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CBI: 'Public-sector pensions unfair and unaffordable'

Robert Peston | 08:26 UK time, Tuesday, 6 April 2010

There is - arguably - no more valuable benefit from working in the public sector than the pension arrangements, which typically pay out a guaranteed proportion of each employee's income.

Bank notesSuch final salary schemes are expensive and have become something of a rarity in the private sector.

The CBI calculates that this pension promise is worth, on average, 26% of every public-sector worker's salary.

This, says the CBI, is unaffordable: the employers' organisation estimates that a proper recognition of the cost of public sector pensions would more than double the national debt and add £10bn to the true cost of government every year.

And it says that with average earnings in the public sector now greater than private-sector earnings, the historic case for the state providing superior pensions to its employees has gone.

The CBI urges whichever party wins the election to replace pensions linked to salary with new pensions determined by how much each employee puts in.

These could still be free of risk (unlike most pensions offered today by private-sector employers) but would be much less generous.

The model for the CBI would be Sweden's "notional defined contribution" approach.

All of which has financial logic.

But any new chancellor may be a little nervous about shining a bright light on this liability at a time when the public-sector's soaring conventional debt is the most pressing challenge of the moment - although the Tories have announced a limit on pension payments to those officials on highest earnings.

And any new prime minister may be a little nervous about going into battle, within weeks of a general election, against public servants paid to carry out the new government's will.

Comments

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  • Comment number 1.

    We should not be looking at how to trash public sector pensions, but on how to get private sector employers to provide decent final salary pensions. My grandparents and parents generations bequeathed better pension entitlements to the next generation. The productiveness of the economy continues to improve so why is our generation being told things have to get worse? It is also true that inequality has greatly increased since 1979, with the very top people awarding themselves an ever increasing slice of the cake. The stats on how many more times a boss earns than his workers tell us where the money for pensions has gone.

  • Comment number 2.

    So you think that any new government will cop out of addressing this anomaly?

    Isn't that what Labour did when, having made an election pledge in 1997, that there would be reform of the public sector, the then current Chancellor refused to do it?

    The anomaly has got worse because Gordon Brown refused the public sector reform, and then encouraged a larger public sector throughout the boom years, and even until just a few weeks ago.

    Hence, Gordon Brown has created this problem which is funded by the tax payer.

    Ed Balls seems to be of the opinion that the public sector is the economy - which opinion is delusional at best. This either means he has completely swallowed the Broon idea of economics or that he is quoting the party mantra, whilst avoiding any sense of responsibility for either.

  • Comment number 3.

    As someone who has at least half of my fund in the public sector but is still some years off of drawing it I have to say that I agree with you Robert. The fund rose by 14% last year way better than my private funds and I cannot see how that is justified from tax payers money.

    My main concern is that it is changed in a way that allows us to plan alternativ es and that has to mean that changes will not kick in for at least 5 to 10 years, if ever for those only a few years off of retirement. Politically that would be tricky to manage as any benefit would not be seen in the life of that government.

    I think that there should also be steps taken to make private sector pensions more affordable as especially in times of low growth the charges are very high and it is hard to see any reason to add to the fund, especially as I am sure that those of us who have been responsible will end up supporting those who have not.

  • Comment number 4.

    I cannot help but see the CBI's remarks as based upon nothing more than personal greed (and not even corporate greed). They wish to have all of the wealth of the country whilst subjecting everyone else to a life of drudgery and most importantly perpetual servitude and poverty. (See impossibly high loans to income ratios 'lent' by the Banks and British Airways etc etc etc.)

    I could take their comments more seriously if they undertook to limit the almost infinite expectation of their own income before they try to make the poor poorer.

    Let me first see the CBI advocating the reduction in the gulf between rich and poor before I can take them seriously in this matter. First they should support a Maximum National Income and then perhaps they will be taken seriously!

  • Comment number 5.

    This is a subject which polarises debate somewhat Robert. The truth is that some public-sector schemes have contributions which they feel cover the scheme but many do not. It is the unfunded schemes that need a change as they are unfair on the taxpayer. They do need to be moved to a more affordable structure with either lower benefits or higher contributions.
    However as I have read many tiimes on the notayesmanseconomics web blog we have politicians who are weak and incompetent. So we end up with a moral hazard where because some will object they will avoid a subject which has a lot of scope to help our fiscal deficit. Alan Johnson had the chance to deal with public sector schemes a few years ago and he balked at the chance and caved in...

  • Comment number 6.

    Make retirement age 75; that should fix it.

  • Comment number 7.

    This problem is actually more serious than would at first seem. Many public sector pensions (I include police officers from personal knowledge) are not paid from investments made from contributions during the employment of each person, but the pension "contributions" made by each employee are paid straight out to current pensioners. Consequently there is no pension fund and the problem is only getting worse as our population ages. There is already talk within the Police of the pensions crisis and police budgets are having to be used to pay existing pensions as the contributions of serving officers are not covering the payouts to current pensioners.

  • Comment number 8.

    Public Sector Pensions. Worlds biggest Government Endorsed PONZI scheme.

    DICUSS!

  • Comment number 9.

    4. John from Hendon.
    What creates wealth? The state or the private sector. If there is no wealth, the poor do not get richer. And btw, you don't make the poor richer by making the rich poorer. Even Lenin saw that a flat wage did not work.
    Gordy's tax raid on Dividends for pension funds didn't help. 1m extra Government workers on defined benefit pension schemes funded by the private sector tax take has turned the UK into one big Ponzi Scheme.
    Why should I work to 68 to fund someone to retire at 60?
    Oh yes, it's the new Labour definition of 'fairness'.

  • Comment number 10.

    There should be a rationalisation of public services and it's plethora of inane inefficient Bureaucracy. It should no longer be considered a job for life with pension benefits, but should be in line with private sector where high standards are rewarded and poor quality work is not accepted. Public sector workers can perform legal work which private firms would charge thousands of pounds for. But there is no joined up thinking between separate Government Departments such as HMRC / CSA / Court Services / Family Law / Insolvency Practitioners / Social Services etc and every area and department is manipulated by corrupted officials who play the game, abuse the system and use every dirty trick in the book to deny people their legal rights. Services allocated to legal firms and debt collectors etc are also abusing the process with no recourse to challenge incorrect decisions. Public Sector workers should treat citizens like Clients and get rid of the hypocritical attitude that they are acting in the interests of the Crown by subordinating individuals. "Officers of the Court" does not mean they are automatically correct and they provide no transparency to prove they are acting professionally and are not biased in their actions taken which is damaging families lives. These people act illegally by working in collusion with colleagues behind the scenes, resulting in a bent and corrupted processes.

  • Comment number 11.

    The reform of public sector pensions will be the next government's, if it is a conservative government, miners strike.

    There has to be reform as the current position is simply untenable.

    It is like the Euro with Germany & Greece. The Germans baulk at bailing out the Greeks when they see the huge Greek public sector and early retirement in Greece with big benefits. The Germans ask why should they work to 67 or 68 and see the Greeks, and Italians by the way, retire much earlier on generous pensions? The Private Sector in the UK is asking the same question now about the Public Sector.

    The reason that many private sector defined benefits pensions are in a hole is that Gordon Brown moved the goalposts with his pension grab early in Labour's first terms.

    The same arguments that Public Sector workers use about the long term nature of pensions and the fact that people in the public sector couldn't survive if they went to defined contributions from defined benefits apply in the private sector to. That hasn't stopped the cutting in the Private Sector.

    Gordon Brown cut away the first leg of support from Private Sector pensions and the closing of the defined benefits schemes has cut away the second leg. Gordon Brown's actions had a huge impact on the forecasting of pension growth for people who had paid in for many years and whose payments into a pension pot were based upon no law changes.

    Soemthing has to be done. The only question is how big will the cuts be and how soon?

  • Comment number 12.

    Why do we bother? Robert is so biased it's unfair. The public sector has grown so large under this government that the private sector can no longer sustain it. What do Labour do about it? Employ more. Pay wages above £100,000 and keep smiling.
    If you can't beat them join them. God help us all. My poor kids are in for a shock.

  • Comment number 13.

    By the way everyone. What happened to studying hard, pushing yourself, working hard and enjoying the benefits. Poor luck to any kids who want to excel. The way the education system works in this country though we won't have any before long. Keep Labour in power and see how bad things are in 5 years time. I won't be here.

  • Comment number 14.

    Low paid workers in the wealth creating private sector are being serially defrauded because of the gross inequality between pension schemes in the private sector and those in the public sector. I see no fairness here.

    I can only put this down to Brown's pension raid of 1997, weak government and greedy unions.

  • Comment number 15.

