Pensions

[saffstar]

Does anyone else out there grasp the fact that occupational pensions and state pensions are different things and that, if the state pension age is increased to 67, public sector workers won't be able to claim theirs until 67, exactly the same as private sector workers? I'm really getting angry now, especially with supposedly educated 'experts' (I'm thinking Digby Jones here) who don't seem to understand this (very) basic prinicple. I'm a public sector employee, my boyfriend is private sector - we're both members of our respective occupational, final salary, pension schemes and at the moment at least, will both be able to draw them at 60, but not our state pensions. Why, why, why is this all so difficult for people to get to grips with?

[nfn]

thank heavens someone else said that! I was begining to think it was just me!!!!!!!!! I think the main prob is people who don't have any kind of personal pension, they will have to work to 67 to claim a pension. I personally have an NHS pension which will be worth about #2.50 a month when I retire at 60!

[kempie]

A state pension is paid by the Government (i.e. taxpayers)

A public sector occupational pension is paid for by the Government (i.e. taxpayers)

A private sector occupational pension is not paid for by the Government (i.e. taxpayers)

That is the crux of the matter.

[Coobeastie]

Yes but a private sector pension is paid for by the populus in a round about way. If you work at tescos (to pick a company at random) and your pension is with them then the public who shop at tescos will be contributing to the wages and therefore the pension of the employee.

Why is it that whenever this gets mentioned its as if people expect that public sector workers don't pay taxes aswell and are part of some conspiracy that means we don't pay council tax/income tax or vat. Oh and we don't actually do any work either and are all on huge wages.

[kempie]

...but not all private companies offer an occupational pension and those that do are not required to pay into it, leaving employees to fund their own retirement.

Mr. Brown removing �5billion from the pension pot didn't help either.

Public sector workers do pay all the taxes you mention but they get some of it back in the form of a pension, private sector workers do not.

I wonder what percentage of private sector workers are on huge wages?

[kempie]

* would read better if I had written

Public sector workers do pay all the taxes you mention but they get some of it back in the form of their occupational pension, private sector workers do not.

[dannydingbat]

Ask yourselves how many people will be prepared to work in public service for the pay, abuse, political pressure and conditions experienced by most public workers unless the pension was there and available. Most professionals, architects, lawyers, etc. are only there for the pensions. Take these rights away and your public services will disintegrate.

[kempie]

My point was not to denigrate the public sector... I believe that it is as valuable to the good order of the country as the private sector (even if there is a need to remove some dead wood, but that is another argument).

Simplistically Pete Private creates wealth, Joe Public is paid from that wealth.

Pete has been expected to work for 5 years longer than Joe and fund Joe's retirement during those 5 years.

Pete will be told to work a further 2 years to but Joe will not. How is that fair?

The bad working conditions argument doesn't really hold up to scrutiny. If we assume all 5.5million Joes are underpaid etc. do you really believe that at least the same number of the 24.5million Petes are not also in that position?

[saffstar]

Yes, but how many large employers don't have occupational pension schemes for their employees? and the majority of those pension schemes are still final salary and allow their members to draw their pensions at 60. The government is, after all, a large employer.

Private sector pensions, incidentally, are paid for by the customers of the private sector employers (of whom a fair proportion must be public sector workers) in exactly the same way as taxpayers (including public sector workers) pay for state and government occupational pensions.

Kempie, your argument about Pete Private creating wealth and Joe Public being paid from it is too simplistic. I, and every other public sector employee contribute to the wealth of this country every time we open our wallets - and millions of people who claim benefits, including child tax credits, are also paid 'from that wealth'. We all, private and public sector, fund each other and are paid by each other in the money-go-round.

If Pete Private is a member of his employer's occ. pension scheme, then he'll probably retire at 60, just like Joe Public, and they'll both have to wait until 65/7 to draw their state pensions. Believe it or not, public sector workers are not any better off than private sector workers who do pay into to occ. schemes

I appreciate that many millions of people working for small employers don't have access to an occupational pension scheme, and that's something that needs addressing urgently but that won't be changed by turning public sector pensions into second-class schemes, compared to those offered by private organisations.

[kempie]

I'm not saying they public sector workers are better off... but not having to work 2 more years will make them so compared to those that will be forced to work the extra years. This is what forms the disparity.

All taxpayers add to the pot which the State draws from but you have to agree that Mr Public takes more from the Treasury than he puts in (unless he pays more in taxes than he earns) and Mr Private puts more in than he receives.

