Unsustainable public sector pensions
Discussion
sidicks said:
You seem not to understand that public sector pensions are unaffordable and massively more generous than those available in the private sector, despite comparable public sector salaries being similar to or above comparable jobs in the private sector (according to the ONS).
ONS links below suggests otherwise. In my experience at higher levels, pay & perks in private sector are significantly better than PubSec.http://webarchive.nationalarchives.gov.uk/20160105...
Countdown said:
ONS links below suggests otherwise. In my experience at higher levels, pay & perks in private sector are significantly better than PubSec.
http://webarchive.nationalarchives.gov.uk/20160105...
The second bullet point clearly states:http://webarchive.nationalarchives.gov.uk/20160105...
"In April 2014, it is estimated that the average pay in the public sector and the private sector was very similar. The estimate ranged from a 0.9% pay gap in favour of the public sector and a 0.1% pay gap in favour of the private sector, after accounting for the different jobs and personal characteristics of the workers."
The report goes on to say that high earners earned more in the private sector and lower earners earned more in the public sector - hardly surprising.
The report does qualify the above by suggesting that, 'adjusting for size of company', private sector workers earn around 3.4% more. But it does seem slightly strange to suggest that because the public sector is 'big' employees should be paid more!
Most importantly, regardless of which piece of information you focus on, there is no justification for a 20-25% effective uplift in salary due to pension benefits, which is obviously the key point.
See also:
https://www.ifs.org.uk/budgets/gb2011/11chap7.pdf
sidicks said:
The second bullet point clearly states:
"In April 2014, it is estimated that the average pay in the public sector and the private sector was very similar. The estimate ranged from a 0.9% pay gap in favour of the public sector and a 0.1% pay gap in favour of the private sector, after accounting for the different jobs and personal characteristics of the workers."
The report goes on to say that high earners earned more in the private sector and lower earners earned more in the public sector - hardly surprising.
Why is that “highly surprising”?"In April 2014, it is estimated that the average pay in the public sector and the private sector was very similar. The estimate ranged from a 0.9% pay gap in favour of the public sector and a 0.1% pay gap in favour of the private sector, after accounting for the different jobs and personal characteristics of the workers."
The report goes on to say that high earners earned more in the private sector and lower earners earned more in the public sector - hardly surprising.
As you've pointed out the report does go on to say
ONS Report said:
• After accounting for the different organisation sizes between the public and private sector, it is estimated that on average the pay of the public sector was between 3.3% and 4.3% lower than the private sector in April 2014
Which was the point I was trying to make. I’m not sure if it mentions or takes account of the fact that a lot of jobs in the Public Sector require higher qualifications (nursing, medicine, teaching etc). In my experience each of these roles pays more in the Private Sector than the Public Sector when compared on a like-for-like basisSidicks said:
Most importantly, regardless of which piece of information you focus on, there is no justification for a 20-25% effective uplift in salary due to pension benefits, which is obviously the key point.
In your opinion. In my view it’s a free market. The salaries/pensions/benefits of workers are set to attract a certain calibre of staff. If anybody thinks that Public sector staff are overpaid they are free to apply for jobs rather than whinging about how it’s all so unfair….[not directed at you by the way]Countdown said:
Why is that “highly surprising”?
I said hardly surprising.Counttdown said:
I’m not sure if it mentions or takes account of the fact that a lot of jobs in the Public Sector require higher qualifications (nursing, medicine, teaching etc). In my experience each of these roles pays more in the Private Sector than the Public Sector when compared on a like-for-like basis
It compares like for like jobs / qualifications.Countdown said:
In my view it’s a free market. The salaries/pensions/benefits of workers are set to attract a certain calibre of staff. If anybody thinks that Public sector staff are overpaid they are free to apply for jobs rather than whinging about how it’s all so unfair….[not directed at you by the way]
Where is this 'free market' in public sector employment?Can you explain what justifies a 20%+ premium for public sector workers?
Jockman said:
Type R Tom said:
Jockman said:
Seriously? A monopoly in a free market? If I feel I'm not getting VFM from Public services I can go elsewhere?
But isn't that the same with elements of the private sector?(There are obvious restrictions on competition between employees imposed by pay banding, collective bargaining primarily in the public sector. Nonetheless, there's clear competition between employers for staff.)