    @Lions After Slumber

    "My grandparents and parents generations bequeathed better pension entitlements to the next generation. The productiveness of the economy continues to improve so why is our generation being told things have to get worse?"

    Simple. When your grandparents retired there was relatively few retired people, to each worker - many people died before reaching retirement age. As life expectancy has greatly increased, so has the proportion of retired people. This puts a massive burden on those still in work, as each one has ever more retired people to support.

    There is only 2 solutions. Either we start to ensure that life expectancy falls sharply, or people have to work longer, retiring later. Personally given this choice I'd opt for the latter, I think most of us would - so that should be an election winning policy - right?

    The problem is that older people are much more likely to vote than younger people. Telling those older people they've got to work longer is a sure-fire way to lose an election. They'll argue they've paid in all their lives, so should be entitled to retire at 65. So all major parties will avoid sorting out this problem.

    To me the most practical solution would be to freeze pensions at the current amount, and then give people the option of retiring later. Those who have private pensions could then opt to retire at 65 in comfort, those who can't afford it can choose to work later, in return for a greater pension for each extra year they work.

  • Comment number 16.

    Anticipating a deluge self-righteous, pontificating, critical comment about public sector employees, from those whose pension schemes are contributory, some additional information might give this article a better balance.
    1. I joined the Civil Service (Assistant Governor, HM Prison Service) in 1970: I was told that the pension was non-contributory, but that there was a nominal reduction in salary of 7% to fund the pension scheme. My earnings at the time were probably the lowest, of all employees, in my workplace (uniformed colleagues received overtime: governor grades did not) - and remained so for three years, as there was no salary increase, irrespective of contribution, until one reached the age of 26!
    2. Many, if not most, private sector schemes used a divisor of 1/60 in calculating final salary pensions (so, for example, after 30 years an employee would receive a 50% pension); the Civil Service used a divisor of 1/80. After 27 years, even on a final salary of about £55K, the resulting pension is not high: and many retired operational colleagues have much lower pensions.
    3. My private sector pension in the same industry was contributory, but the outcomes were calculated in sixtieths. After five years, the value will be 35% of that of my public sector pension. It would have taken 15 years, not 27, to accrue the same pension value as the civil service pension.
    4. My public sector pension will be reduced by 2% when I start to draw my old age pension. No-one has ever provided a credible explanation of why such a decision was approved by Parliament - does the value of my work as a prison governor merit a lower pension after I attain that age?
    Readers might like to consider that operational staff in HM Prison Service are charged with managing often difficult behaviours displayed, individually and collectively, by prisoners after conviction and sentence,: usually, they're bloody effective at doing so. When they're not, there is a torrent (often ill-informed and partial) of criticism by those whose understanding of resource management is about as complete as is mine of nuclear physics. Prison staff, most of whom are civil servants, are at least as much in the front line of the "fight" against crime as their operational colleagues in the Police Forces and other law enforcement agencies: sadly their contribution remains (publicly, though HMPS has introduced some laudable internal recognition schemes) unacknowledged. Most cannot (because the minimum age for operational staff used to be 21 years - and many were ex-Forces personnel who joined between the ages of 30-40) hope to work long enough to obtain the maximum 40/80 pensions. Administration staff, whose work supporting their operational colleagues remains critical to their success, are similarly not over-rewarded.... Add to this the perpetual tension between the "mainstream" civil service (office hours specialists, weekends at leisure, no night duty requirements, making decisions about reward structures for people, the complexity and demands of whose work they simply did not understand) and the specialist sub-divisions, and you begin to gain some idea of the complexity of the issues. As always, civil servants - especially the retired ones, who have no voice - are there for kicking by the ill-informed; it's a pity that their contribution to the maintenance of social mechanisms is not perceived to be as essential as that of, for example, employees of the NHS...

  • Comment number 17.

    One Way Street - Highway Robbery with Aggravation

    The Government gives £60 per week if unemployed

    It taxes you 40% (or more) on your income if employed

    It charges £50 or more if you drive in a Bus Lane to turn into Burger King or forget to buy a parking ticket or drive 10 miles faster than the speed limit in the middle of the night where there is roadworks and everyone has knocked off from doing any work.

    The greed culture of disproportionate fines and banking charges for late credit payments etc has been plagiarized by the fools in local and civil government

  • Comment number 18.

    "you don't make the poor richer by making the rich poorer. "
    ___________________________________________________________________________
    "The rich get richer and the poor get poorer" is a catchphrase and proverb, frequently used (with variations in wording) in discussing economic inequality. ...

    and the little that they have will be taken away
    do you hear what I say, you have to Fade Away

  • Comment number 19.

    JOHNNY REGGAE,

    Actually, I'd describe it as a general social attitude that it's o.k. to extort money from people for nothing. That blended with a sense of the world owes me a living, even if I do nothing very much for anyone.

    Seemingly any and everyone is 'fair game' as long as the perpetrators make dosh. It's some sort of variation on Harry Enfield's 'Loadsamoney' character.

    Sadly, in my view, it's screwing down the coffin lid on the UK economy and has killed off the notions of customer services or of delivering customer or service outcomes.

    Seemingly, looking back at recent(ish) history for just one example, it's just fine to pay public servants lots of money out of the public purse (including pension entitlements) to substantially increase the fatality rates at a certain NHS Trust and then pay lots of other highly paid civil servants to come along and discover that the people who were in charge were not delivering the service outcomes, not monitoring their service outcomes and, therefore, not responding to the problems that they seemingly had not even noticed.

    Wouldn't it have been much more efficient just to properly performance manage that Trust's Board Members in the first place? Answer 'yes', but the NHS does not have an organisational culture of accountable performance management (with some exceptions in some places).

    It's not that dissimilar in banking. The huge difference between loan interest rates and deposit interest rates, especially when you factor in all the addtional administrative charges that banks charge for everything (by that I really mean that they charge for doing nothing much).

    Why do people put up with it? Because there is no real choice in the market place. Now if there was say a National Bank (say some sort of Girobank II) which did not penalise its customers for being alive, the traditional banks would lose their customer base.

    But how likely is that to ever happen - given that all brands and types of politicians aren't going to want to upset the globalised banking industries or squeeze them in any way?

  • Comment number 20.

    "As a nuvos member you will pay contributions of 3.5% of your pensionable earnings towards the cost of providing your pension. Your employer will pay between 17.1% and 26.5% depending on your salary."

    "In the stakeholder scheme the Civil Service contributes 10% of earnings for the 36-40 age group and will match up to an extra 3% of employee contributions."

    Where do you find contribution levels like this in the private sector ? especially from an organisation with massive debts and ongoing expenditure way in excess of its income.

    https://www.civilservice.gov.uk/my-civil-service/pensions/index.aspx

  • Comment number 21.

    Everybody who is in employment, public or private, ought to have a decent pension to look forward to at the close of their working life. Rather than seeking to destroy public provision the CBI needs to encourage its membership to do the decent thing by private sector employees, making fair matched contributions so that proper provision is made for everyone in that company. Including, of course, themselves.

    Or do they prefer to regard pension funds as a handy pot of money to raid at their convenience, without regard to their obligations?

  • Comment number 22.

    CBI: 'Public-sector pensions unfair and unaffordable'

    ...as opposed to CEO wages - which of course are fair and affordable....

    Isn't it funny how those in glass houses insist in throwing the biggest stones.

    The CBI are hypocritical and only represent the interests of business - which I might add got us into thie sorry mess by believing that pursuing self interest would be a good thing for the country.

    Never mind - I'm sure they will be sorry when they realise what they have done.

  • Comment number 23.

    Should the CBI be saying this? Since when did they ever have a moral conscience or has the pension deficit in the private sector finally reached the top floor? Isn't it ironic that the CBI are now talking about fairness. Times are definitely changing.

    The deficit in public sector pensions is deemed to be in the region of GBP 800 billion. Some of these schemes require employee contributions, others don't. I expect all schemes, like the remaining private sector final salary schemes where they exist, to be paying out more than they are receiving in. It is said that many recent increases in council tax have been due to the need to sustain the pensions funds of the relevant council.

    This is starting to turn into a rather nasty stew largely due to the competence of the previous Chancellor of the Exchequer who having conducted a tax raid on pension funds, failed to encourage sufficient investment growth through added value, and then created the biggest bubble in the economy for three hundred years which finally popped leaving us all with a national debt more than twice the size he inheritied which he now plans to double yet again in five years!

    I am amazed that anyone wants to be the next Prime Minister as sorting out this mess is going to be a truly dreadful experience. Yes, public sector pensions are an issue of fairness as why should a private sector pensioner be taxed to pay a better pension to a public sector pensioner, but can this conundrum be resolved fairly?

    Not on your Nellie, it aint? It is not going to be a case of winners and losers: it is going to be a case of losers and losers.

