George Osborne's Plan B

[Last of the Fraggles]

Wow. Emotive.

MPs are public sector workers, aren't they? Francis Maude's pension will pay out £44k per year, but that's not being touched. 72% of pensions over 50kpa are paid to doctors. Couldn't they afford to make their own provision?

The cuts are regressive, that's the issue for me.

Yes, there's no reason why an MP or a doctor shouldn't be getting the same pension deal as a teacher or a office admin person. Unless there is a justification for a better one.

I'm OK with anyone getting a better deal if its justified, but I've not seen much attempt at justification going on. Just complaints about an entitlement being taken away.

What's offensive is that you pick two jobs and use those two in a Daily Mail-style smear which implies that all public service jobs are equally as trivial.

Those 2 jobs are currently open vacancies. Either they are justified or not. I say not. Your offense at unfair representation is mute when nurses and street cleaners are raised and they are just as unrepresentative.

Public services form the backbone of the country; it would be a very different place indeed without them.

And nobody is suggesting we do away with them (well, OK we can do without Biodiversity Officers right now). What I'm asking is why public sector workers need a better deal than everyone else.

 

[richardm]

What I'm asking is why public sector workers need a better deal than everyone else.

Because that's what their agreements say. Just because private pension funds have been frittered away and ruined is no reason to go and change a whole bunch of pensions which haven't been.

It's real dog-in-the-manger stuff.

 

[stokes234]

If the public sector workers want pay increases then how about earning them? if they want sugar coated pensions then how about justifying them?

Ok, passing casually over your apparent belief that a 10% wage cut is a sugar coating, what makes you so sure that public sector workers aren't earning them?

Why can't a public sector worker contribute to their own pension pot like everyone else? Seriously, what's so special about them?

What's so special about directors that they get a 90% pay rise over 2 years while public sector workers are getting a 10% pay cut in the same period? Does it look to you like they're fixing the uk economy, providing jobs etc?

Government contributions to public sector workers pensions are part of their pay package. You still haven't explained why the public sector should be getting a pay cut just because the private sector was disorganised enough to get shafted.

 

[Last of the Fraggles]

Ok, passing casually over your apparent belief that a 10% wage cut is a sugar coating, what makes you so sure that public sector workers aren't earning them?

Well if they are earning them then they should make that argument and present it. I'm ready to be convinced that a Council Admin Worker needs a pension plan that is superior to an admin worker for a private company.

I'm not 'sure' they aren't earning them, but they haven't convinced me they are. My experience of public services and from working with the public sector is that they don't generally do anything that would justify a superior package to an equivalent private sector employee.

I'm sure there are individuals within the public sector who are underpaid and underappreciated and I'd support them getting more. I'm a long way off agreeing with the idea that everyone in the public sector deserves a sugar coated pension and while I have some sympathy with the 'we were promised it argument' we cannot keep compounding past mistakes by continuing to provide benefits that don't make sense.

What's so special about directors that they get a 90% pay rise over 2 years while public sector workers are getting a 10% pay cut in the same period? Does it look to you like they're fixing the uk economy, providing jobs etc?

Nothing is special about them. But I don't fund their pay rises through taxes and if I feel a private company director is extracting the urine I have the choice to take my business elsewhere.

Government contributions to public sector workers pensions are part of their pay package. You still haven't explained why the public sector should be getting a pay cut just because the private sector was disorganised enough to get shafted.

Its nothing to do with the private sector getting shafted, the government spends more than it earns and the only answer to that is to earn more or spend less. If we are looking at spending less then public sector pay is one area to look.

Why shouldn't it be looked at?

 

[stokes234]

Well if they are earning them then they should make that argument and present it. I'm ready to be convinced that a Council Admin Worker needs a pension plan that is superior to an admin worker for a private company.

I'm not 'sure' they aren't earning them, but they haven't convinced me they are. My experience of public services and from working with the public sector is that they don't generally do anything that would justify a superior package to an equivalent private sector employee.

Where we disagree is in your assumption that private sector pay and pensions are automatically fair by way of the market being a correct judge of what is fair. I see the market as lending too much power to directors and the lack of private sector union organisation as resulting in a power deficit for ordinary workers, and this, rather than fairness, is what is resulting in low private sector pensions.

I'm sure there are individuals within the public sector who are underpaid and underappreciated and I'd support them getting more. I'm a long way off agreeing with the idea that everyone in the public sector deserves a sugar coated 10% pay cut and while I have some sympathy with the 'we were promised it argument' we cannot keep compounding past mistakes by continuing to provide benefits that don't make sense.

Allowing old people to get pensions of £6,000 a year makes perfect sense to me.

Nothing is special about them. But I don't fund their pay rises through taxes and if I feel a private company director is extracting the urine I have the choice to take my business elsewhere.