Certainly in the past the general perception was that one tended to trade a lower salary for greater job security and good pensions by working in the public sector. Nothing wrong with that. In effect the public sector tends to defer some of its salary in return for its pension.The problem is that whenever someone threatens to adjust public sector pensions, there's an outcry that this is breaking that tacit agreement that they'll defer salary for pension.
This ignores two fundamental points.
1. Private sector total payment is ALSO a combination of pay and pension, and most of the private sector has ALREADY seen its pensions changed. Asking the public sector to follow suit is not asking them to make a sacrifice that hasn't already been made in the private sector. Cries of "unfair in principlr" ring pretty hollow.
2. If we think of pension provision as deferred pay, offering someone a final salary scheme means employers have no way of knowing how much they're paying a member of staff. Think how crazy that is. I may pay you 25k cash this year, but I have no way of knowing with any real certainty what your final salary is going to be in, perhaps, 30 years and I sure as hell have no way of knowing how much money I need to invest now to be able to match that liability. When interest rates fall through the floor, a pension fund has to have enormous sums of money invested to be able to meet final salary liabilities. Back in, say, the 1980s no one would have believed that we'd see a decade of interest rates at virtually zero. Those administering funds and signing up new members back then would not have had an inkling of the scale of the liabilities they were taking on. They had no way of knowing.
So, here's the question. Given we find ourselves in a position where it is ruinously expensive to provide final salary benefits, is it really fair to leave one group of workers receiving them when another group has already given them up? Is it fair for the unexpected burden to fall on the shoulders of the next generation of tax payers who are already going to have to foot the bill to look after an aging population?
Of course in an ideal world we'd all have final salary schemes and eat cake. But we have to deal with the world the way it actually is. Promises have been made and expectations set, all in good faith, that have turned out to be undeliverable and unrealistic. That sucks, but that is reality.
Edited by ATG on Tuesday 17th January 09:53
sidicks said:
Countdown said:
Why is that “highly surprising”?
I said hardly surprising.sidicks said:
It compares like for like jobs / qualifications.
I don't think it does. The examples I gave for comparable jobs (nurses/doctors/dentists/teachers) are better paid in the private sector.Sidicks said:
Where is this 'free market' in public sector employment?
See above. Anybody can apply. Lots of people I trained with now work in private Sector. Equally I know at several ex-"Big 6" ACA who work in NHS Finance and Audit.Sidicks said:
Can you explain what justifies a 20%+ premium for public sector workers?
Can you justify why a private sector Financial Controller gets £80k compared to £40k in NHS?ATG said:
This ignores two fundamental points.
1. Private sector total payment is ALSO a combination of pay and pension, and most of the private sector has ALREADY seen its pensions changed. Asking the public sector to follow suit is not asking them to make a sacrifice that hasn't already been made in the private sector. Cries of "unfair in principlr" ring pretty hollow.
Actually that is a very good point when discussing relative salaries between the public and private sector.1. Private sector total payment is ALSO a combination of pay and pension, and most of the private sector has ALREADY seen its pensions changed. Asking the public sector to follow suit is not asking them to make a sacrifice that hasn't already been made in the private sector. Cries of "unfair in principlr" ring pretty hollow.
You have to account for the fact that most private sector employees these days will be contributing to their pension pots out of their salary - thereby reducing their effective salary relative to a public sector employee who probably has a non contributory pension.
In real terms - the public sector employee will be much better off as a result.
The double whammy in all of this is that the public sector pension is also likely to be much more generous than the pension the private sector employee might get and a lot of this pension provision is paid by the taxes gathered from private sector employees.
superlightr said:
Countdown said:
an you justify why a private sector Financial Controller gets £80k compared to £40k in NHS?
eh? a Financial controller covers so many sins. Their pay level will vary enormously job/experience dependant. need to compare apples with apples.
Payroll
Purchase Ledger
Sales Ledger
Credit Control
Statutory Reporting
Treasury Mgmt
Internal & External audit
Moonhawk said:
Actually that is a very good point when discussing relative salaries between the public and private sector.
You have to account for the fact that most private sector employees these days will be contributing to their pension pots out of their salary - thereby reducing their effective salary relative to a public sector employee who probably has a non contributory pension.