  • Comment number 24.

    Robert







    I presume that the same argument goes for the BBC. The real scandal in FS pension schemes is people getting a large pay rise in the last years of their employment leaving a huge black hole to be filled by the employer whether in the public sector or the private.

    The pension costs of senior staff in the BBC far exceed the salary that they earned while in employment.





  • Comment number 25.


    The one who's always acting smart
    And don't carry no love in his heart
    Shall fade away.
    --------------------------------------
    ( Satan Bites The Dust )

  • Comment number 26.

    Can't say that you wouldn't expect a lot of political points scoring today, but i can remember being taught in school in the 70s that the pensions crisis was inevitiable. I also know people who took jobs low paid jobs in the public sector based on the selling point of a good pension in later life.

    IMO Bill has made the most sensible comment. When the pension age of 65 was set only a 1/3rd of people would make this age and if they did it was only likely to be for a couple of years. Today nearly 90% of people make it to retirement age, if your sixty five today and male you have on average another 17.4 years to live, if you are female you have on average another 20.2 years to live. Combine this with the rapidly declining percentage of people working to being retired and you have an inevitable problem no government has ever had the ability to face up to. The retirementage needs to be increased by at least 10 to 15 years

  • Comment number 27.

    Won't be too long until 100% of everyone's council tax is used to pay for bloated local authority pensions. At least then there will be a credible excuse for the bad services provided and imperious arrogance displayed by local authorities. Caledonian Comment

  • Comment number 28.

    Those who eagerly deride the public sector and make out the private sector get a raw deal don't seem to understand the relative trade offs involved in the two sectors.

    Public sector workers get paid a lot less for doing the same job - as a consequence, they justly expect greater job security and a fair pension.

    Private sector workers have the ability to fund their own pension plans with the extra money they make from doing the same work. If they don't do so then that's their buisness.

    This set up ensures that both sectors attract competant workers but with different priorities. Each has its advantages and disadvantages, so there is no obvious choice where a talented individual chooses to earn their living.

    You can't just change the rules half way through the game and demand that public sector workers not only have worse pay, but less job security -and- no pension. And not just because that would be totally unjust on those who joined the public sector upon the understanding that their pension was sorted. It would also leave no incentive whatsoever to join it over the private sector, so all the talent would go there, leaving public services crippled.

    For those who claim that this is the way it should be, that only the dregs should join the public sector, I really hope you don't ever have to go to hospital, or have a child, or file a tax return, or encounter crime, or use a road...

  • Comment number 29.

    With Public Sector salaries (ON AVERAGE) HIGHER than the private sector AND the favourable, (read wreckless) pension terms the public sector is earning disproportionately more overall than their provate sector peers. Add to that the job security early retirement age and cusy 35 hour weeks, public servants really dont realize how good they have it.

    They are so USED to striking and demonstrating at perceived poor terms of employment that they are blinkered to their rather cosy situation!

    For heavens sake we have the NUT going all militant, you know its all going potty when we have mild mannered maths teachers taking to the streets protesting at the very necessary cuts we need to make.

  • Comment number 30.

    @ 19. Sutara
    I guess the buck stops at all the old time team leaders, directors, Chief Executives and Members of Parliament etc at the top who are paid the big money, presumably to be held accountable for adhering to codes of practices and service levels, which are falling and failing far short. A clean sweep of all the power mongers who failed to perform their duties is required. Names of the guilty can easily be provided from their own records.

    Examination Results:
    ( Old Brooms. ✘ ) Grade F = Fail

  • Comment number 31.

    Firstly, whenever the CBI are mentioned, I tend to switch-off - they represent the out-of-touch millionaire excecutives of large companies who are happy to take huge pension payments themselves whilst reducing staff pensions. These fat cats, on average, earn 80 times the salary of their workers.

    Secondly, what is Richard Lambert's motive? Is it to save money or is it push business into the private sector thus inflating share prices?

    People go on about unions, however, over the last 13 years it is businessmen and their representatives that have ruled over Downing Street - unions have been powerless. Now David Cameron is already trying to seeing what he can for the overpaid men's club as they write to newspapers propping-up poor policy. Nothing has changed - we had this with Blair.

    Defined benefit pensions were fair but the greedy bosses chose to invest in their own bonuses rather than a decent retirement for their workers. The private sector should keep defined benefit pensions.

  • Comment number 32.

    This is the ticking time bomb i'm afraid. I was a civil servant (Engineer ex MOD) transferring my DB pension when we were privatised. I've worked from the age of 17 (1985) for the same company, contributing between 5% to 8.5% salary. I know i'm lucky and if i manage to live to 65 I should have a reasonable pension pot. However, I still have 24 years to go and the future doesn't look bright.
    Reading other comments, it's all very well saying "Increase the retirement age to 68, 70, 75..," but where is all this work going to come from? People staying in jobs for longer because they can't afford to retire will only add to the increasing difficulty for younger generations. Add to this all the foreign workers coming to this island competing for ever decreasing job numbers. I have 2 young children, currently aged 8 & 6, and i'm already concerned on what they are going to do. I strongly feel that the next goverment, whatever colour, needs to URGENTLY address this country's deficit & social tension that is rapidly building. In my view there are now 2 classes in this country "The haves" & "The have nots". If 'they' carry on burying their heads in the sand we will see civil unrest in this country on an unprecedented scale.

  • Comment number 33.

    In the boom days of the 80s, private pensions were so attractive that public workers such as the miners and nurses were sold (in many cases mis-sold) private pensions. Has private enterprise done so badly since then that public pensions are now seen as better that private pensions? Since the 80s wealth-creating manufacturing has largely been replaced by wealth-recycling financial services and any surplus wealth created has been siphoning upwards rather than trickling down.

  • Comment number 34.

    I love the stuff about folk signing up for years of low pay followed by early retirement on a comparatively generous pension arrangements in the public sector. A principled decision by public spirited communitarians? Phooey!

    The bulk of long term public sector employment is sadly comprised of the folk who simply wouldn't be employed by a company trying to make a profit, operate efficiently or present a basically courteous face to its customers! The public sector contains plenty of hard-working conscientious people but sadly they are vastly outnumbered by the work-shy, clock-watchers and timeservers in "makework" jobs. The public sector acts as a huge sponge to soak up the people who didn't work hard enough at school. Your local council is the final resting place for people who failed their A Levels, where they can spend the empty years dreaming up ways of penalising and restricting others.

    The country desperately needs more private business, and by this I mean the type that makes things and does things that people want to buy. Real wealth creation rather than the cannibal-capitalism of the financial sector that various politicians and bankers have the nerve to describe as creative and innovative! The political decision to let the financial sector devour the wealth creating side of the economy, replacing it with a bloated public sector was just about the most stupid, politically motivated act in recent history.

    If we earn the money then we can have the pensions. If not then we will just have to get used to making do! All the bellyaching by the principled public servants won't make a jot of difference when the cash runs out. I was never a fan of Margaret Thatcher but she did wisely remark that "the problem with socialism is that eventually you always run out of other people's money!" These remarks are as prescient as ever as a new generation Labour administration runs spectacularly out of cash for want of a little courage and the ability to count!

  • Comment number 35.

    If you go to university (as most young people seem to be expected to nowadays) and retire at 65 you will have worked for 44 years. If you go on to live for another 20 years (as many can expect to) you will have worked for 44 years and been supported for 40 years (20 growing up and 20 retired).

    Expanded out to the scale of the economy, we are expecting each unit of work to support 1.9 units of consumption. Howe many people save 45% of their salary? Very few I bet.

    The only alternative is of course growth, if we invest our spare cash when we are working, economic growth will mean that it expands to cover the missing income.

    Between 1945 and roughly the late 90s this was probably true - we had consistent economic growth, due partly to demographics (the baby boom gave us lots of extra consumers / producers) and partly because the world economic situation was pretty messed up in 1945, and there was a lot of room for improvement by opening up trade barriers, exploiting new technology etc.

    So the 'pensions crisis' didn't hit when life expetency increased (as the previous poster was told in the '70s), and we kidded ourselse that we had avoided it. But it was just delayed. Obviously it hit the private sector first as its easier for companies to go bust than countries, but now its pretty much here for all of us.

    Its just basic maths as I say above, unless you are very lucky its not reasonable to expect to be supported for half your life. It just makes no sense.

  • Comment number 36.

    At 09:35am on 06 Apr 2010, hootsmon wrote:
    What creates wealth? The state or the private sector?
    Interestingly, my Teachers Pension Scheme pension emanates from the State sector - What creates British wealth? ...... diplomates, graduates, postgraduates from British universities and colleges.
    Public sector or private sector? Let's not get too polarised
    ..... but let's all remember which political party stole the pension funds of many, many thousands of British people.