Of course you do, because there are millions of spare jobs going, eh? Anyone who wants to can just up and move and work somewhere else.

Its nothing to do with the private sector getting shafted, the government spends more than it earns and the only answer to that is to earn more or spend less. If we are looking at spending less then public sector pay is one area to look.

Why shouldn't it be looked at?

I'm all for looking at it, but I kind of assumed that when the public sector received their 10% pay cut, that was already a form of it being looked at. Now that we've taken money from people who are already living payday to payday, how about we get the next round of money from the people earning millions a year? Surely they'll feel it less.

 

[Last of the Fraggles]

1. Where we disagree is in your assumption that private sector pay and pensions are automatically fair by way of the market being a correct judge of what is fair. I see the market as lending too much power to directors and the lack of private sector union organisation as resulting in a power deficit for ordinary workers, and this, rather than fairness, is what is resulting in low private sector pensions.

2. Allowing old people to get pensions of £6,000 a year makes perfect sense to me.

3. Of course you do, because there are millions of spare jobs going, eh? Anyone who wants to can just up and move and work somewhere else.

4. I'm all for looking at it, but I kind of assumed that when the public sector received their 10% pay cut, that was already a form of it being looked at. Now that we've taken money from people who are already living payday to payday, how about we get the next round of money from the people earning millions a year? Surely they'll feel it less.

1. So your argument is that public sector pay isn't enough AND private sector pay is even worse? And your answer is that the even worse off private sector should keep forking over for the public sector to enjoy the benefits?

2. Sorry, but where was 6k a year mentioned?

3. Well yes, you can switch jobs if you like - I'm doing that myself on Monday. But the argument wasn't about switching jobs it was about not having to fund salaries and pensions in the private sector with my own money and having the choice of whether I do or don't.

4. Yes, it was a form of it being looked at and it wasn't enough. Trying to justify the public sector overpaying people because some other people are even more overpaid makes no sense to me. Even worse, when it's used to try to disguise where the public sector salaries and pensions come from which is private sector employees living payday to payday.

 

[stokes234]

1. So your argument is that public sector pay isn't enough AND private sector pay is even worse? And your answer is that the even worse off private sector should keep forking over for the public sector to enjoy the benefits?

No, my argument is that the part of the private sector that is well off - ie. the richest percentages - should be forking over more to keep public sector pensions as they are and to bring private sector pensions back up to the same level.

2. Sorry, but where was 6k a year mentioned?

That's about the average public sector pension.

3. Well yes, you can switch jobs if you like - I'm doing that myself on Monday. But the argument wasn't about switching jobs it was about not having to fund salaries and pensions in the private sector with my own money and having the choice of whether I do or don't.

The pensions you're whingeing about are part of the salaries of public sector workers. If you think they should be funded at market rates, would you be happy about the UK paying an extra 8% of GDP towards healthcare? Or are you prepared to admit that the market is not always the best course?

4. Yes, it was a form of it being looked at and it wasn't enough. Trying to justify the public sector overpaying people because some other people are even more overpaid makes no sense to me. Even worse, when it's used to try to disguise where the public sector salaries and pensions come from which is private sector employees living payday to payday.

Honestly, if it turned out that the current economy was totally unsustainable and public sector workers had to be paid less, i'd accept it, but i'll only accept it after a much fairer amount of tax has been taken from the rich. If after that the finances are still dire, then i'd accept the need for pay cuts, though i'd want them to be more progressive than the current pension cuts.

 

[Rolfe]

Without taking sides in this, I can foresee a not-too-distant future where people who have retired from the public sector will be having three holidays a year and doing up their houses, while their contemporaries who have retired from the private sector will be struggling to heat their homes.

A combination of interest rates of almost zero having destroyed the pensions the latter group thought they had saved for, even more effectively than the fall of Equitable Life, and rampant inflation in energy costs.

I think it's the timing that rankles with some people. You'd have to have a pension find of about £600,000 these days to get a pension of the same value as a teacher is entitled to. Nobody on an ordinary income can possibly have built up a fund of that size, no matter how frugal.

Rolfe.

 

[Rolfe]

Putting it a different way. We're being told public sector workers took lower salaries to get pension entitlements. But really, so did everyone. If you're putting £800 a month into a pension fund, you're not putting it into your current account after all. There's no such thing as a free lunch, and there's no such thing as a non-contributory pension.

A private sector worker could be putting enough into a pension fund to achieve the pension they aspired to, at sacrifice of their current income, and be told five years ago that they were nicely on course and everything was looking according to plan. Then the economy goes belly-up, and that worker discovers, tough, all that money you put aside is only going to bring in a pension half as much as you anticipated. Them's the breaks. Suck it up.

A public sector worker may have been in much the same position. Accepting a lower income right at the moment, for the prospect of a good pension later. Only the method of achieving that is different - instead of identifiable money going into a pension fund, it's all just "taken care of". Then the economy goes belly-up. This group declares that its pension entitlement should not be affected.

