Pensions are indeed deferred wages

Urgent talks are under way to avert a mass walkout on the railways in a growing row over pensions.

Tensions have risen over the Pensions Regulator’s demands that train companies and workers plug yawning deficits in their final-salary schemes.

Well, yes.

“We will always seek to protect our members’ deferred wages and resolve any issues in the best way possible, based on their wishes.”

Pensions are deferred wages. Therefore we’d better include pensions in our calculations of wages, hadn’t we?

So, public sector, you underpaid are you?

16 comments on “Pensions are indeed deferred wages

  1. Chickens coming home to roost.

    In the State sector increasing pensions were a convenient way for politicians to avoid making tough decision. See also the new research that says the you don’t want to pay for the elderly.

    Maggie used to bang on about the demographic time bomb, but as usual was at best ignored and at worst pilloried. Well, its stopped ticking because its now exploding.

  2. Presumably they are underpaid if the pensions dont pay out because they are run as a ponzi scheme rather than making functional investments .

  3. Maggie used to bang on about the demographic time bomb, but as usual was at best ignored and at worst pilloried. Well, its stopped ticking because its now exploding.

    People living longer and retiring earlier, not a sustainable combination. But meh, austerity.

  4. “they are run as a ponzi scheme rather than making functional investments”: mainly, yes. But LGPS is actually funded i.e. owns heaps of investments. (The only one among the large schemes for govt employees, I believe.)

  5. I have a minuscule pot in USS and NHS schemes. I am not relying on seeing a penny of it. But mostly because I probably won’t be alive to draw it. I’m sure proper civil servants have it rather better, though USS would have been pretty generous had I stayed in.

  6. People never want to calculate benefits of any sort when it comes to ‘I’m paid less than you so I deserve more’ contest.

    Waaay back when I was a junior sailor, single, one of my married colleagues tried to explain to me how he was paid so much less than I was and so deserved special accommodation.

    Pointing out that the military lent him a house (compared to my rack on the ship), and provides a ton of spouse and dependent support options his answer was ‘but I have less money left over after paying bills than you do’.

  7. A lot of astute UK military (eg my cousin) buy a property and rent it out whilst living in cheap Mil accom.

  8. “I have a minuscule pot in USS and NHS schemes.” They are DB schemes: you don’t have a pot, you have a promise.

    At least USS has a fund, even if it may prove too small. The NHS scheme is unfunded.

  9. Everyone is told that: only the rich have done well from the past 10 years of QE and the public sector have been neglected.

    Given annuity rates have gone from c7% to c3% (i.e. 100k of savings used to buy 7000 of pension and now buys 3000). a defined benefit scheme has roughly doubled in value. If you were on 40k and building up db rights of 1.75% that was worth (40 + 40 * 1.75 / 7% = 50k). That same pension is now more valuable so today your compensation is worth (40 + 40 * 1.75 / 3% = 64). From 50 to 64 is an annual pay rise of 2.4% p.a. Anyone will actually have seen much more due to pay rises (many are on automatic seniority based escalation) and some inflation based increases.

    At the same time if you had built up a db pension of 14k (20 years worth) then 10 years ago that was worth 200k (14 / 7%). The original pension rights have increased to 17k due to inflation (this is ignoring rights earned over 10y). That is worth 17 / 3% = 570k. So this civil servant has seen their pension increase from 200k to 570k – plus the value of the pension rights earned in the past 10 years.

    Then don’t even talk to me about senior doctors being allowed to bring forward their retirement dates and not suffer a financial penalty if they know the symptoms of ill health. That is a benefit worth in 500k+.

  10. So tje question: are public sector employees under – paid? Well, if they believed their wages were being deferred into their pension and if that pension is now in doubt, they’ve been sold a pup. And anyone in that position would take whatever action they could. Wouldn’t we?

  11. @ Ironman
    If their pension is in doubt, so is the £ note.
    But the ONS says that they are modestly *overpaid* relative to the private sector.

  12. A few years ago I read about a study of employees of Fedgov USA, comparing their “compensation” to non-gov people.

    Bottom of the heap Fedgovers were overpaid, top of the heap underpaid. Or so it was claimed.

  13. I have some distant kin who were prison warders. They had no complaints about pay and pensions – thought them pretty good for their part of the country. But, reluctantly, they retired early.

    Cause: it had all become too damned dangerous.

  14. @ Mark T
    That doesn’t reflect well on you if you are serious (almost certainly you are not).
    When I was young MPs were paid a modest salary and no expenses so most Conservative MPs had private incomes or were self-employed who could fit their other work around their duties, often lawyers who could work in the morning and attend Parliament in the afternoon/evening or were journalists and most Labour MPs were privately wealthy or sponsored by their Trade Union (there were exceptions e.g. Bill Rodgers was subsidised by his wife’s earnings as a dentist and Shirley Williams by her husband’s as a Professor, Barbara Castle was a journalist). They had to want to do it because they thought the job was worth a scarifice in terms of material wealth. Now, many, if not most, do it for the money.

  15. @john 77, December 11, 2018 at 2:00 am

    They had to want to do it because they thought the job was worth a scarifice in terms of material wealth. Now, many, if not most, do it for the money [And Power & Status].

    +1

    imo MPs & Councillors etc should be unpaid and role seen as a vocation. Self-fund or raise funding from your supporters.

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