Private Sector Pensions

[quisquose]

It is similar to holding up an ex head teacher with a £30 grand p.a. pension as an example of typical public sector pensions?

 

I get your point, because in the same way you don't know any loaded private sector cronies, I don't know any public sector pensioners getting £30 grand a year.

 

You don't know any ex-heads with a £30K+ pension? Really? How about your ex-head?

 

I know two, plus many more health workers with that sort of pension (my wife included thankfully).

[Guest sibon]

I'm approaching 50, and when I was a graduate starting in employment I recall that my salary was slightly higher than that of a teacher, but back then only 5% of school leavers were going to University to obtain degrees.

 

Nearly all the graduate in our employment now (a typical distribution business with a full mix of employment), are earning average salaries significantly less than teachers. I actually feel really sorry for many of them. About 1 in 10 might have a chance of a £40+ salary, but for most it's more about defending £20-£30k jobs for as long as possible. We don't have a contributory pension, but we are required to administer one if asked. Nobody has asked us in 5 years because nobody can afford to contribute 5%, never mind 10%.

 

Even if one of our graduates could put away £3000 (10-15%) a year (and they can't) over 35 years, my spreadsheet estimates an annuity pot of £200k. How do you suggest they make this up to the £340k required to match a teacher on an equivalent salary, not including the lump sum of course?

 

We are of very similar age then. I know a good many people employed in the private sector who earn as much as I do, or more. Some of them have company cars, some are able to use accounting tools to minimise their tax bills. Many have expense accounts that are "flexible", to say the least. I've got a good pension. Swings and roundabouts really.

 

As for affordability. I have always prioritised my pension payment. Mostly because I can count and I know that it is a good deal. It would have been easier to not pay it and spend the cash on nice holidays, or another car. When I was 25, it was often a case of paying my pension or eating properly. Mind you, my mortgage rate was 13% at the time.

 

Anyone earning £30k per year can afford to save for retirement.

 

According to my calculations, £300 per month, saved for 30 years at 6% will yield a pension pot of £292,777. That will buy roughly £14k of pension. I've saved that and at the moment, I'll get that. I don't see why a private sector graduate shouldn't be able to do likewise.

 

It isn't public sector pensions that are generous, it is private ones that are performing poorly. Ask the questions of the fund managers.

[donkey]

You don't know any ex-heads with a £30K+ pension? Really? How about your ex-head?

 

I know two, plus many more health workers with that sort of pension (my wife included thankfully).

 

No, I lost contact with my ex headmaster. I don't know why we didn't keep in touch. We had so much in common

 

What do you mean by 'health workers'? Doctors often earn in excess of £100K. This is an amount set by the private sectior (personally I'd be in favour of efforts to cap this). In the context of those earnings, £30,000 plus pension doesn't seem disproportionate, whether in private or public sector.

 

Nonetheless, Like most people, I am not personally aquainted with many professionals who earn four and five times the median income, and neither of the couple I do know are retired.

[Anna B]

You try standing in a classroom of 30 baying, hormonal adolescents for 40 years and then tell me teachers don't deserve every penny of their pension.

 

And if they have to teach non stop till they're 66 it will probably finish them off anyway...

[Tony]

You try standing in a classroom of 30 baying, hormonal adolescents for 40 years and then tell me teachers don't deserve every penny of their pension.

 

So you reckon that teachers who are that bad without improvement throughout their entire career should get their pension?

 

Others may disagree.

[Tony]

some are able to use accounting tools to minimise their tax bills.

Everyone is subject to the same tax rules though Sibon, even teachers.

[GrapeApe]

Not all public sector workers get such deals - you can't lump them all together like that.

 

The average pension in the public sector is something around £5k pa

[Tony]

The average pension in the public sector is something around £5k pa

 

The average is substantially more than that, and even then, the mean average does not represent the true picture.

[andrejuan]

... and to add insult to injury, the public sector is now better paid than the private sector!

 

... then compounded still further by the fact that the private sector pays for it all!

 

Exactly right..

 

The pension benefits along with better holidays, better PAID sick leave (of up to 13 weeks p/a) much shorter working week, earlier retirement age, closed shop union membership (and the benefit of union representation of biblical proportions) benefits in kind, etc. etc. etc.

This was all accepted at one time because their pay was slightly less than the private sector. That is not the case any more. Like for like, pay in the public sector is way above private pay at ALL levels from office juniors to top management.

 

As for pensions, I have paid my private pension contributions since my twenties, every month out of TAXED income, all on my own, the full amount (not just a small proportion of it) and gone without things to make sure it was paid.

When I found out that my counterpart doing the same job in the public sector will retire 10 years earlier than me on a pension just under double what mine MIGHT be (because mine is not superannuated) then I don't have a lot of sympathy.

 

The public sector workers who are whinging should hang their head in shame, we all have to take a hit in these hard times, and those who have the most should give up most.

 

I don't mean this to be disrespectful but, fair is fair.

[quisquose]

We are of very similar age then. I know a good many people employed in the private sector who earn as much as I do, or more. Some of them have company cars, some are able to use accounting tools to minimise their tax bills. Many have expense accounts that are "flexible", to say the least. I've got a good pension. Swings and roundabouts really.

 

As for affordability. I have always prioritised my pension payment. Mostly because I can count and I know that it is a good deal. It would have been easier to not pay it and spend the cash on nice holidays, or another car. When I was 25, it was often a case of paying my pension or eating properly. Mind you, my mortgage rate was 13% at the time.

 

Anyone earning £30k per year can afford to save for retirement.

 

According to my calculations, £300 per month, saved for 30 years at 6% will yield a pension pot of £292,777. That will buy roughly £14k of pension. I've saved that and at the moment, I'll get that. I don't see why a private sector graduate shouldn't be able to do likewise.

 

It isn't public sector pensions that are generous, it is private ones that are performing poorly. Ask the questions of the fund managers.

 

I'm pleased you have set out in detail what you think of the subject from your position, because it confirms what I said earlier.

 

With the exception of the "accounting tools" nonsense, what you have described belongs to a time when we started work 25 years ago. The people that you and I might socialise with, public or private sector, might be okay from a retirement planning situation. Most of my friends are okay, as long as the companies they worked for remain in business (and many worry about them) we should all benefit from company pensions that are now shut. My own pension should give me £12k when I retire, and I am very grateful for that. I am also grateful in the knowledge, since I signed the cheques, that the company was contributing 33% of our salary (up from 8% 20 years ago). No wonder it is now closed. I am also grateful for my wife's public sector pension which will be double that of mine. On the whole I don't argue with people our age that the those in the public sector have it better than those in the private sector.

 

I worry deeply about people younger than me, and my childen's generation. The figures you quote are woefully out of date. There is no way that £300 per month can accrue an annuity of anything close to £290k anymore, or that £290k could buy a pension of £14k anymore, not with the additional benefits that your's and mine will give us. Nor is it possible for young adults to even think about saving £300 per month anymore.

 

I'm not trying to argue that you have it better than me because you don't. I'm arguing that changing demographics and investment returns have dramatically changed how we need to manage retirement for the generations behind us. We're in it together apparently. Unfortunately one side refuses to change, with the result that our children will grow up in a two tier system which is deeply unfair.

 

"You lot shouldn't have let them close your pensions", or "you lot should demand better investment returns" are the sort of unhelpful comments I hear a lot which just highlight the divide which has been created.