You say "If Pete is a member of his employer's occ. pension..." well that is a very big if. Only about 8.5million of the 24.5million private sector have final salary pensions, the others 16million must provide for their own retirement. While they provide for themselves they must also provide for public sector pensions which can be drawn 7 years earlier.

[nfn]

I have an NHS pension, as I've mentioned before. I contribute to this to the tune of around 30 quid a month. Yes it's index linked, yes it means i'll get a 'private pension' at 60 but as I've also said, it will be very little. I simply won't be able to retire at 60 because the projections I received last year mean I'd be living on less in 25 years time than I am at the moment (and that's not an awful lot).

[saffstar]

Don't forget though, that we do pay a fair chunk of our own wages into our occupational schemes too - they're not entirely funded by taxes collected.

Yes, public sector employees get out more than they put in, but the work that we do is essential for the running of the country - we ensure it's funded, policed, educated, nursed, protected and so on but we don't do it for the love of it - we work to live, just like everyone else and we have a right to be paid for the work that we do and to have pension schemes of equal value to those of equivalent sized private sector employers.

[kempie]

As I said previously, I do believe that the public sector is a valuable asset.

You want an equal pension to that offered by an equivalent sized company...

There is no equivalent company. The state is the largest employer in the UK with 5.5million workers. However 8.5million workers from numerous companies have an equal or better scheme than yours.

This leaves almost double that figure in the private sector whose employers do not contribute anything towards their retirement.

You wrote earlier that you do not want your pension to turn into a second-class scheme but the majority of those who fund yours already have a third-rate scheme (if they have one at all).

These people will have to fund their own retirement and pay towards your retirement and to achieve this they will be expected to work for longer whilst you will not.

[kempie]

oops... where I wrote "8.5million workers from numerous companies have an equal or better scheme" the 'equal' should perhaps read 'similar'.

Similar but there are major differences:
There is no guarantee that a company does not go out of business, leaving an 'orphan' fund.
Company pension funds are mostly invested in the Stock Market (only recently recovered from a major drop 5 years ago). A crash would wipe them out.
The Treasury removes the equivalent of �5billion per year since the ending of tax relief.

[saffstar]

If a company goes out of business, its workers pensions are now protected in law.

I completely agree with you that something needs to be done to assist the huge number of people who will have to rely on a state pension as their only means of income but, to go back to my original point, occupational pensions and state pensions are completely different schemes, just because public sector workers are employed by the government doesn't make them any different to other employees - and the government is, after all, an employer just like any other. I pay just over 5% of my salary into my occupational pension scheme, I've been a member of that scheme for 2.5 years - before that I was employed by a tiny business and had no opportunity to make any provision for my retirement so I fully understand the worries of being on the 'other side'.

Another point is, if the government backtracks on it's pension agreement with it's staff - how long before the larger private employers do the same thing?

[kempie]

"...the government is, after all, an employer just like any other."

An employer that every taxpayer has to give money to. We don't have laws forcing us to give money to Tesco.

"...if the government backtracks on it's pension agreement with it's staff - how long before the larger private employers do the same thing?"

Private employers have been 'moving the goalposts' for decades.

[kempie]

...not that I am saying we should give more money to Tesco.

Perhaps we should be forced to give money to the companies that don't offer occupational pensions so that they will. If that is too radical an idea perhaps we could institute a pension that is paid to these workers, perhaps one paid by the State, a State occupational pension if you will.

We could shorten the name to "State Pension".

Of course an occupational pension is different to the state pension because those with access to an occ. pension are already better off.

I just do not see the fairness in forcing millions of "have nots" to work for longer while the "have somes", who wish to be "have mores", do not want a corresponding increase in their working lifespan.

[gavinbecky]

The current State Pension that pensioners now receive is of course paid by you and me now. When the Government introduced State Pensions they didn't have the foresight/money to invest a chunk in the same way that normal pensions are paid for.

The one thing that is missing in this argument is that most companies won't employee people of 66,67,68. Ageism may have been outlawed, but I know people that have been let go because ''we don't employ people beyond your age''.

I hate to say it, but although older is wiser, business these days is fast paced and demanding. Can you imagine 68 year old Reg working in McDonalds or 64 year old Edna in a call centre trying to cope with the daily demands of business?

I've worked in pensions for nearly 20 years. I see the day where there is no retirement age and we will work until we die. In effect we will not be allowed to 'sit around' just because we have reached a certain age.