In real terms - the public sector employee will be much better off as a result.
No, most public sector jobs have decent employee contributions on average around 8-12% depending on occupation.You have to account for the fact that most private sector employees these days will be contributing to their pension pots out of their salary - thereby reducing their effective salary relative to a public sector employee who probably has a non contributory pension.
In real terms - the public sector employee will be much better off as a result.
Few private sector employees contribute this much, but maybe they would if 'someone else' contributed 2 or 3 times this amount!
Moonhawk said:
The double whammy in all of this is that the public sector pension is also likely to be much more generous than the pension the private sector employee might get and a lot of this pension provision is paid by the taxes gathered from private sector employees.
Not really a 'double whammy', just the actual point!Countdown said:
Sprry, typo. Why is it hardly surprising?
I'm not surprised. The private sector are under greater commercial pressures.Countdown said:
I don't think it does. The examples I gave for comparable jobs (nurses/doctors/dentists/teachers) are better paid in the private sector.
The ONS survey confirms it compares like with like - if you don't believe them, feel free to contact them!Countdown said:
Can you justify why a private sector Financial Controller gets £80k compared to £40k in NHS?
1) maybe not comparing like with like - there can be massive differences between similar job titles2) the survey recognises that some jobs are paid better in the private sector
sidicks said:
I'm not surprised. The private sector are under greater commercial pressures.
sidicks said:
The ONS survey confirms it compares like with like - if you don't believe them, feel free to contact them!
sidicks said:
Countdown said:
Can you justify why a private sector Financial Controller gets £80k compared to £40k in NHS?
1) maybe not comparing like with like - there can be massive differences between similar job titles2) the survey recognises that some jobs are paid better in the private sector
Roughly speaking, for anybody over £40k the private sector pays significantly better than the Public Sector. Well, maybe not significantly but definitely better. And it’s not just the pay – the working conditions are noticeably better (in my opinion).
TL:DR – if you think Public Sector/Banking/actuary/Zookeepers are paid far too much then get a job as a Public Sector/Banking/actuary/Zookeeper.
Countdown said:
You’ve genuinely no idea what the Public Sector is currently going through. One of my closest friends has recently left NHS because she’s fed up of 60 hour weeks and not seeing her young kids. Now that might not sound like a lot (and I know 60 hour weeks are common for Partners/Directors in Accountancy firms) but their remuneration is twice as much.
Please don't tell what I don't know - I have family and friends working in the public sector.Countdown said:
The same survey that confirms that, for like-for-like organisations, private sector pay is greater than public sector pay?
I think you're missing the point.Pay is allegedly greater by 3% in the private sector. The value of pensions is greater by more like 25% in the public sector...
Countdown said:
As I mentioned above I’m comparing the PS/JD on a like for like basis. And I work in that area so I’ve got a pretty good idea how similar the roles are.
Roughly speaking, for anybody over £40k the private sector pays significantly better than the Public Sector. Well, maybe not significantly but definitely better.
And it’s not just the pay – the working conditions are noticeably better (in my opinion).
TL:DR – if you think Public Sector/Banking/actuary/Zookeepers are paid far too much then get a job as a Public Sector/Banking/actuary/Zookeeper.
1) no-one claimed there wouldn't exceptions. The survey is comparing averages on a like-for-Ilke basisRoughly speaking, for anybody over £40k the private sector pays significantly better than the Public Sector. Well, maybe not significantly but definitely better.
And it’s not just the pay – the working conditions are noticeably better (in my opinion).
TL:DR – if you think Public Sector/Banking/actuary/Zookeepers are paid far too much then get a job as a Public Sector/Banking/actuary/Zookeeper.
2) tell that to the ONS, it's not what the survey says. And still ignores the total package.
3) highly debatable - again there will be exceptions. How do average hours worked and efficiency surveys compare?!
4) How can total remuneration packages of 20%+ higher in the public sector be justified?
Edited by sidicks on Tuesday 17th January 12:01
sidicks said:
4) How can total remuneration packages of 20%+ higher in the public sector be justified?
For the sake of argument let's assume they're not justified. So, across the board, on a like-for like basis, on average, remuneration for a job in the PubSec is 25% higher than the Private Sector? If that's the case where do you think all the highest calibre people will be applying?Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff