Breaking strikes

Mil

Hardly downhill. But far more convincing as a childhood highlight!

Dave B

I think they've got Cameron pegged about right. Fortunately, the unions appear be led by muppets.

Private Schultz

I agree. They don't have a leg to stand on. I'm in the public sector, and when I joined in the mid '80s, I think it was genuinely the case that equivalent salaries were generally lower than in the private sector, and the good pension deal was meant to compensate for that.

However, I noticed in the last quarter's employment stats that average incomes in the public sector now exceed those in the private sector slightly. This, taken in conjunction with the changes in private sector pensions that have already taken place (including the raid by one G. Brown), surely means that public sector pensions supported so heavily by the taxpayer, and early retirement ages are now totally unjustifiable.

Also Fraser - slightly off topic, but I wonder if you might have time to provide a numerate riposte to the outrageous graphic on the front of today's Independent (hard copy only, it would seem). This compares average pensions of various groups of public sector workers with those of MPs with the headline 'Public-sector pensions: spot the odd one out'. Perhaps MPs do get a particularly good deal, but someone needs to point out that this can only be judged by comparing the pensions of workers in each area of the public sector who earn over 64k (and I'm sure there are plenty of them) with those of MPs. Another category it would be instructive to include would be the pensions of Trades Union leaders who earn over 64k.

David Lindsay

None of the unions on strike today is affiliated to the Labour Party. But, as I have often been explained, Britain's most militant union has close ties to the Conservative Party. Readers in London, remember that the next time that there is a Tube strike.

Labour's municipal and industrial machines in the North and the Midlands may be shadows of their former selves, but the Conservative Party's are as mighty as ever. Michael Gove's doolally scheme to allow any and everyone to set up a school, and that at public expense, is being fought tooth and nail by Conservative-controlled councils from the East Riding of Yorkshire to Birmingham, where the Council Cabinet member for education cohabits with the General Secretary of the NASUWT.

Yonmei

If you think it's unfair that private sector workers have to work till they're 66 and get worse pensions than public sector workers do, then campaign to level up - don't whine and try to drag public sector workers down.

Pettros

I think the point that Public Sector pay etc is higher than Private Sector is misleading as we as a country are in serious financial difficulty. Private sector pay is always likely to go down. During the goodtimes private sector pay far outstripped that of public sector.
That is simply just the risk/rewards of being in the private sector.

Mal

Yonmei. You have two tanks of water at different levels, connected by a pipe. Open the valves and the tanks equilibriate. It is the same with pensions - there is a finite amount of money. Now, if we were taxed less........

stephen Barr

@ Yonmei

Your comment is silly. What you seem to forget is that we're *all* living longer: as a society we can't afford for eveyone to retire at 60/65 anymore; each year, lifes expectancy increases by another 3 or 4 months. All public sector workers are being asked is to pull up your socks and accept that the world is changing, like the rest of us have already accepted.

tb

@Yonmei

Because some people understand economic reality.
If you're in the private sector and want to retire at 60 you can work and save harder for it (and hope that politicians don't move the goalposts again).
If you're in the public sector you want other people to work harder and earn less to pay for it.

Public sector workers were silent and in some places gloating over Labour wrecking the retirements of millions, the sympathy you get now is the result of Labour's divide and rule policies.

alexsandr

Yonmei @ June 30th, 2011 11:31am

But where does the money come from? You are forgetting we are skint.

denis cooper

Fraser -

"They [teachers] want to retire aged 60, and ask that this is paid for by people who will now have to work until they're 66."

This kind of crude Tory propaganda is demeaning; you should rise above it and protect your reputation as a reliable commentator.

The minimum age for receiving the state pension will rise to 66 for everybody, including teachers, by 2020; and the pension then received will depend on NI contributions made:

http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_4017919

The normal minimum age for receiving a pension from any other scheme is now 55:

http://www.hmrc.gov.uk/pensionschemes/min-pen-age.pdf

and there will still be plenty of people who start to take those other pensions before 66 because their employers no longer wish to employ them.

Maggie

Just because the retirement age is going to be 66 or 68 or whatever doesn't mean they can't retire till then.

RCE

Private Schultz,

I happen to think a comparison with MP's pension and severance arrangements would be very instructive.

You objection seems to reveolve around the fact that MP's are paid a lot of money to start with.

denis cooper

On the matter of Gordon Brown's raid on pension funds, I'd like to make three points.

1. It affected all pension funds, not just pension funds for private sector employees.

In other words, the teachers' pension fund:

http://www.teacherspensions.co.uk/

also lost the tax credit on dividends, affecting teachers not only in state schools but also in many private schools.

2. When Brown made the announcement in his first budget, July (?) 1997, it was obviously a bad move, but it took the Tory party and Tory supporting media years before they started to raise objections.

3. Which may have been because Brown's reforms on ACT, Advanced Corporation Tax, were in fact continuing and completing a process which had been started by the previous Tory government.

From November 1993:

http://www.independent.co.uk/news/business/goodtime-pep-pill-turns-into-a-downer-some-personal-equity-plans-may-now-be-worthless-1502690.html

"The chief attraction of a PEP is reclaiming the basic rate of tax deducted at source on dividends (the so-called tax credit). Unfortunately, one of Norman Lamont's last acts as Chancellor was to slash the credit from 25 to 20 per cent.

Pension funds and other tax-free institutional shareholders able to reclaim the credit duly kicked up an enormous fuss. But the sideswipe delivered to PEP plans was hardly noticed."

I recall a Telegraph journalist writing with respect to PEPs that the government had made a deal, but was now welshing on it.

In retrospect I wonder whether the EU may have had anything to do with it.

Bickers

Denis, you're being disingenuous.

The Private Sector is the source of almost all taxes that pay the way of Public Sector workers. Public Sector pay under Brown soared to levels where a great many public sector workers are paid a higher salary than their private sector counterparts and they enjoy relative job security, more days off sick, no competitive pressures and a pension that dwarfs the private sector.

If we have a financial system that encourages people to want to work in the public sector rather than the private the country is screwed as where will the future wealth come from to generate the taxes to pay the public sector pensions - look no further than Greece to see the results of a country running a bloated public sector and living beyond its means - it's bust

TrevorsDen

i am glad yonmei's silly remarks have been squished on.

'They want to retire aged 60, and ask that this is paid for by people who will now have to work until they're 66' - this is a key point.

If they want to retire at 60 then people must accept a lower pension. Otherwise they can opt into the 66 scheme.
Existing entitlements are being protected. These workers want a benefit but will not pay for it themselves. The money for the status quo has to come from the govt, us. If an employer for a private scheme cannot afford its pensions and benefits payments then it goes bust. This little fact seems to escape the public sector.
General Motors is a good example, it came out of administration with a far less generous pensions and benefits package.

Danielle

If everything is so bad for workers in the Private sector, why not try to improve their working terms and conditions instead of the race to the bottom by hurting Public sector workers?

All these references to the strikes of the 80's etc are a joke. This is not the 1980's and the people who are striking this time is very different. There has been a massive shift in Society since then in terms of the workforce. Now over 70% of Women work and mainly in the Public sector. This is not Militant Union men, it's women. And don't forget if the Tory's want to stay in Power at the next election they need the votes of Women, so is this all worth it, when actually the only 'savings' from the Pension reforms is £3Billion. By the way that is the amount they've increased the International Aid Budget by.

Justify that!!

tb

@denis cooper
1. But public sector funds used the tax payer to minimize the effects.
2. So? Just because the another bunch of overpaid wastrels didn't see the damage doesn't negate the damage.
3. Repeating a bad decision doesn't make a good decision, in fact it's the definition of lunacy.

Yosemite Sam

I am always cautious about disagreeing with Mr Cooper, but it is a matter of fact that there is no Teachers Pension Fund (nor any other public sector pension fund save for the Local Government Scheme). Public Sector pensions are transfer schemes. In principle, they are no different from the state old-age pension. The Government Actuary does attempt, at the periodic valuations, to give some value to a notional fund for the scheme but it does not exist in practice. If a person draws a public sector pension before the normal age of retirement for the population at large (for whatever reason), it follows that their pension is being paid for by the taxes of those still at work in the population at large. The same is true for a public sector pension drawn at normal age of retirement. Private sector schemes, on the other hand, whether defined benefit or defined contribution, are paid for by the scheme and enterprise within which the employee works - they are entirely internal and the costs fall internally.

