Public Pensions

As may be obvious from my label name (StuPot1947) I am 65 and I am a pensioner. When I was 22, however, I had career choices to make.

1. Should I take the safe option and take a role as a Civil Servant?? OR

2. Take a risk and generate a career in the Private Sector!

Some of my friends chose the former and throughout their careers suffered many of the economic and political ups and downs of being employed (ultimately) by the government and remained employed until they retired. Those like myself, who wanted more excitement (?) also suffered the same ups and downs but often had to change jobs whether voluntarily or forcibly.

None of my civil servant friends were ever exposed to the income levels my group had, however, they did have a guarantee that they could predict their incomes in the short, medium and long terms with some considerable accuracy. They also knew they would have a pension of more or less predictable proportion to look forward to when they reached pensionable age.

We non state employees often enjoyed higher salaries than our state employed friends, and usually enjoyed company pension schemes. But those pensions ended when we left each employment and became set at a proportion of our terminal salary – but what may have been a high salary in 1987 is far less in current terms than it was then. As an example a person who worked from his 25^th birthday to his 40^th birthday for ABC Ltd would end up with a pension of 15/60 of their final salary which may have been £20,000 per year. 25 years later they would enjoy this pension of £5,000 per year. After this they may well have bought a money purchase pension which forecast say, £25,000 per year at the time of retirement when they reached 65. However, what actually happened (if they were lucky) is that it ended up yielding a pension of less than £8,000 a year due to lower than promised growth, taxation on dividends (thank you Gordon Brown), and poorer annuity rates and despite higher contributions.

So most of my civil servant friends ended up with much higher pensions than my other friends.

To hear what the Coalition is now doing to Civil Servants these days certainly saddens me, but I do not believe those people should protest as loudly as they do.

Comparing their pensions to those in the private sector could in the future leave them with the same plight as many of my private sector friends.

They should be careful what they wish for.