visit the other two websites.

  • Comment number 65.

    I recollect PWC (PriceWaterhouseCoopers) recently calculating the cost of replicating public sector pensions within the private sector at 33% of payroll. No doubt this estimate will increase with improving mortality too. The cost is of course even higher for MPs pensions due to their overly generous accrual rates.

    A notional cost of 33% of pay, with 26% being funded by the employer (ie taxpayer) underlines the true cost of these benefits. It is a great pity that the private sector cannot match this cost and provide similar benefits to the remaining 80% of the UK workforce, but the brutal reality is that it can't afford to! Therefore if the current situation persists we will end up with the private sector paying more money for public sector pensions than it can afford to pay for its' own pensions. That surely cannot be equitable.

    I would therefore like to see full recognition and acknowledgement of the actual cost of these pensions by public sector employees and their unions. I would also like to see a progressive move towards pre-funding.

  • Comment number 66.

    Great to see this issue getting coverage but couching it in terms of public v private sector is unlikely to generate sensible debate.

    A better question would be whether defined benefit schemes can have any place in retirement planning.

    It doesn't matter whether it's higher taxation to fund growing public sector obligations or lower investment returns from funding private sector deficits. Either way, the ordinary (defined contribution) saver picks up the tab for the spiraling cost of providing pensions to a privileged group of people.

    Leave the question of whether unfunded state schemes are a good idea to the debate on fiscal balance

  • Comment number 67.

    Mark Dampier is saying that public sector schemes are unaffordable because they are based on the pay as you go system and these will place intolerable pressures on those working in years to come as an increasing number of baby boomers retire. It is a fair enough point to make.
    To remove this untolerable burden he suggests that the public sector employees have individually funded account (including contributions from the employee and employer - though much reduced employer contributions than present because of affordability). The money would be invested in the market place. It sounds a good idea as the pension investment would be protected from the machinations of politicians (witness the change from RPI to CPI in uprating pensions).
    The only problem is that this will never, ever fly as a serious proposal for the reasons set out by danj180 at comment 37. It is is the most inefficient and costly way for the government/taxpayers. To quote "If public sector pensions move to the system you (Mark D) advocate this would mean government would borrow money which would then be given to fund managers who would take a cut and then reinvest a significant chunk of the money in government bonds such as inflation linked gilts. This circular investment situation would be frankly ridiculous."
    The current issues with public sector pension schemes come from the expected increase in cost. In March 2010 the National Audit Office said the cost of the unfunded schemes would increase from 1.5 per of GDP - more or less the cost over many years - to 1.9 per cent of GDP before falling back again some years later. It is this 0.4 per cent of GDP increase that is getting people hot under the collar (although they may not realise it as such). If the cost were to remain at 1.5 per cent of GDP you would suppose there would little of the current debate although equality of provision between the private and public sector may still arise.
    There would therefore seem to be a half way house. The Government/ taxpayer seem to be comfortable with paying 1.5 per cent of GDP for unfunded pension schemes (so keep things as they are for the bulk of an employees pension provision). But where forecasts show that this is likely to change upwards employees could be asked to fund the difference in advance in the type of account suggested by Mark Dampier.

  • Comment number 68.

    I am 33 years old and as far as I can see, my taxes will end up supporting quite a few public sector retirees. Especially more so, as the population ages.

    I refuse to pay higher taxes for this.

    Therfore, I have accepted a job abroad and am taking my labour to another country. If more and more people decide to do this, WHO will pay the pensions.

    I am grateful to the UK, but adios!! I will watch what happens with interest..... and hopefully still claim my state pension and free BBC!!

  • Comment number 69.

    Pensions and their unfairness has been one of the most controversial subjects on Have your Say certainly for the past couple of years or so.

    It wasn't something that worried too many folks until fairly recently because it was something they took for granted. That if you paid into a pension it automatically grew and provided a decent annuity or index related pension when you retired.

    However market performances and inflation have been low for few years now and as annuities are declining in value which is what most in the private sector relied on public sector pensions continue in their original format without taking account of the market influences.

    This has led to black holes having to be filled by those taxpayers who are suffering a deterioration in their own savings.

    Even the big private companies on the footsie 100 can no longer afford to fund these expensive schemes so it seems ridiculous that the Public Sector have not made any attempt ro reform theirs.

    Trying to explain pensions to people now and why they are unaffordable when for years the policy seemed to be to make them so complicated no-one was supposed to understand how they worked is one big challenge for anyone.

    For a start how do you explain to someone who thought that their contributions were going into a pot of their own that they were only paying for someone else's pension today and that they would have to rely on someone else to pay their pension when they retired.

    Ignorance is bliss so they say and knowledge is power until the day of reckoning arrives.

  • Comment number 70.

    Mose wrote:

    "The 'investment bankers'would say this wouldn't they? They have already raided most private pension funds to fuel their greed and would dearly love to get their hands on the billions of pounds in public pensions so that they can cream this off for themselves too."

    1. Public pensions when defined benefit (like the NHS largely) are not a pot of money you can move around - they are literally paid from our NIC's. There is nothing to be 'raided'
    2. If they are DC (personal pensions) they are owned by the Trust for the benefit of members and again cannot be 'raided'
    3. The raiding of private funds (personal pensions) was dne by Gordon Brown removing tax advantages of pension schemes.

    You need at the very basic knowledge of pensions before you spout off such utter rubbish as you have.

  • Comment number 71.

    I do not know Mark Dampier, I do not work for HL, I am not involved in the pensions industry (except for fact that I contribute to a pensions scheme) but I do agree with Mark Dampier that the traditional public sector scheme needs to be scrapped.

    1. Govt (Labour of course) has effectively abolished traditional final salary schemes for the private sector. It is completely wrong that there should be one law for the private sector and a different law for the public sector.

    2. Stop blaming companies for taking contribution holidays they had no choice - again govt (Conservative this time) was responsible for this by changing the law such that companies got heavily taxed (or should that be fined) for running large pension surpluses.

    3. Final salary schemes only really work if (a) the workforce contributing is larger (and/or much more highly paid) than the pensioner taking pension from the scheme. What we have had in many schemes is the current pensioners taking more out than is being put in by current workforce which leads to inevitable problems. This is only going to get worse as it is clear that public sector workforce needs to be reduced

    4. There is nothing wrong with money purchase pensions (although I would still like lower charges) but you have to accept that the risk likes with the pension provider of declines in investment returns. I understand that most pension managers gradually move the investment portfolio from shares to govt bonds as you get closer to retirement age to compensate for this.

    5. Scrapping traditional public sector schemes does not necessarily mean rubbish pensions, it all depends on what employer contributions are made. I would imagine the public sector unions would, entirely reasonably, seek to get those as high as possible.

    6. Public sector funds could become the drivers of economic growth in UK if they had a mandate to invest in UK companies.

    I have to say that no govt ever seems to understand pensions. Conservatives messed up pension surpluses, Gordon Brown destroy the traditional financial salary scheme, and the current proposals on tax and pensions are so utterly insane that in some circumstances a worker could be worse off by accepting a pay rise. I think it has something to do with pensions being long term and politicians being incapable of thinking beyond tomorrow's newspaper headlines

    Personally I have never trusted any govt promise about pensions and I would not advise anyone else to trust any govt (of any political leaning) either

  • Comment number 72.

    To : 35. At 10:09am on 09 Sep 2010, Those_were_the_days

    It is very interesting you point out the benefits from my pension, little of which I question, I have a very good pension which I appreciate, however, my point was and still is this, My private sector comparison less than five miles from my station is paid almost, though not quite, twice my pay, my pension contribution was eleven percent his only now one percent, mine a final salary, which is no longer available to new recruits, his also final salary over very similar timescale, we both work a similar work pattern, except in the local authority we actually work more shifts per year. You may ask why I did not move to the private sector, I believed in the big society long before david cameron, we are in this world to help one another, sadly their are to many selfish, greedy, hedonistic people in this country.

    I look forward to pay increasing to compensate for a much reduced pension benefit to that of the private sector for my colleagues still in the fire service, that is we really want a level playing field and not just any chance to kick the public sector!

    As to moonlighting, I can say with my hand on my heart I did not moonlight, I know firefighters that have part time jobs paying their taxes etc. moonlighting infers the black economy I know of no fire fighter doing so. if you want to look at monlighting/ part time work I suggest you look first at the senior executives earning millions from many footsie one hundred companies!
    Yes I have continued to work after retirement from the fire service, indeed I work alongside a retired soldier, retired bank manager, retired salesman, a great many people work while receiving a pension, this is irrelevant to the debate, if anthything we are obeying the requests of industry and government.

  • Comment number 73.


    That made me smile. Sorry.

  • Comment number 74.