RKing

Public sector workers are out on strike...... has anyone noticed any difference???

But hows this for a solution to the pensions debacle.. each worker has contributed all their working life and the total to date forms their so-called pension pot. Why not offer them this sum for them to invest in their own pension fund wherever they wish. The percentage amount they contribute at present should be added to their salary. Then in future each individual becomes responsible for the amount they wish to contribute similar to the private sector. If they want a big pension then they will have to fork out for it again in line with the private sector.

denis cooper

Bickers -

I don't know why you think I'm being "disingenuous".

It goes without saying that the money for public sector workers - and also workers in suppliers and contractors to the public sector - has to be raised by taxation, even if it's deferred by government borrowing, and the lion's share of that taxation comes from individuals and businesses which are not working for the public sector.

That's what we've decided to do, as a society - collect money from across the whole of society to pay people to do things that we want done on behalf of society.

It's legitimate to argue that we should shrink that back, restrict the things we want done in that way, employ fewer people, reduce their costs in salaries and pensions, and I'd agree with that, but we can't expect them to work for nothing and retire without pensions.

The workman is worthy of his hire whether he's hired by the public or hired privately.

denis cooper

Yosemite Sam -

Yes, I was wrong about that because the teacher's scheme is unfunded which presumably means that the contributions are never invested in equities and therefore there are no dividends to be either taxed or not taxed.

The question in my mind is whether at any point in the history of this scheme there was an excess of contributions being paid in over pensions being paid out, and if so what use the government was making of that surplus as apparently it wasn't being invested.

Nevertheless I still think that Fraser is wrong to confuse the issue by comparing the minimum age for drawing a pension from what is an employer's pension scheme with the age at which the state pension can be drawn.

Teachers would be far from alone in starting to draw an occupational pension before they become eligible for the state pension.

Knips

Your graph Sir; may we have the reference. It appears to show primary and nursery teachers teachers earning 35K in 2006. This seems a little strange given the starting salary for a secondary qualified teacher this year is 21K.

Peter From Maidstone

Dennis Cooper, you are talking crap. No-one is asking a public sector worker to work for nothing and retire with no pension. Indeed all that is being required is what lots of protestors in London have been saying on their placards - Fair Pensions.

A fair pension is one which does not cost the tax payer a disproportionate amount, does not provide the public sector with greater benefits than those paying for them, and requires the public sector worker to pay the same proportion of income towards their own pension, and retire at the same time, as a public sector worker.

I can't presently afford to pay into my pension. I object to paying into the pension pot of someone who doesn't think they should have to pay very much at all, thinks that they should get a large pension, and thinks that they should be able to draw it 20 years before I will probably be able to stop working.

JohnBUK

Danielle, here on planet Earth the private sector have to pay for "better working conditions" from their own earnings, there is no fairy godmother in the guise of other taxpayers. Currently, as you may have heard, things are just a tad tough on the earnings front in the private sector as people don't have the same money as they had in the past when Gordon had beaten boom and bust. Therefore they have to hunker down and live within their means until matters improve. Shocking I know but stripping pound notes from the living room walls isn't an option any more and, strangely, no other options present themselves. Still that needn't worry those on planet Liebore where money grows on trees and someone else, anybody else, will foot the bill. Good luck.

stephen bennetts

The government is being disengenuous, what this is about is making public services more attractive for the private sector to take over.
A fly in the ointment to this happening is the cost of the pensions in the public sector.

Peter From Maidstone

Knips, the starting salary for a new teacher outside London is £21k.

Since increments to pay are made each September by one or two increments if the teacher is good then in 4 years a new teacher outside London starting at £21k could expect to be on £32.

I know few private sector jobs where the growth in salary would be so rapid and generous.

If the teacher is working in London then pay starts at £27k and goes up to £36k in the same circumstances. And this is just the basic pay scale. Start adding on some extra courses and responsibilities and the sky is the limit.

HJ

Fraser - I don't doubt that your graph on teachers pay is correct, but you really should have provided a source reference.