  • Comment number 37.

    Taken from the National Statistics Onlien website (Government stats site)

    "The percentage difference between the median level of full-time earnings in the public sector (£539 per week) and the private sector (£465 per week) widened over the year to April 2009, following annual increases of 3.1 per cent and 1.0 per cent respectively."

    no offense but when the Public Sector are earning 15% MORE than the private sector, Public Servants whinging about low pay and using it to justify cushy pension arrangements is BANANAS!

  • Comment number 38.

    ☏ United Kingdom ✾ Wake Up Call! ✾
    ☞ It's time to wake up and smell the coffee

    ------------------------------------------------
    Lame Excuses used to terminate staff and
    Outsource work to India in Business World
    ------------------------------------------------
    Recessions
    Iraq War (First one)
    9/11
    Afghanistan
    Iraq War (Second one)
    Financial Crisises
    ----------------------------------------------------
    Standard Tricks in the trade of job reductions
    ----------------------------------------------------
    Employ Contractors
    Mergers / Demergers
    Eliminating Depts / Job Roles
    Headcount reductions
    No salary Increases
    No promotions

    ➡ There is no such thing as a Job for life
    ➡ All employees are liabilities not assets
    ➡ Young cheap workers replace old expensive workers
    ➡ Nobody has any rights

  • Comment number 39.

    In addition:

    From straightstatistics website

    "Pensions
    Pension comparisons are tricky, too. A much higher proportion of public sector employees are in defined benefit (DB) schemes, which pay pensions based on years of service and final salary. According to the Institute for Fiscal Studies, 76.5 per cent of public sector employees belong to such schemes, against only 17.0 per cent of private sector employees.

    However, if we compare just DB schemes, the annual accrual of pension rights is worth about 25 per cent of salary for a public sector worker, and around 20 per cent for a private sector worker (Disney, Emmerson and Tetlow, IFS). This means that public sector workers are accruing benefits more quickly than those in private sector DB schemes – the main reason being a lower pension age (60) in most public sector schemes vs 65 in private sector schemes. Putting it simply, a public sector employee in a DB scheme earning £20,000 a year would have a total remuneration package including pension of £25,000 a year: a private sector employee a total package of £24,000 a year.

    We can combine these two factors – greater membership in DB schemes in the public sector, and greater accrual rates – to work out what public sector pensions are worth, on average. IFS did the calculation for its 2008 Budget report and concluded that to compare public sector and private sector pay rates, one must add 12 per cent to public sector pay to account for the better pensions. So that’s the bottom line: public sector pensions are worth another 12 per cent of pay, on average."

    So add an additional 12% to the public sector average wage to account for the more generous pensions, and this 15% gap widens further to 29%

    TWENTY NINE PERCENT

    Sorry but the Public Sector Unions have NOTHING to moan about, the stats dont lie!

    And before people go rubishing them, these are government stats and IFS stats, make of that what you will.

  • Comment number 40.

    having worked in both public service (PS) and the 'private' sector, I do rather dispute the often-made statement that PS workers are paid more than private. On what is the comparison based?

    By PS does the CBI et al mean the Civil Service or Local Government, or what? Even 'Civil Service' isn't a clear definition given the plethora of Quangos, agencies and NDPBs that we have to live in.

    The fact that the PS offers half decent pensions (and to use figures already published - 26% might sound generous until you consider 'of what'). An example; it isn't uncommon for a junior grade PS job to pay £16K - £18K. 26% of that isnt a lot, and it assumes a lifetime working in the same sector in the same job, which is not typical. Why contrast reasonably decent employers' arrangements for pensions to the often less-than-generous private sector?

    PS workers pay their contribution towards the pension 'pot'. They can if they wish pay mor.

    What thought has been given to existing PS workers' circumstances? I would not support a 'sudden death' approach to any reform if it disadvantages anyone in the PS anticipating requirement in the next 5 - 10 years.

    Shouldn't the aim be to improve pensions for all, not snipe at the PS and bring it down to the lowest possible level?

  • Comment number 41.

    Without the prospect of good benefits, why would bother to do work? I want my reward, please, and no work gets done if you try to fiddle me out of it.

  • Comment number 42.

    The hypocrisy of the private sector is bottomless.

    Let's just clarify the situation shall we?

    In the fantasy hubris world the Capitalists created they paid themselves 'kings ransoms' with their paper money built from paper profits.

    Now that it's all gone wrong and they are faced with the cold, hard truth that the people are being expected to pick up the tab they cannot afford - even with all their 'wealth'.

    So it's time to criticise the public sector - for it must have been their pensions which created the giant black hole in the public finances - not their gambles with financial weapons of mass destruction. Their toying with instruments they barely understand - like a child fascinated by the matches he has got hold of.

    How dare the CBI talk about sustainability - when their members have heaavily contributed to the biggest and most unsustainable party in the world - ever!

    Want to know about sustainable - how can BA award their exec's big fat bonuses when the company is creaking due to their mis-management of the workforce?

    I suggest the CBI keep their fat mouths shut - or they will find themselves on the wrong end of the wrath of the public.

  • Comment number 43.

    34. At 11:57am on 06 Apr 2010, Anglophone wrote:

    "The public sector contains plenty of hard-working conscientious people but sadly they are vastly outnumbered by the work-shy, clock-watchers and timeservers in "makework" jobs. The public sector acts as a huge sponge to soak up the people who didn't work hard enough at school. "

    Have you concluded this from personal experience - or is it what you read in the Daily Mail this morning.

    It seems these public sector workers are a damned sight brighter than your private sector employee - I mean they still have their jobs and they still have their rights to keep them.

    ...meanwhile the private sector gave these rights away when they went chasing the 'golden dream' - which most people worked out - could never happen.

    It seems the 'jealousy of Capitalism' is in full effect - oh how the private sector weep at their harsh job losses - and look over enviously at those who still have rights.

    UNLUCKY - you chose your bed - now lie in it and take it like a man.

    P.s. Having worked in both private and public sector I can assure you there are lazy bums in both - the difference being that the lazy bums in the public sector are not as well paid as the lazy bums in the private sector.

  • Comment number 44.

    34. At 11:57am on 06 Apr 2010, Anglophone


    ...and all other Thatcherites.

    "I was never a fan of Margaret Thatcher but she did wisely remark that "the problem with socialism is that eventually you always run out of other people's money!" These remarks are as prescient as ever as a new generation Labour administration runs spectacularly out of cash for want of a little courage and the ability to count!"


    ...but wait a minute - sorry you're trying to re-write history here, because I'm sure that the bailout was a private sector ones

    ...That's the problem with Capitalism, you eventually have to go running to the public to bail you out because you run out of money.

    Don't you get confused living in such a blatant lie?

    At least you've proven Thatcher was wrong all along.

  • Comment number 45.

    The maximum people can earn through the public sector pension is half their annual salary (after 40 years!). For this they've paid in all their lives. In order to make it 'fair' for the CBI - the pensions would need to be cut, amounts increased or pension age raised, all after the employee agreed to join the scheme and paid in under a contract. While I am sure that breaking of these contracts matters not to hard pressed private sector millionaires, I do wonder why it is seen as fine to break a contract in this way.
    I'm also amazed at the swiftness at how public sector workers are seen as the cause of our problems - rather than HMG choosing to rescue private sector businesses that didn't want to play by the rules of the market and go bust. Why do right w(h)ingers alway suspect that nil tax and fewer bureaucrats will lead to a society that is not simply worse than what we have now? Do you image that massive redundancies will lead to a explosion of small businesses being started? or that none will need to reflect on the point of 'living by the rules' or that criminals will march themselves to court and lock themselves up!
    Rather than continuing making the poor poorer - may I suggest an alternative? Since we've stopped making anything to trade abroad, I think the best way to solve our financial difficulties, we should reduce Corporation Tax and tax all revenue. Then we make PAYE the only allowable deduction from revenue allowed for corporation tax. This way would encourage employment in the UK and make a corporation's head office nearly irrelevant (should they choose to leave - patriotically). The beauty of this way would specifically target high profit-low pay companies that for lengthy reasons are no longer under competitive pressure.

  • Comment number 46.

    So private pensions from your company are a waste of your money then! Best get a job with the council 'cos if you don't you can either freeze or starve when you are old. Unless of course, you are the boss of the private company!

  • Comment number 47.

    #35 MisterGC

    Personally agree with a lot of your analysis. The point i was making (or at least trying to make) was the inevitability of the pensions crisis coming was known of in the seventies, I was not trying to imply that it had been reached in the 70s and certainly not trying to imply that anything fundamental was done to address the problem.

  • Comment number 48.

    #28 I hate to break the news to you but on average the public sector is now better paid for comparable job (CEO being the obvious exception)than the private sector.

    I have no problems with public sector workers getting decent pensions. The issue is who is paying for them. As the private sector has worked out final salary schemes (at least under current rules) are totally unaffordable. I could blame Gordon Brown for that but the truth is that all he did was accelerate the inevitable demise of the final salary scheme. They would have disappeared within 50 years, he made sure they disappeared within 15 years.

    Public sector workers should be on money purchase schemes with govt making an employer contribution probably comparable to what a decent private sector employer would make. If the public sector then want better pensions they will have to pay for it themselves by not getting pay rises for a while.

    That way the public sector and private sector are the same. At the moment the public sector gets a much better deal than we do.

    #33 I agree with you that many public sector workers were mis-sold private pensions. However, there is a related story. For the last few years all pension providers and govt have encouraged most people to contract back into the state SERPS (I think that is what it is called). Alledgedly most people will be better off - but what the govt and pension providers do not tell you is that is only true for as long as govt does not change the rules. I long ago decided that such a risk was not worth running and decided to contract out on the principle that at least then the money was in my funds hands not the govts.

  • Comment number 49.

    The CBI are bound to make such claims about the public service defined benefit scheme. The CBI is about profit and money, not people, and has overseen the decline of such schemes in the private sector. The fact that people might suffer doesn't concern them. Final salary schemes might seem expensive but why on earth aren't contributions adjusted? Because private sector retirees are encumbered with inferior and rather dodgy schemes is not a case for telling public sector workers that they, too, must suffer these woes.

    Simply, a cap on the maximum would be enough, rising in line with inflation. Let's say £30,000. If that isn't going to be enough those concerned can take out a money bought scheme with British Casinos plc.

  • Comment number 50.

    12. At 09:39am on 06 Apr 2010, openyoureyes

    I don't understand. We can have people on the dole being humiliated or we can employ them to provide services. Now the government wouldn't have been employing so many people if the private sector was a competitive employer, hiring people and using the skills the people had... can'y help think something has gone a bit wonkey and the goverment stepped in to create jobs that are far better than creating the tented cities now appearing across the US.

    Employers really dont want us, not unless we work 16 hours a day for ten bob and a bag of vegetables every month, live in shacks with no running water or electricity, that, unfortunately, is what they really mean wheyn they say wage costs are too high.

  • Comment number 51.

    28. At 10:58am on 06 Apr 2010, Laenis wrote:
    "Those who eagerly deride the public sector and make out the private sector get a raw deal don't seem to understand the relative trade offs involved in the two sectors.

    Public sector workers get paid a lot less for doing the same job - as a consequence, they justly expect greater job security and a fair pension."

    This is simply not true anymore. There are reams and reams of useless people in the public sector earning 50k plus. These workers would simply be unable to command that kind of salary in the private sector, because nobody there is interested in someone who organises meetings and ticks boxes for a living.

  • Comment number 52.

    32. At 11:32am on 06 Apr 2010, ConcernedFather wrote:
    Reading other comments, it's all very well saying "Increase the retirement age to 68, 70, 75..," but where is all this work going to come from? "

    This is an excellent point, and rarely raised in these debates. Let's also not forget the ageist attitudes we have in this country and it's hard to see where the jobs for these veteren workers are going to come from.

  • Comment number 53.

    @28 in recent years the public sector has matched if not exceeded private sector pay. Add to that the average length of contract in the private sector being around 2 years increasing the risk that there will be preiods of no income and the increasing tendancy for individuals in the private sector to be self employed, guaranteeing lean periods and long hour and I really dont think that arguement washes any more.

    In my experience my counterparts in local authorities are expected to manage 2 or 3 medium size projects for a better wage, holidays and pension package than I get. where as I am expected to be on call 24/7, manage up to 25 projects and sort out my own pension.

  • Comment number 54.

    I don't know where all these "highly paid" public sector employees are actually working. It's not in local government that's for sure!

    Council employees haven't had a pay rise that has matched the prevailing rate of inflation at the time for years. It's normally at least 0.5% BELOW and that was during the "good times" just gone!

    This year's pay rise is 0% and councils across the country are making "efficiency savings" (aka sacking people) so to say we aren't sharing the pain of the recession is wrong.

    Yes, we have a decent pension but contribute 6.7% of our salary towards it (as opposed to 3% in a typical employer run private pension). And it's part of the terms & conditions package we signed up to when taking the job.

    If we are expected to accept the "going rate" for our pensions shouldn't this also apply to our basic salary as well? For many professional council employees such as accountants, chartered engineers, architects and legal staff etc. the difference between a regulated council basic salary and "going rate" in the private sector is easily five grand or more

  • Comment number 55.

    # 36. At 12:03pm on 06 Apr 2010, GeoffWard wrote:
    > At 09:35am on 06 Apr 2010, hootsmon wrote:
    > What creates wealth? The state or the private sector?

    Small communities in the Amazon, the far north and some parts of
    Africa exist without any functional state. And, if you look at societies
    without a state, they are very poor indeed. The private sector needs
    libraries, medicine, education, public order, irrigation,
    roads, public health and defence etc.

  • Comment number 56.

    "So it's time to criticise the public sector - for it must have been their pensions which created the giant black hole in the public finances - not their gambles with financial weapons of mass destruction."

    Oh dear - looks like somebody doesn't understand what actually happened in the credit crisis. Everyone has to take a share of the blame - you, me, the bankers, the govt. If the public weren't so greedy it would never have happened.

    In any case - this is irrelevant to this discussion. The public sector cannot have their unfunded pensions. The money isn't there. And when the pot is empty frankly your opinion will be worthless in any case. Sorry mate - the money is gone - no more final salary for you.

  • Comment number 57.

    "...That's the problem with Capitalism, you eventually have to go running to the public to bail you out because you run out of money."

    Hahahahaha - yes - the good old public sector will generate the wealth to bail out the private sector. Have you any idea how ludicrous your statement is if you think about it logically?

  • Comment number 58.

    "Why do right w(h)ingers alway suspect that nil tax and fewer bureaucrats will lead to a society that is not simply worse than what we have now? Do you image that massive redundancies will lead to a explosion of small businesses being started?"

    Nobody notices when the public sector go on strike. Thus it stands to reason nobody will notice when we fire a huge chunk of them. Thus we will be in the same spot as now, but saving a huge chunk of money. Cheaper to pay them benefits I'm afraid.

  • Comment number 59.

    Wake up!
    Can nobody see that we are about to be offered a new range of super investments?
    Proper pensions. And boy they will cost. Big time. But you know it makes sense. Yeah right.
    Divest your investments. That way everyone can steal a share in your hard earned wealth.

  • Comment number 60.

    "1. At 08:44am on 06 Apr 2010, lions after slumber wrote:
    We should not be looking at how to trash public sector pensions, but on how to get private sector employers to provide decent final salary pensions."

    I agree completely with this. I've lived in Canada and Australia. Both of those countries have pensions for all, not just for those who opt in or are lucky enough to be in a profession with a dedicated pension scheme.

    In Canada there is a state-run pension to which ALL employers must contribute on behalf of their employees, through wage deductions. The amounts taken are not huge, but they at least represent a contribution to post-retirement care and well-being.

    In Australia, employers contribute to registered superannuation schemes on behalf of their employees (for example, there is one for state government, one for retail workers, etc...heck, there's even one for postgraduate students!). These schemes are very flexible and transparent, with a range of investment options, full disclosure of annual performance, and personalised annual statements indicating and gains and/or losses, and any fees deducted.

    Individuals can make additional contributions to their scheme if they wish, and all monies are transferrable among schemes, so if you change jobs or want to move your money to an independent scheme, you are free to do so, often without penalties.

    Contrast this with the situation in the UK. I have paid into several pension schemes since coming here, but if I ask how much I have contributed, what my current balances are, or whether I can move money around, I am met with a wall of silence.

    One place I worked for clearly listed a pension contribution on my payslips, and then when I moved to a new job and wanted to ask about these contributions, they denied any knowledge of my having paid in! They claimed that because I wasn't (at the time) a UK permanent resident, I could not have made contributions - what a joke! It was only when I threatened to get a solicitor involved that they admitted I'd put money into the organisation's pension pot. "So sorry for the misunderstanding.....". Right, yeah.

    Employers and pension schemes in this country need to take lessons from other civilised nations, and be more comprehensive, open, and accountable when it comes to pensions. Then maybe we'll finally see some measure of improvement in the well-being of retirees in the UK.

  • Comment number 61.

    51. At 12:56pm on 06 Apr 2010, U14342801 wrote:

    "This is simply not true anymore. There are reams and reams of useless people in the public sector earning 50k plus. These workers would simply be unable to command that kind of salary in the private sector, because nobody there is interested in someone who organises meetings and ticks boxes for a living."

    That's odd - because the private sector is full of them

    So now we're on wage comparison - would you enlighten us as to how Sir Fred Goodwin commanded such a great salary considering the consequences of his 'leadership'?

    At least in the public sector he would have been forced out - not paid off like he was in the private one.

    Maybe Ed Balls needed to do an 'amendment' to the FSA inspection so that he would be denied his payoff.....or is that something only considered for the public sector workforce?

  • Comment number 62.

    Q. Is it time to nationalise bankrupted British companies like the Banks and Flagship Corporations such as British Airways, Royal Mail, British Rail

    A. Only if the government and their networks can do a better job providing value for money - which can not be that impossible to beat such low standards of services

    ____________________________________________________________________________
    As an additional point Local Councils need to do a whole lot more more than collecting Council Tax in order to invest into their pension funds with dodgy icelandic banks, etc

  • Comment number 63.

    53. At 1:00pm on 06 Apr 2010, jan

    So the private sector took you for every last ounce of blood. No wonder there is so much illness and stress in the UK, something else the CBI will probably whinge about as well!

  • Comment number 64.

    50. At 12:56pm on 06 Apr 2010, copperDolomite wrote:

    "Employers really dont want us, not unless we work 16 hours a day for ten bob and a bag of vegetables every month, live in shacks with no running water or electricity, that, unfortunately, is what they really mean wheyn they say wage costs are too high."

    Ah ha - and here we have it - the ultimate contradiction.

    Free market definition - where exchanges are made without duress or intimidation, where a free and fair exchange of values is agreed by two parties.

    However when the 'exchange' is between labour and the employer - and the labour does not wish to work for the employers offer - suddenly all the free market overlords forget how the system works.

    Currently we are witnessing the BA staff, the Rail staff, the Royal Mail staff and the Civil servants all expressing they do not wish to engage in such a deal.

    ...but the cries from the private sector are "this isn't fair" - well I seem to recall that "Capitalism isn't fair" - and they're all going to find out the hard way.

    Such a shame - the Free Market monkeys really believed everything they were told

    I got over discovering Santa Clause isn't real - I'm sure they will get over the fact that the Free market isn't a one way bully street for employers backed by the legislator.

  • Comment number 65.

    53. At 1:00pm on 06 Apr 2010, jan wrote:

    "In my experience my counterparts in local authorities are expected to manage 2 or 3 medium size projects for a better wage, holidays and pension package than I get. where as I am expected to be on call 24/7, manage up to 25 projects and sort out my own pension."

    ...well then who's made the bad career move there then? - why should the public sector be responsible for your failure to select the right career for you?

    If you chase the 'golden paper dream' - you must prepare for disappointment.

  • Comment number 66.

    56. At 1:06pm on 06 Apr 2010, U14342801 wrote:

    "Oh dear - looks like somebody doesn't understand what actually happened in the credit crisis. Everyone has to take a share of the blame - you, me, the bankers, the govt. If the public weren't so greedy it would never have happened."

    Oh I certainly do understand exactly what happened - however you are assuming that the 'credit crisis' is a new thing - which demonstrates your lack of understanding of our Ecopnomic woes.

    Had you read Das Kapital you would know that debt has the function of subsidising the declining wages of the worker in a Capitalist economy - as a result of the tendency of profit to diminish (Ricardo, Adam Smith - not me or Marx) and that this merely obscures the contradition - not removes it.

    As a result there is eventually a realisation that the worker (who is also the consumer) can no longer afford all the goods and services produced and provided by the private sector - overproduction results and we get a massive asset devaluation. This occurs at a time when huge debts are held by the consumer (depending on how long they have been subsidising their wages for)

    Eventually the Governments come to the rescue by devaluing the currency - which is like a tax rise most people cannot see. However on this occassion the problem is a fall in worldwide demand (and not just domestic demand) which means devaluation is a road to nowhere - the edge of a cliff - with the UK, US and parts of the EU all with their foot to the floor (of the printing press) trying to get there first. Meanwhile China is already there...ready and waiting to dump all the debt it's built up from the west.

    ...now what bit about the credit crunch don't I understand? - I presume you have a similar explanation which begins with "Gordon Brown messed up the Economy..." - forgetting there was an Economic history before GB became chancellor - and of course that he followed the guiding principle of 'light regulation' promoted by the Tories under Thacther.

    I can't wait for your response.....I'm all ears...it's always good to hear a good tale from the land of fantasy...

  • Comment number 67.

    It's time to bite the bullet, even if it means strikes and some disruption to services. The system is no longer fair resulting in too high a burden on tax payers many of whom do not have the luxury on high, inflation-proof pensions.

  • Comment number 68.

    57. At 1:08pm on 06 Apr 2010, U14342801 wrote:

    "Hahahahaha - yes - the good old public sector will generate the wealth to bail out the private sector. Have you any idea how ludicrous your statement is if you think about it logically?"

    ....only as ludicrous as the Capitalist supporter who claims 'we can all be rich' through the boom times and then claims "we're all in this together" when their gambles fail.

    If you want to talk about logic - Dialectical Materialism is full of logic.

    Until that point, maybe you need to check that the public sector does generate wealth - but that you are clearly confusing this with 'money'.

  • Comment number 69.

    58. At 1:10pm on 06 Apr 2010, U14342801 wrote:

    "Nobody notices when the public sector go on strike."

    What you mean is only those who understand what the public sector is providing notice when it goes on strike - you won't notice until the bin hasn't been emptied for a month and the roads are full of potholes.

    "Thus it stands to reason nobody will notice when we fire a huge chunk of them. Thus we will be in the same spot as now, but saving a huge chunk of money. Cheaper to pay them benefits I'm afraid."

    I wish you were in charge - I'd love to see you fire all the public sector and then scramble around as you quickly realise what they all did for the country. That would be hillarious.

  • Comment number 70.

    Ah writingsonthewall

    "P.s. Having worked in both private and public sector I can assure you there are lazy bums in both - the difference being that the lazy bums in the public sector are not as well paid as the lazy bums in the private sector."

    Hmmmm...in my experience you do get lazy bums in both sectors. The crucial difference is that the one's in the private sector are either out of the door or languish in lowly functionary roles for all eternity. Those in the public sector rise inexorably through the system of committees and "dead man's shoes"...sorry let's not be perjorative..."non-living, gender non-specific individuals personal choice of footwear"...until they are in a position to be a lazy bum in a senior position where they can do real damage...such as the incompetent administration of social work or delivering hospitals that would have disgraced the Crimean War to name a couple of recent examples. Maybe you haven't worked at a senior enough level to see the difference?

    I know that many public servants are admirable people doing a genuinely socially useful job and that there are a miasma of parasites floating around the "private sector". The problem is that for every socially useless derivatives trader out there, there are a dozen social-inclusivity outreach co-ordinator types fretting over useless and expensive initiatives or building a huge correspondence file over someone's planned conservatory. Without a robust private sector making money and paying taxes there is nothing but a long spiral downwards in prospect. The people on these threads who believe that the can survive by basing the economy on a "world class public sector" are simply demonstrating the chronic innumeracy that afflicts these debates...and indeed the very reason they find themselves working in the public sector.

    Your comments on the "private sector bailout" is true...although the public finances were already heading South at some speed before September 2008. Again, not intending to suggest that I was an uncritical admirer of the Iron Lady but I think that she would not have poured public money into propping up the likes of Northern Rock or forcing a shotgun wedding between HBOS and the otherwise prudent Lloyds in order to win a Scottish byelection. She would have let nature take its course and to Hell with the consequences.

    I this sense the biggest political problem that we face at the moment is the absence of anyone tough enough to stand up to vested interests on either side of the equation. Political parties are now obsessed above all else in not being perceived as "nasty"! A pathetic and degrading ambition to anyone who aspires to lead...you just end up with David Brent as Prime Minister!

  • Comment number 71.

    Seem to be many public sector posters today vehemently defending the status quo without any real hard facts to back up their position. Just conjecture on what they THINK salary levels are like. Sorry but the comparisons have been done and in the cold light of day there is now a reverse salary gap with public sector employees getting paid more than their private sector counterparts. Why do you lot live in denial? Wake up and smell the coffee.

    you cannot use a 20 yer old out of date point of contention in todays world where your alleged facts simply dont hold any truth whatsoever.

    Anyone argiuing that ANY public servant DESERVES to retire 5 years earlier than someone in the private sector is smoking some sort of funky junk!

    Lets just raise the retirement age ACROSS THE BOARD to 70, close ALL final salary pensions in the public sector and up the contributions required for all.

    A slice of nothing is still nothing, one way or the other the money will dry up. It will cease to be a discussion point and simply be foisted on you lot, when i dont know, but us private taxpayers will get very sick and tired of ever increasing taxes to pay for cushy retirement packages for the public sector.

    Come into the real world, here we work 48 hours a week, we often get PAY CUTS let alone below inflation rises, we routinely get redundencies and we have piss poor pension provisions.

    now I dont blame you guys for getting used to your nice packages, who turns down a free lunch? but when the writings on the wall (pun intended) its time to face reality.

  • Comment number 72.

    61. At 1:24pm on 06 Apr 2010, writingsonthewall wrote:

    "So now we're on wage comparison - would you enlighten us as to how Sir Fred Goodwin commanded such a great salary considering the consequences of his 'leadership'?"

    Your point is patently ludicrous. We are talking about comparing the average joes, rather than the big dogs. Shall we bring entrepreneurs suc as Richard Branson into the mix - that would be as about as usful comparison as you are proposing.

  • Comment number 73.

    I am a member of the Local Government pension scheme which I had no choice in joining back in the 80's it was part of my terms and conditions of employment when I started.

    The conditions of the scheme were that for paying 6% into the scheme I would get a 1/80th for every year and a lump sum based on 3/80ths of my final salary. Those benefits have since been reassessed and are now based on 60ths with no guaranteed lump sum however so have the contributions I now pay on a sliding scale dependent on my earnings... currently 6.9% my employer also contributes as part of my renumeration package.

    I do not get the benefits for free I do actually contribute to the Pension and still pay NI as well.

    Instead of the CBI lambasting the government on the pensions provision in the public sector it should be urging the government to put in place measures to promote acceptable pension arangements in the private sector
    and to those who would whip up petty jealousy you can always apply for a job in the public sector if it is that good

  • Comment number 74.

    65. At 1:32pm on 06 Apr 2010, writingsonthewall wrote:
    53. At 1:00pm on 06 Apr 2010, jan wrote:

    "In my experience my counterparts in local authorities are expected to manage 2 or 3 medium size projects for a better wage, holidays and pension package than I get. where as I am expected to be on call 24/7, manage up to 25 projects and sort out my own pension."

    "...well then who's made the bad career move there then? - why should the public sector be responsible for your failure to select the right career for you?"

    So you are saying we should strive to work in an environment where we will be under challenged and be a drain on the economy? Perhaps some of us want to be challenged and see what we can do, rather than clockwatch. Sorry - forgot I was talking to a public sector enthusiast.

    I sense a lot of bitterness from you, possibly because you feel your job will be under threat next year?

  • Comment number 75.

    Eida, akikoa, dokeo.

    Watching and listening to these rich men plotting ways to take away mostly small pension benefits from lowly paid Public Sector workers is quite depressing.

    These men at the CBI, would brook no amendment to their employment contracts and grossly large pensions if they were in discussion.

    The reality is that the Disciples of the Free Market are embarrassed by the abject and total failure of the Private Pensions system.

    A failure brought on due to mismanagement, corruption, grossly large commissions and of course the collapse in share prices of Public corporations, significantly owned by Pension Funds.

    But when the Managers of Pension Funds do not properly take care of their Charges then the Private sector will fail.

    The Financial Markets and their operators are too obsessed with trying to work out new short term commission generating opportunities than to give good value to their clients.

    These rich Acolytes of greed, wish to reduce all benefits and expectations receivable by british working people.

    Perhaps I should have started with Latin,

    Conspectum, exceptum, contemptum !

  • Comment number 76.

    What else did anyone expect when Uk interests were sold out to American Companies and Industries such as Banking, Supermarkets, Retails, Properties, Credit and Finance Companies

    Is it surprising that employees are terminated for cheaper costs abroad

    Is it surprising that departments and costs are ruthlessly cut and relocation of business centres to cheaper towns are performed, with several people lost in the shuffle

    Is it surprising that companies and people are only interested in making money and force families out of their homes

    Is it surprising that whole communities are neglected and exploited, as on organised strategy

    Guess T Blair was the biggest self interest greedy and vain suck up artist of them all..

  • Comment number 77.

    "Had you read Das Kapital you would know that debt has the function of subsidising the declining wages of the worker in a Capitalist economy - as a result of the tendency of profit to diminish (Ricardo, Adam Smith - not me or Marx) and that this merely obscures the contradition - not removes it.

    As a result there is eventually a realisation that the worker (who is also the consumer) can no longer afford all the goods and services produced and provided by the private sector - overproduction results and we get a massive asset devaluation. This occurs at a time when huge debts are held by the consumer (depending on how long they have been subsidising their wages for)

    Eventually the Governments come to the rescue by devaluing the currency - which is like a tax rise most people cannot see. However on this occassion the problem is a fall in worldwide demand (and not just domestic demand) which means devaluation is a road to nowhere - the edge of a cliff - with the UK, US and parts of the EU all with their foot to the floor (of the printing press) trying to get there first. Meanwhile China is already there...ready and waiting to dump all the debt it's built up from the west."

    If you are offering the above as an explanation of the credit crisis, I don't really think this discussion is going to go anywhere. I'll humour you though - let's just assume the above hold water. At which point is it COMPULSORY for the consumer to take on credit? If the wages of the workers are truely diminishing as you say, at which point is it COMPULSORY that they take credit to fund a second holiday, a new car, a plasma TV?

  • Comment number 78.

    "Until that point, maybe you need to check that the public sector does generate wealth - but that you are clearly confusing this with 'money'."

    Utter nonsence. The public sector FACILITATES wealth creation. As such it should serve it's function and no more - it should never be as Labour use it - a function to reduce the effect of a recession (i.e. by creating useless jobs)

  • Comment number 79.

    Wouldn't it be better not to allow any tax to be applied towards the payment of anyone's pension at all? If employees of the the public sector had to do what everyone else has to do in providing for their own pensions we should see lower taxes and a capitalisation of the market and the economy resulting in more jobs.

  • Comment number 80.

    "I wish you were in charge - I'd love to see you fire all the public sector and then scramble around as you quickly realise what they all did for the country. That would be hillarious."

    If this is true, please explain something to me. 250,000 public sector workers went on strike about a month ago. Nobody noticed. NOBODY. In fact most people didn't realise it had happened. What does this suggest to you?

  • Comment number 81.

    The first post was about right; the real scandal is the pensions paid to the higher earners in the private sector.

  • Comment number 82.

    69. writingsonthewall
    ------------------------
    You could say the Country is not run by any Government, it is run good or bad by public servants

  • Comment number 83.

    69. At 1:53pm on 06 Apr 2010, writingsonthewall wrote:

    I wish you were in charge - I'd love to see you fire all the public sector and then scramble around as you quickly realise what they all did for the country. That would be hillarious.
    "

    Hmm.
    I dont think it would take as long as a month to notice. You need a crime report number from the police to claim the insurance on the expensive though trashed city bank properties. The phone would ring, and ring.... 'cos they've all had their p45s and gone off on a demo!

  • Comment number 84.

    9. hootsmon wrote:

    "4. John from Hendon.
    What creates wealth? The state or the private sector. If there is no wealth, the poor do not get richer. And btw, you don't make the poor richer by making the rich poorer. Even Lenin saw that a flat wage did not work. Gordy's tax raid on Dividends for pension funds didn't help. 1m extra Government workers on defined benefit pension schemes funded by the private sector tax take has turned the UK into one big Ponzi Scheme.
    Why should I work to 68 to fund someone to retire at 60? Oh yes, it's the new Labour definition of 'fairness'. "

    I don't disagree with anything that you wrote - however as we are all about to suffer the worst recession for 350 years, courtesy of the Bank of England I do see that the rich will need to moderate their attacks on the poor for the sake of what social cohesion there is left, and as part of this, like the Church of England said recently, there should be a maximum acceptable multiple of income differential between rich and poor. Infinite expectations by the rich are simply unacceptable, for those that wish to remain in Britain, and remain British subjects.

  • Comment number 85.

    "Instead of the CBI lambasting the government on the pensions provision in the public sector it should be urging the government to put in place measures to promote acceptable pension arangements in the private sector"

    Unfortunately Gordon Brown taxed our pensions to death (and continues to do so). If this could be reversed it would be a start. However, the massive damage this man has done cannot be understated :(

  • Comment number 86.

    71. At 1:57pm on 06 Apr 2010, Anand

    Sorry, but I don't want a bunch of creakey 70-year-old police or firement coming to rescue me if I every get in trouble. Nope, not even an ambulance technician who has hands so riddled with arthritis that he can't quite manage to lift up the patient on his stretcher. Don't quite fance the 669-year-old copper chasing after a granny-mugger, do you?

  • Comment number 87.