    The point being missed by some is that the pension contribution from the "government" IS part of pay, not a gift - from them as an EMPLOYER. A shop worker getting paid £25K is not comparable to nurses who now must have degrees, pay for expensive training courses, deal with horrific injuries and illnesses. Public sector workers won't just shrug their shoulders, they'll changes jobs or countries. Why the government wants to equate itself with the worst employers who whinged about the minimum wage etc is beyond me - equality of misery, great idea. Moving away from final salary to average salary is fair enough but average local authority worker pensions of £4K, and teachers £9K hardly suggests a massively feathered nest to me!

  • Comment number 75.

    Most directors' pensions schemes build up pensions at least twice as fast as those of their staff - usually at a rate of 1/30th a year compared to 1/60th or 1/80th for ordinary staff

    54% of top directors are still in final salary schemes

    One wonders if Mark Dampiers pension is included in the 1/30 or 1/60 the hypocracy is amazing!

    leaders should lead by example, or as usual in this country do as I say, not as I do.

  • Comment number 76.

    Thank goodness someone has had the guts to raise the issue politicians never will - their career is too short to have to face the music.

    For many years actuaries have been pointing out the pension issue to their clients in the private sector and slowly but surely salary based pensions are being phased out. There cannot be many jobs out there where new staff enjoy a final salary pension. If there is, do not buy shares in the company; it will not survive! My old company changed when it went public in 1987, it was advised to buy out the existing final salary rights and convert them to private pensions or the market would react badly to the float.

    I was lucky, my pension was paid for me at 20% of salary per annum but I was a director of the company.

    If public sector pensions, based on final salary, are not changed this country will be bankrupt buy 2050, if not before then for other reasons. Forcing the length of working life as an alternative is repulsive in my view. Let everyone in the country be on the same terms, it is the only fair solution.

    When my old man worked for the public sector, everyone knew they were paid less than the open market but the pension made up for it. Now, most public sector workers earn more (look at the stats) but still have the pension, mainly because of their strong unions and blackmail postion they are in. Either privatise or convert to equal terms.

  • Comment number 77.

    Well done Mark Dampier - someone has to stick their neck out & help get these unaffordable public pensions under control.

    The level of public sector pensions paid out compared to the almost negligable contributions made by public sector workers is a scandal which should have been addressed years ago.

  • Comment number 78.

    Mr Dampier has his facts understated. It is a lot worse than he says. The NHS pays in 14% to add to the 6.5% nurses pay in. But the 14% doesn't pay for it all - there is still a huge shortfall which the Treasury has to cough up as well. My public sector pensions commission recently analysed the costs and found that the cost is over 40% to the Government.

  • Comment number 79.

    Several points:

    1. It really is not the place of Mr Dampier, or any other millionaire, to lecture the rest of us on how we should save (if we can afford it) for our retirements. Most people with a great deal of money owe their fortune to luck, rather than outstanding skill, and in not a few cases their weath has been accumulated by means which are, at least, dubious if not downright criminal. A little humility in the face of good fortune might be a more appropriate stance.

    2. Mr Dampier is essentially suggesting that the present unfunded pension schemes should be stopped, and replaced by investment-backed pensions. A pause for thought at this point might suggest that doing this is not the panacea he supposes. You see, in order to produce the returns to fund the pensions the money has to be invested somewhere. As I'm sure Mr Dampier knows, if indeed he is a pensions 'expert', and not merely a self-serving controvertialist UK pension funds already own a good slice of the UK stock market, and through investments in Government Bonds they underwrite at least part of the National Debt. The introduction of an incvestment based pension fund for 1.8 Million NHS workers, for example, would result in significant increase in the amount of money seeking returns on the financial markets, and this is likely to result in a reduction in the average rate of return the this money can get. This is a simple consequence of the laws of supply and demand. It is therefore concievable that by doing this ALL pensioners, not just public sector pensioner would end up worse off than they are now.

    3. The perfomance of funded pension funds, like most other products of the so-called financial service industry has not been great.(Think endowment mortgages, for example.) This is one of the reasons why final-salary pensions are all but extinct in the private sector. The performance of these schemes has not been helped by practises such as empoyers giving themselves pension 'holidays' - not contributing to pension funds and using the money to pay increased dividents or higher executive salaries when the fund appeared to be in surplus. Oddly, they (and the markets) don't like the idea of contributing more now the funds are in deficit.

