Directors at Britains 100 top companies probably make up 1% of the total private sector workforce. What about the rest of us private sector workers Mehdi?

If you go back 30 years most private companies provided decent pensions to most of their workers, especially those who worked for them for a long time. It was considered part of the basic compact between employer and employed.

Over recent years most private employers have decided that they'd rather keep that money for themselves and their shareholders rather than pay it out to loyal employees. Some like Maxwell just took the money directly, others just closed down their pension schemes. Governments allowed them to do this. Now only company directors get good pensions in the private sector.

It's not surprising that a right wing government of millionaires now wants to complete the process by doing the same to public sector workers.

The public sector should be continuing to offer proper pension provision to attract the best people into public service, not joining in this race to the bottom.

Over recent years most private employers have decided that they'd rather keep that money for themselves and their shareholders rather than pay it out to loyal employees. Some like Maxwell just took the money directly, others just closed down their pension schemes. Governments allowed them to do this. Now only company directors get good pensions in the private sector. http://www.personalinjurylaws.net/

The public pension system is affordable. This attack on state workers is totally ideologically driven. Nice interview on Radio 4 this morning with Francis Maude floundering when confronted by the facts. The argument that an example of a private sector pension is a bit crap therefore all our pensions should be is ridiculous. Pensions in the private sector (and public for that matter) have been slowly eroded over the years whilst the wealth gaps in society have become bigger and bigger. We all deserve a better deal. I say support the unions, we are all better for it.

Well said Mehdi. Anyone hear that pompous arse francis Maude on The Today programme this morining? It turns out he hasn't bothered to read the Hutton report either, and the bits he has read and I emphasise the word "bits" are nowhere to be found in Hutton's report- Evan Davis tried to find the paragraphs in the report that Maude was referring too but they weren't there.

PeteyMcPeterson there's no corporate conspiracy here. this is about fairness, the state has run out of our money. So why should some benefit more then other? Many in the private sector the 'genuine wealth creating part of the economy' haven't had a pay rise for three or more years, all have long lost their final salary pensions. So why should they have to see their taxes rise to pay for benefits of other they themselves can only dream of?

Oh Luddite, you don't half talk so utter rubbish.

It's not about the money, in fact it will actually get cheaper.

The State has not run out of Money, why do you persist in peddling that old, tired and disproven lie?

So the fact that private sector employees are now being treated unfairly by their private sector employers is now reason to attack the pensions of the Public Sector? Give me strength you are intellectually like a 10 year old. Why must it be a race to the bottom? Why can't we work on improving consumer confidence, business output and thusly the conditions of the private sector employee?

Benefits they can only dream of? Have you not looked at the actual amounts the normal workers in the public sector get? For example 60 quid a week is the average pension for a female public sector worker, 60 quid. That is hardly a gold plated pension.

Come back when you can do more than parrot the tired lies of CPHQ and the right wing press.

Thanks

there is no denying there is a public/private sector pensions apartheid. we can't keep our head in the sands and this is why ed miliband is not supporting the strikes.

a taxi driver in the private sector does not get a pension yet has to pay taxes so that public sector workers can.

the simple and very fair solution i feel is to cancel all public sector pensions, work out the total cost of all public sector pensions and share this equally between all lower income people of pensionable age - whether they work in the public or private sector. that way we would have no public/private pension apartheid.

I VOTE FOR MATHEW. This lad can turn lead into gold..

Luddite is that all you can come up with?

So Your Teachers, Doctors, Nurses, Police are unproductive?

If you want to actually debate the facts then so be it but all you seem to do is repeat the tired practiced lines that all right leaning pundits have spouted.

Sound Economic Policy? Nope as the report clearly states the cost is going to fall as a % of the GDP. They are not unaffordable and if you had actually read the Hutton report you would know this.

Also the National Audit Office has said that the Public Sector Pension Scheme had already been reformed and made sustainable. So do you know more than them?

Also the biggest area you fall down on is the actual amount of money that most Public Sector workers recieve as a pension. If you think the £60 a week that the average female public sector worker will get is "gold plated" then you need to pull your head out of your backside and face up to the real world.

If you want fairness don't drag already poor people down, social justice is a race to the bottom.

If you want to debate then lets go, if you want to parrot already disproven lies then I'll reserve my right to laugh and point at you.

Enjoy yourself, you're more stupid than you think.

Too bad Mehdi skipped right past the beginning of the Hutton report, where the conclusion is laid out rather plainly - it supports extending the retirement age, it supports schemes based on average rather than final salary, and it recommends a cap on pension cost to the taxpayer. But most of the people referring to the Hutton report here have never read it and only know that there is a nice chart somewhere in the middle that says publiic sector pensions are going to be below 2% of GDP someday which sounds like a nice number.

Never mind that directly below that chart the report explains that despite these projections, "because of the design of public service pension schemes, the general public cannot be sure that schemes will remain sustainable in the future". In other words, defined benefit plans (which the public sector get) are inherently riskier to finance than defined contribution plans (which nearly the entire private sector has moved to).

Medhi also digs himself a nice hole in his use of newspaper quotes. The "right wing" (booooo!) newspapers look at pension costs on a like for like basis - looking at how much two equivalent workers pay in and get out - whereas the left wing papers (yay!) shockingly reveal that high income people earn more than the rest of us and 2% of GDP is manageable overall, so who cares if they are overpaid? I can't see how this makes the left look like the serious commentators.

No surprise in discovering the deliberate skewing of taxpayers' funds towards the pension pots of the rich and powerful. Thank goodness Gordon Brown took a little icing off the cake.
What about John Major's government's active thrust into the state pensions business. As far as we can recall, the Tories set up a parallel system to rival the state provision of the 'old-age-pension'.
Heard several complaints from contributors who took up the Major pension plan and then found out that when they became unemployed they could no longer keep up the payments. Hence, no pension!
Did it work - in the round? We think it was called 'the OLD GEEZERS Programme'

Undertaker

How ironic that, to validate this post, I'm going to have to do a simple sum when, quite clearly, so many in the public sector seem incapable of doing just that.

I love this little "it's not a race to the bottom" soundbite that seems to crop up too... it's becoming a pretty nauseating slogan for the "pro-public sector" brigade to be honest because it actually means nothing at all... It's just a neat stock answer to a question when the actual answer just wouldn't fit the argument.

A staggering lack of understanding about pensions regimes in general has led to this eloquent but wholly misleading blog and I am not sure what is more depressing.. The idea that people agree with it because they truly believe they understand the issues here or the idea that they are agreeing with it because they are misinformed!

Matthew please calm down and try to write something coherent.

Call it conspirarcy, call it good business, but it's all relative. Cut public sector pensions and it won't be long before private companies start cutting futher. Not because they're evil. But because they can, and it maximises their profits. The only solution is for the workers to announce that they don't find it acceptable. Seeing as private sector employees would be risking their job to do so, the duty falls to the public sector. I don't understand how teachers and council workers have somehow become the villains in this picture.

Public sector workers have been treated shockingly in recent years. The blame lies with their employers (and partially those who perpetuate a system which forces them to accept shoddy working conditions), not with the guy who collects the rubbish.

The Govt pitting private sector against public sector is great distraction therapy for them.

The centre right/right and media is in overdrive and the private sector are stamping their feet and crying 'it's so unfair' in to their hankies over the public sector whilst their private sector bosses spend their golden handshakes and gold plated pensions courtesy of the sweat and toil of their private sector employyes who didn't fight to protect their own pension rights and deals.

Meanwhile Blighty is going to hell in a handcart and the coalition sit back with the champagne and strawberries watching Federer slamdunk a few balls whilst their policies slamdunk huge swathes of the electorate and decimate this country and it's economy but hey, don't sweat the small stuff like that when you've got the public sector to use as a punchbag for all your frustrations with Govt.

IF we haven't got any money Luddite, Mr Danger, etc, it's because it's all gone to the rich. How do you square that circle with cutting pensions?

You know it, and all of this tiresome arguing shit that ordinary right-wingers do is just profoundly depressing. It's fucked up boys, the market is no longer free (might've been once) and the only way to make it so is to stop pretending it is, because unless you're up top those you aspire to be.. are laughing at you. Support the strikes. Nurse's average pension 4-5k.

Matthew the state spent the lot, there's no money left. Does that up-set you, live with it.. Labour fucked-up badly.
Lou what is the distraction? would Labour if! still in government be doing anything differently?

A Pensions Primer for Civil Servants

Final salary pensions require a sum of money available in a ‘pensions pot’ at the point of retirement of approximately £250,000 for a £10,000 pension to be paid.

That ‘pot’ is funded jointly by the employer and employee during their career.

The size of ‘pot’ has had to become much, much higher over the last thirty years as we are now living much longer (on average ten years longer than in the 70’s) and thus the pension has to be paid out for a much longer period. This effect is accelerating.

Because this increase in longevity was not fully forseen almost all schemes have too little money in them to meet their liabilities and it is getting worse.

In most of the economy, and almost universally in the private sector, these types of pension are now unaffordable and almost all employees in the private sector have had, grudgingly, to accept that any further pension they obtain will have to be through a defined contribution scheme where employer and employee put money in a ‘pot’ and invest it in the hope that it will be as big a pot as possible when they retire and will then fund a pension, the value of which cannot be foreseen today.

What is being asked of Civil Servants is far less than was asked of private sector employees, they will still get a ‘guaranteed’ pension, but based on the average earnings not final salary. They will retain the ‘final salary’ pension they have accrued to date.

What Civil Servants are asking is that they retain their final salary arrangements (and continue to retire much earlier than those in the private sector), even though almost all in the private sector have given them up, with the increasing shortfall being paid by employees in the private sector through their taxes.

Accountants PriceWaterhouse Coopers have estimated that private sector workers would need to contribute about 37% of their salary to their pension pot over their working lifetime to match the retirement income paid to a public sector worker on an equivalent wage. They say this a "broad average" across final salary schemes in the public sector.
http://www.bbc.co.uk/news/uk-politics-13775278

Whilst recognising reform is needed to adjust to the ageing society and the length of time a pension is payable for,amidst all the arguments on how much this is costing the taxpayer we should remember the taxpayer funds far more welfare and benefit top ups for pensioners who don't have adequate pensions be they public or private sector workers than they subsidise public sector pensions.

We should fight for a fair deal for public sector workers and equally we should be urging the Govt to do something about the private sector and reverse the trend of the fat cat employer retiring and living off the pension interest whilst the employees live off pension credits.

Christ almighty Bob if those figures are right, and by jiminey you seem stale enough to be talking truth, we are ALL in a very bad place because private sector workers are only puttin max 10% in and a nurse needs a pot of 100k for a measely 4k pa. That's going to be some massive drain on future tax spending on welfare and such. What's the solution?

Oh right, we ALL go poor.. I see.. Ingenious!

Alwaysintegrity:
One question springs to mind. Are private workers some kind of saints ready to sacrifice themselves on the alter of the free market or have their unions sold them down the river by accepting appalling conditions and a lack of pension entitlement?
If the latter is the case, which I suspect it is, they only have themselves to blame for not fighting for their rights! Why should the public sector workers made to feel greedy because the private sector workers let their bosses steal their pension, like Lou correctly points out?
Apparently the level of pensions in this country (the 6th richest country in the world.used to be 4th), private, public and state, is at this moment the LOWEST in the OEDC countries.Think about that! After this government has finished with them they probably will be at the level of underdeveloped countries.
GREAT-Britain indeed where old people will die of cold and malnutrition while the bankers continue to cash their obscene bonuses.
If we let them we all deserve to die in poverty.

What an appalling shame!

Daniele our old are already dying of malnutrition in our well funded hospitals or didn't you read the newspapers.

LUDDITE's head is so far up his own arse he can't see the wood for the trees.

Divide and conquer.