    "and to those who would whip up petty jealousy you can always apply for a job in the public sector if it is that good "

    It's not jealousy that drives people mad. It's the injustice that our tax money pays for it, when Brown has destroyed our own pensions. It's a double hit, as my council tax has gone through the roof with no discernible increase in service. I assume my extra tax just goes into your bottomless pension black hole.

  • Comment number 88.

    Hello, Robert, At last, a well thought out, reasoned, balanced debate is taking place
    about this important question. This is happening here in these response pages of your
    blog. Well away from Parliament, who won't discuss it, and the tabliods, where the
    editorials lost touch with reality some time ago and where their vitriol has been re-
    directed onto a group containing some of the lowest paid from the bankers who
    are not only the highest paid but the best 'connected'. The points I would have made
    have already been made, suffice to say that whatever emerges as a solution the
    lowest earners should not be the ones who lose out. Regards, etc.

  • Comment number 89.

    One of the Labour government's better initiatives was Stakeholder pensions, which have transformed the pensions industry. A majority of private sector pension schemes are now based on Stakeholder principles.

    One of the Labour government's failings is that it has not insisted on public sector employers replacing their existing pension schemes with Stakeholder schemes.

  • Comment number 90.

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

  • Comment number 91.

    Freedom? you're asking me about Freedom. I'll be honest with you, i know more about what freedom isn't. Because I've never been Free. I can only share with you my vision. Don't ask me about what Freedom is because I don't know what it is.

    The way I see it, Freedom is the right to grow, the right to blossum, the right to be yourself, to do what you want to do

  • Comment number 92.

    Politicians make fiat currency promises now to steal from the future the wealth that may never be generated due to a shift in the balance of economic power to the east.

    They peddle their competitive delusions within the political market place that support the unspoken lie that debts/liabilities will somehow be honoured in real terms without the requisite due diligence.

  • Comment number 93.

    Post 28 wrote re public sector pensions.

    "You can't just change the rules half way through the game and demand that public sector workers not only have worse pay, but less job security -and- no pension. And not just because that would be totally unjust on those who joined the public sector upon the understanding that their pension was sorted. It would also leave no incentive whatsoever to join it over the private sector, so all the talent would go there, leaving public services crippled."

    The problem is simple Gordon Brown did exactly this to the private sector pensions in 1997.

    https://news.bbc.co.uk/1/hi/uk_politics/5099428.stm

    People in the private sector had them rules changed. If it is fair to change the rukes for the private sector why is it unfair to change the rules for the public sector?


  • Comment number 94.

    Post 91.

    "Man is born free yet everywhere he is in chains". Rousseau.

    I would suggest it as a good read for anyone interested in politics.

  • Comment number 95.

    84. J F H. The 'rich' are not 'attacking' the poor. The CBI are pointing out that the Public sector pension bubble is unaffordable. The private sector has been shaping up to this for the last 10 years. Mortality rates down, defined liability up.
    The rich are an insignificant minority, get over it. The ability to become rich does at least allow people to aspire, though admittedly, the body (cod) politics here damn you if you have the audacity to achieve.

    I cannot believe WOTW's is real. It must be a polemic, but even then it's too obvious. The nonsense he writes sounds like some spouting 13 year old in a Che Guevara T shirt.

  • Comment number 96.

    My brother paid in to a private company pension, he was prudent he put aside cash for his retirement.Within 5yrs of retiring the scheme folded and he lost everything he was in tears.
    On the other hand you have the public sector which pays good pensions but generally the wages are a lot lower.I would like to see the state run ALL pension schemes, take employers out of it period. Its too risky and easy for them to get the fingers in the till.
    Companies are bought and sold for the pension surplus, the funds raided and the company is then sold on leaving the workers robbed of there savings.
    Lets face it who is going to trust any financial advisor after last year?

  • Comment number 97.

    writingsonthewall,

    The roads ARE full of potholes - around my neck of the woods anyhow.

    (O.K. the bins did get emptied this week).

    The road will probably not get repaired soon because of the cost of repairing them - allegedly.

    Or perhaps it's that the Council, or other authority, can't afford to repair the roads because of its financial commitments to its staff in terms of wages above the market (private sector) rate and the rather nice pension arrangement basically funded on the never-never.

    And how did this all come to pass? Well perhaps if some of the Council, and other authority, 'managers' had been better performance managed by their political masters, or perhaps by Central Government ....

    The fact is the public sector pension thing is a mess which was easily predictable many years ago and which should have been put right many years ago, but it was not politically expedient to do so.

    It's generally funded out of current year budgets and not from the budgets of the years that the people earned their entitlement to it in. So Councils' staffing budgets are always funding the cost of its pensioners. These are basically completely 'non-productive' costs in terms of the organisation.

    Fine in boom times - just as long as the boom continues for all eternity.

    In recession it's unsustainable.

    But then this is only one type of contract / financial commitment that public servants signed into during boom times which now look less than feasible - the wonderful NHS IT system has set the public purse back a few bob too to name just one example.

    Answer is really better calibre and better performance-managed public servants.

    Much as we now generally recognise the need for better calibre and better regulated bankers.

  • Comment number 98.

    WOTW - welcome back from the Easter holidays, we have missed you ever amusing posts. I particularly liked

    "What you mean is only those who understand what the public sector is providing notice when it goes on strike - you won't notice until the bin hasn't been emptied for a month and the roads are full of potholes."

    As my road is already full of potholes and the rubbish only gets collected once a fortnight you are right I will not notice.

    I recently looked up some govt stats on employment.

    72% of the working population is actually in work (the rest is at university, not working or claiming benefits)

    22% of the working population is in the public sector.

    That means 50% of the working population is in the private sector producing wealth for the other 50% of the working population and all the none working population to spend. Broadly it means every person in the private sector has to support not only him/herself but also 2-3 other people. Now that was doable when the entire country worked on the basis of a family of 2 adults and 2 kids where only the man worked. That model broke down 40 years ago but our spending habits have not caught up.

    No one is suggesting that the public sector all be sacked. But equally no one is prepared to face up to the level of cuts required. My view is that public sector spending is 15-20% too high. As 70% of public sector spending is wages that means that the public sector needs to cut its wage bill 10-14%. In the private sector most companies did that by simply offering staff a choice, redundancy or a 10% wage cut across the board. Harsh but that is the reality in the private sector. I do nt see the public sector here being given that choice (unlike Ireland which at least has had the guts to implement the necessary changes).


    Going back to public sector pensions I think the simplest solution going forward is for the public sector to go onto a money purchase scheme where the contributions of the employee are matched by the govt. If that is coupled with say a minimum contribution of 6% by employee, then it is broadly comparable to a decent private sector employer and over 30 years would provide a reasonable pension pot. What is unaffordable is for employee contributions of say 6% to be matched by govt contributions of 15%

  • Comment number 99.

    There is a tendancy for many to quote the best public sector pensions, the truth is that there are many Public Sector schemes the vast majority of which are contributory schemes, whilst many allow for early retirement it is usually on a reduced pension (calculated so the mean pension bill is constant) and in many cases only before 55/60 (scheme dependant) when you can prove you are incapable of working.
    If we use the same trick and compare ordainary public pensions with the best private pensions then we can compare with the likes of Fred Goodwin and other bankers, who having taken his institution to the point of bankruptcy, retired at 50 with £342,500 & 2.7m lump sum and I know more ordainary people in the private sector who have retired with pensions on a par with the salary of lower paid public sector workers.
    I would hope most people would want to see all retired people on a decent (but not extravagent) income. The question is, with an aging population and a huge variety of pension schemes how do we achieve this.
    Personally If I retired at 65 with my 20 year Public sector pension as my only income I might be able to pay heating and council tax bills but wouldn't be able to afford food or anything else.

    On the matter of Public Sector workers being scroungers and the only income generators being the private sector, I would point out that using the same arguemnt the majority in the private sector are also scroungers as their goods and services are paid for using recycled money already in the economy. The only true income generators (in that philosophy)are those who bring new money into the economy by selling their goods and services abroad.




  • Comment number 100.

    What a joke the CBI is. They cannot afford National insurance, the minimum wage, training, pensions, pay rises, less overtime, new machinery, complying with modern environmental standards, or anything else that makes life better.

    They are also refusing to make stuff here and would rather import it. Their lack of vision and inspiration has created the balance of payments crisis which is wrecking the country, and now they are trying to blame it on the police, the NHS, the schools and the refuse collectors. They are playing a political game to whip up petty jealousies to justify the next government giving them even more of the state owned industries. They will then allow those industries fall into foreign hands, like they did with the Utilities.

    The government, any government, should shake the CBI out of it's pompous lethargy and get them to concentrate on investing in innovation, replacing imports and selling exports, and stop playing Tory politics.

 

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