    4. Mr Dampier commented that the average pay-out from private sector pensions was ever worse than the pay-out from public sector pensions. He said that the reason for this was that people had not been saving enough, which is fair enough as far as it goes. But he didn't comment on WHY people hadn't been saving enough, and aren't saving enough today. One major factor is that people can't afford to because wages for most people are actually quite low, and the cost of living, and especially housing is quite high. Yet, I suppose that if people at the bottom of the heap started agitating for higher pay so they could save more for their retirements Mr Dampier and his ilk would be ready to slap them down with a different set of arguments about how their 'unreasonable greed' would do 'permanent damage' to the economy!

    5. This is not to argue that the present public sector pension arrangements are perfect, or that the policy of retirement at 65 is paticularly justifiable, given the increase in life expectancy of the population. It seems odd that firefighters and police can retire on a full pension at age 50, given that they have the reasonable expectation of another 15 years of working life under the present arrangements. Surely it should be possible to provide resettlment and retraining for such individuals, such as is offered by the armed forces, so that they can go on to work in other jobs rather than drawing their pensions at such a young age? Maybe this is done now, but we don't hear much about it if it is.

    6. The problem of coping with a population which is both aging, but actually healthier than ever before, is not a simple one. Simplistic arguments, and quick-fix solutions such as that proposed by Mr Dampier are not even particularly helpful contributions to the debate, let alone to be considered as serious propsals. However politicians who find such nostrums ideologically attractive may be tempted to seize upon them for short term populist gain at expense of all our futures. If Mr Dampier has some more carefully considered thougths on the problem then it would be interesting to hear them, but last night's headline grabbing performance leaves a sour taste in the mouth.

  • Comment number 80.

    Dampier should compare like with like ......the nurse on 25k a year is not on 25k, she is on 25k plus 14% employer pension contribution ie 3500 equals 28.5k.
    The nurse does not pay 1600,she does not pay 3600 either , she is paying 5100 towards her pension.
    So her final salary pension at twice the 25k worker's pension is actally costing her 5100/1500 = 3.4 times the private worker .
    The nurse pays 70% more than the private worker for every penny she receives.
    Dampier knows this fine well, and is at it.
    And the government are at it, because not a penny of thet 5100pa ever gets invested.

  • Comment number 81.

    The terms and conditions of Public sector workers in relation to their pensions have not materially improved since 1970. Why is there a problem now? One is because the last labour government expanded the public sector and thus the future pension liability, and secondly because the costs and risks of final salary pension schemes have become "unaffordable" to private sector companies. most people really don't understand pension and their unions have proved incapable of protecting entitlements in the private sector. So not only have companies closed their final salary schemes to eliminate risk (the company was liable for any deficits) they have reduced the percentage of pay going into the replacement scheme - this opportunism has been on a massive scale. Governments of all shades have allowed this trend to go unchecked but New Labour arguably have been the worst. So progressive were they that they allowed private sector pensions to be decimated and didn't care about it (after all in the progressive eyes of New Labour the private sector is bad and the public sector is good). So the real debate should be about providing a decent works pension for all not bringing the public sector pensions down to average private levels. The private sector should be forced to provide comparable pensions to their staffs as public sector pensioners receive. Yes the companies will pass on their costs in the form of higher prices which we all will pay, but to live in retirement in dignity is a primary human right. All New Labour did was to pay extra to poor pensioners through the pension credit, thereby adding yet more to its its payroll vote already swollen by the extra public servant it had sanctioned (with borrowed money from tomorrows taxpayers).

    The campaign should be for decent pensions for all workers - MD's suggestions ignore this fundamental point.

  • Comment number 82.

    I was quite open to the idea until I read that rediculous quote "Take for example a nurse earning £25,000 a year. Currently she pays 6.5% of her salary towards her pension - that's £1,600 a year. We taxpayers then promise her a further 14% on top. Overall, £3,500 goes towards her pension each year.
    Then take someone working in the private sector, a shop worker perhaps, also on £25,000 a year. On average employees like this pay 6% of their salary towards a pension - equating to just £1,500 a year - less than half what the nurse receives. How can that be right?"

    He asks how that can be right. All my working life I have been told it's not about salary, it's about total remuneration package. So he is not comparing like with like, instead he is comparing a nurse whose remuneration is £25,000 plus 14% that's put into a pension and a shop worker who earns £25,000. That's how it's right.