I'm not taking sides here, because I have a lot of sympathy. But I can see how the group who behaved as prudently as they possibly could, also at the sacrifice of their take-home income, and yet has seen their pension prospects destroyed, might feel they just can't win. How can these people go on strike to make Axa or Standard Life give them the pension that was shown on their annual statements five years ago? They can't. Their pension is just being taken away and there's nothing they can do about it.

Now they see their local services being withdrawn by people who want them to pay through their taxes to keep the strikers' pensions up at the original level, at the same time their own pensions have been destroyed. Nobody's wrong, everybody's being screwed over, but it's not exactly black and white.

Rolfe.

 

[Giz]

That's about the average public sector pension.

(Sighs) It's an average, skewed lower by lots of short service workers (people who worked 5 or 10 years rather than 30 or 40) hence it is a meaningless figure. Try looking up average pension amounts for those who retire after working 40 years in the public sector....

 

[Last of the Fraggles]

No, my argument is that the part of the private sector that is well off - ie. the richest percentages - should be forking over more to keep public sector pensions as they are and to bring private sector pensions back up to the same level.

That's about the average public sector pension.

The pensions you're whingeing about are part of the salaries of public sector workers. If you think they should be funded at market rates, would you be happy about the UK paying an extra 8% of GDP towards healthcare? Or are you prepared to admit that the market is not always the best course?

Honestly, if it turned out that the current economy was totally unsustainable and public sector workers had to be paid less, i'd accept it, but i'll only accept it after a much fairer amount of tax has been taken from the rich. If after that the finances are still dire, then i'd accept the need for pay cuts, though i'd want them to be more progressive than the current pension cuts.

Well great. If the public sector can come up with a way for their pensions to be funded by millionaires and fatcats without impacting on your typical worker then great. Go for it.

I'm not sure where your point about healthcare comes in. I don't think I proposed privatising any of these services.

 

[Rolfe]

Both groups have sacrificed income in order to build up pension entitlement. One group has seen that entitlement disappear, through no fault of their own. They have no recourse at all.

The other group has decided that if it makes everyone's lives a misery effectively enough, it can force the first group of people to contribute to keeping its pensions up at their original level.

I said I wasn't taking sides, but maybe I am. We're being told that we're not all in it together. We're being told that one group must be protected from the cold wind blowing on us all, while the other group is not only thrown to the wolves, but has to contribute to protecting the first group even though it has been stripped naked.

Why is someone who took a job where the employer undertook to see them right at retirement age unquestioningly deserving, while someone who made conscious sacrifices to build up a private pension fund just a hapless victim of economic circumstances?

Rolfe.

 

[Rolfe]

And talking of getting the rich to pay, I'll bet the chief executives of Axa and Standard Life are positively rolling in it. At the direct expense of the people whose pension prospects have just been slashed. Will striking help?

Rolfe.

 

[funk de fino]

(Sighs) It's an average, skewed lower by lots of short service workers (people who worked 5 or 10 years rather than 30 or 40) hence it is a meaningless figure. Try looking up average pension amounts for those who retire after working 40 years in the public sector....

How about you bring that data here and try explaining why that person is not worth a bloody good pension? Just cause the UK has screwed up private sector pensions doesnt mean we have make these people suffer.

And try looking up the pensions of CEO in private sector after less than 40 years and compare.

If I am not mistaken there was already reviews and changes made in 2005'ish and many were moved to age 65, moved to career average rather than final salary and the index linking was also changed.

It is only 1.9% of GDP and is predicted to fall over time.

My mother worked 18 years for the Civil Service and another 14 for the Council and this highe salaries and gold plated pensions is scaremongering nonsense.

 

[Rolfe]

Financial markets have screwed up the pensions of people who worked just as hard as people in the public sector, and who sacrificed salary to accumulate a pension pot. They can't go on strike about it.

Financial markets have also screwed up the ability to provide for public sector workers. Nobody is saying they don't deserve a good pension. But why do they deserve it more than someone in the private sector who scrimped and saved to pay into Standard Life, and now sees a tiny annuity at the end of it? Why should the tax man take from that person, to prop up the pension of public sector workers?

The private sector isn't all gold-plated million-dollar pension pots. A lot of it is the person who thought they were going to get £10,000 a year pension and is now looking at half that. With no redress. That's the person you want to tax so the teacher can keep the £25,000 a year index-linked pension.

It's not all one-sided.

Rolfe.

 

[stokes234]

Well great. If the public sector can come up with a way for their pensions to be funded by millionaires and fatcats without impacting on your typical worker then great. Go for it.

I'm glad we agree. If the money still isn't there when the millionaires have been well and truly taxed, I would be much more understanding of cutting public sector pensions.

I'm not sure where your point about healthcare comes in. I don't think I proposed privatising any of these services.