    I can't see anything wrong with one person having a package that includes an element that isn't cash (it's been going on for years) and there may other reasons why it's not right, but if Mark Dampier has used this as his central argument against the logic of the current system, then it suggests to me that the argument is flawed.

    Moving on, I really don't think this should be about the differences between public and private sector pensions, when I read the headline I expected it to be about the provision of the state pension, now that's something that can be logically questioned at this point in time.

  • Comment number 83.

    Its a shame this nettle has not been grasped before. Its simple - Mr Dampier tells the truth and should be applauded.

  • Comment number 84.

    Two questions for Mr Dampier.
    1. How much money have you got?
    2. How did you get it?

    The answers will help us all understand any conflicts of interest you may have. Thanks

  • Comment number 85.

    The problem that Mr Dampier has not taken into account is that public servants pensions are subsidised


  • Comment number 86.

    Good to see that Mark is willing to contribute, although I find it quite amusing that those who talk about 'fat cat' private pensions are accused of 'envy' whereas those commenting about public sector pensions are only interested in 'fairness'. Clearly, we are in the area of Yes Prime Minister's "irregular verbs", as in:
    "I give confidential briefings, you leak, he is being prosecuted under section 2a of the Official Secrets Act."

    What I would like is to ask Mark is three straight questions that as an 'expert' he should be able to answer.

    1. Can he name five public pension schemes that are still being offered as final salary schemes to new and recent entrants?

    2. Can he give the total amount of surplus contributions that these pension schemes have paid into the Treasury over the last, say, 25 years?

    3. If he believes so strongly in fairness would he welcome the return of the 'unearned income' band for tax, which could raise significant funds and could apply to those with a pension of above, say, £40,000 a year?

  • Comment number 87.

    We have a once in a generation opportunity to fix this balooning liability - the people who will really pay the price if we don't are our children and our children's children. We owe it to them to have the moral courage to sorth out the behemoth which public sector pensions have become....

  • Comment number 88.

    This constant need to bring ordinary workers down to the lowest level of pension possible makes me so mad that I have had to register for a BBCid to comment. I recently read on the BBC site that the poverty level of income is £14,000. I can say from personal experience that there aren't many public servants who are going to retire on that much. The old Civil Service scheme (long closed to new entrants) needed 40 years service to qualify for a full pension. This means that to achieve the poverty level today you would need to be retiring on a salary of £28,000 after 40 years service. I can assure you that there aren't too many ordinary civil servants who will come anywhere near that. Most as has already been mentioned will retire with pensions of around £4000 a figure that would leave them eligible for pension credit and other benefits. We should be working for a fair living pension for all. At the moment the true fat cats have the rest of us all busy trying to lower ourselves into misery by eroding the few benefits left to the poorest paid workers in the public or private sectors.

  • Comment number 89.

    I don't see many people questioning the assumption that public sector pensions are better than private sector ones, and I don't understand this.

    Over the course of my career I have contributed to 5 pensions, 3 in the private sector and 2 in the public sector. The best two, and the worst one was from the private sector. The public sector ones were in the middle.

    So why don't we see private sector organisations and the pension industry "gurus" like Mark campaigning against private sector companies offering better pensions than the public sector can offer?

  • Comment number 90.

    As someone who has worked for over 25 years in the lower reaches
    of local government my so-called 'gold plated pension' is going
    to be anything but. I am due to retire in the next two years
    but like many of my colleagues in a similar position and age
    will not be waiting around to see the benefits we have saved
    towards snatched away. It is not compulsory to join the local
    authority scheme where I work but rather than let the state support
    me I decided to contribute towards a pension having a fairly substantial
    sum deducted every month from a not particular wonderful salary, so the
    implications that somehow I and others like me are all going to live in the lap of luxury is a grossly unfair statement.

  • Comment number 91.

    I have been passionate about the gross unfairness of public sector pensions v private pensions for years.
    How can it be fair if one works for the public sector and one works for the private sector taking home the same salary, paying in the same pension, for the same years of work..yet the public sector person can retire at 60 on 2/3rds final salary and enjoy an life time index linked pension.The private sector person has to retire at 65 and will get largely 1/3 to 1/2 of final salary with NO index linking; on a like for like pension.
    All public sector pensions are unfunded,and are massively in debt to pay for it...see any local government financial statements..
    That is why all the public sector struggles with providing a decent service because it is burdoned with a huge pension debt.
    We as a country cannot afford these gold plated pensions any more.
    Perhaps Hargreaves and Lansdown should take over all public sector pensions and provide their pensions based on their accrued pot.. like what I have to do shortly..then parity across the board will reign.

  • Comment number 92.


    Just for clarification which public sector pension allows people to retire at 60 on 2/3rds salary?

    I know for a fact that the Teachers Pension scheme (before it was reformed) was based on each worked year being 'worth' 1/80th for pension purposes. So a teacher starting at the earliest possible opportunity at 21 who worked every year until they were 60 would retire with a pension of 39/80ths which is under half their salary. This would be the maximum available.

    It is as a result of the 'low' accrual rate and therefore the need for many years of continual working that so many public pensions paid are pretty low. As I said earlier the average female NHS pension paid is £4,000 per annum.

    Also it is factually inaccurate to say that "All public sector pensions are unfunded". The Local Authority Scheme a funded scheme! Apparently the 101 LGPS funds hold more than £120 billion in investments and assets, enough to pay benefits for over 20 years The LGPS has a positive cash flow, with income from investments and contributions exceeding expenditure on benefits by £4-5 billion every year.

    On such an important matter it is vital that rather than opinions there are facts which inform the debate. That is my greatest concern about the whole of this article high on opinion but not enough real facts.

  • Comment number 93.

    Some contributors seem to be completely unaware of the facts - I refer them to the national audit office reports over the last year or so. In particular, to suggest anyone in the NHS is being subsidised by the government is PLAIN UNTRUE - that scheme GAVE the government £2 billion last year! The tax payer doesn't give them anything.

    "Bill McMillan, head of pensions at NHS Employers, said the NHS Pension Scheme was the only one of the four schemes over the past 10 years that had paid more into the exchequer than it had taken out."

    Also, the fact that some scheme pensions are paid from current contributions is not the fault of the workers. Saying they don't deserve a pension, having paid in for many years, is rather like saying "tough" to the people who worked for Robert Maxwell when he was helping himself to their pension fund. Add to this 2 years (or perhaps more) of pay freezes whilst private sector salaries probably improve, and the real value of those pensions will be reduced anyway.

    I have worked in both public and private sectors and my private sector pension is worth twice the public sector one for the same service.

    Public workers HAVE planned for their retirement - they have elected to work for an employer which included a good pension in the pay package. A pension is part of their pay just as much as when a company provides a car, free parking, subsidised restaurant, uniform or whatever. Just because it is delayed for 30 or 40 years doesnt mean everyone doesnt know it is important!

    If the country doesnt think we can afford to pay people working for it as much as we do now, then so be it. But dont be surprised when you get a lower calibre of staff, and dont complain when you suffer all the consequences of that - you get what you pay for, I'm afraid!

  • Comment number 94.

    Most public sector pensions are paid on a pay as you go scheme, the same as all benefits..where do some people get the idea that there are lots of money sloshing around for these pensions/benefits are deluded.If that is the case then why do we have a public sector pension deficit..??
    Just look at your local authority pension deficit and multiply that by all counties and the government departments, and you have some idea of the massive deficit/debt.
    Its going to be an interesting future, to see who will pay for all this ..
    Happy days..

  • Comment number 95.

    Steve Bee's take:

    "We should not forget that fundamental principle when we talk about other aspects of pension policy. The pay that people receive from their employers (irrespective of whether that employer is the Government itself or not) can come in the form of cash paid into their bank accounts or paid out as deferred income in later life; a pension. But both forms of money, cash and pension promises are pay for work already done by employees under the terms and conditions of their employment. The pensions promised so far to public sector employees like nurses, teachers and the police force are no different to the pay that was put into their bank accounts for the work that they did in the past. It is their money."

  • Comment number 96.

    Dave Harvey gives the impression of knowing only one person in Bristol: Mark Dampier.

  • Comment number 97.

    I totally 100% agree with Mark Dampier, I have been saying the same to my private sector work colleagues for the past 9 months. Of coarse falling on deaf ears with the ones who have spouses or partners in this fantastic pension scheme every public sector worker is paying for. Also more importantly this country can no longer afford.

  • Comment number 98.

    Absolutely correct, public pensions should be no higher than those of staff in the private sector with a similar salary profile.

    The notion of higher pensions for lower pay is simply rediculous. Government should move the whole lot over to the publi sector. In this way the added volumes should drive economies of scale on costs and better control of coorporate boardrooms since everyone will have an interest in business performance through their pensions.

  • Comment number 99.



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