Well, it sounds like you're perfectly happy to allow the public sector system to make savings for you by reducing your healthcare costs, but you're not happy for the public healthcare system to apply the traditional (and promised) public standards to pay and pensions - instead you want those to be decided by the market. But if you pay people market prices and thus less, you attract people of lower ability and you provide less incentive for people to stay in the job, thus reducing the quality of the public services you rely on. Do we know that the NHS would remain at world-class standard if the people working in it were less competent and less motivated and there was a higher turnover of staff? The same applies to other aspects of the public sector.

As stated by others, the entire public pension system costs 1.9% of our GDP. But some estimates put the savings of using a public healthcare system at 8% of GDP.

 

[stokes234]

Both groups have sacrificed income in order to build up pension entitlement. One group has seen that entitlement disappear, through no fault of their own. They have no recourse at all.

The other group has decided that if it makes everyone's lives a misery effectively enough, it can force the first group of people to contribute to keeping its pensions up at their original level.

I said I wasn't taking sides, but maybe I am. We're being told that we're not all in it together. We're being told that one group must be protected from the cold wind blowing on us all, while the other group is not only thrown to the wolves, but has to contribute to protecting the first group even though it has been stripped naked.

Why is someone who took a job where the employer undertook to see them right at retirement age unquestioningly deserving, while someone who made conscious sacrifices to build up a private pension fund just a hapless victim of economic circumstances?

Rolfe.

I can see your point of view, and i'm also trying not to be too biased, but the counterpoint to be made is that private sector workers had their chance to form unions to protect themselves against their pension reductions (the reductions in employer contributions, rather than the banking collapse), and they didn't. And while there is a cold wind blowing over most of us, as i've shown previously, there's clearly enough money around for massive pay increases for directors.

I agree with the idea that everyone should share the pain, but if private sector workers want fair pensions or at least want a source of money so that they don't have to pay extra towards other people's pensions, I see their first port of call as being their directors, CEOs etc, rather than public sector workers. The private sector itself has money, but its concentrated at the top. Let's deal with that before we take any more from the pay of public sector workers.

 

[Rolfe]

Not really. The responsibility is with the pension providers. I'm talking about the huge number of people working for small businesses who simply contracted with pension companies to administer and provide personal pensions for their staff. They were in the business of making widgets, not providing pensions. The portable personal pension was the way this was done, and it's not the fault of the guy who set up the widget-making business that Axa and Standard Life paid their CEOs millions and now don't intend paying out the pensions.

Rolfe.

 

[Last of the Fraggles]

I'm glad we agree. If the money still isn't there when the millionaires have been well and truly taxed, I would be much more understanding of cutting public sector pensions.

Well lets tax them FIRST and then when the country is rolling in all this extra tax money we'll talk about how we spend it. Of course, they'll just bugger off or find ways to avoid it but who cares right? We'll just get the people on minimum wage with bugger all pensions to fund the retirement of the public sector. They can afford it, and the public sector DESERVE IT. Right?

Well, it sounds like you're perfectly happy to allow the public sector system to make savings for you by reducing your healthcare costs, but you're not happy for the public healthcare system to apply the traditional (and promised) public standards to pay and pensions - instead you want those to be decided by the market. But if you pay people market prices and thus less, you attract people of lower ability and you provide less incentive for people to stay in the job, thus reducing the quality of the public services you rely on. Do we know that the NHS would remain at world-class standard if the people working in it were less competent and less motivated and there was a higher turnover of staff? The same applies to other aspects of the public sector.

As stated by others, the entire public pension system costs 1.9% of our GDP. But some estimates put the savings of using a public healthcare system at 8% of GDP.

Well yes, not being stupid I'm quite happy for public services to be provide in the most effective way. If that's public ownership then great, if its private ownership fine by me too. If it's something else, bring it on.

Trying to use that to justify exceptional pensions for the entire public sector is ridiculous. Even trying to do it for just the NHS makes little sense. However, as I've said before, if it's justified in the NHS then fine, let's see the justification. That doesn't necessarily make it justified for the binmen, the biodiversity project managers and the IT bods.

 

[Last of the Fraggles]

I agree with the idea that everyone should share the pain, but if private sector workers want fair pensions or at least want a source of money so that they don't have to pay extra towards other people's pensions, I see their first port of call as being their directors, CEOs etc, rather than public sector workers. The private sector itself has money, but its concentrated at the top. Let's deal with that before we take any more from the pay of public sector workers.

The public sector obviously has more than enough to go around judging by this lot as just the first example I found.

http://www.scottish-enterprise.com/...ip/management-team/senior-staff-salaries.aspx

Or my 'hard-working' local council management team

http://www.northlanarkshire.gov.uk/index.aspx?articleid=17857

Now I see why they have to charge me to pick up my rubbish!