Dedication deserves you a gold plated pension

Dedication deserves you a gold plated pension: that was Unison’s message in today’s Metro article on why we will have up to 3 million workers take part in the largest strike Britain has ever seen on Wednesday this week. Dedication by those looking after our children (teachers), our elders (nurses), our planet (recycling collection). Don’t get me wrong, I do appreciate the education I had, the help delivering my two children and having my bins emptied every week. But why are those working in the private sector or for a charity, who could equally be as dedicated to helping others, not be as deserving as those who have managed to find and sustain work in the public sector.

The comparisons used in the Metro article to illustrate the existing public sector schemes are of a hospital porter and a nurse. I have not checked the maths but they are quoted as follows:

“A hospital porter earning £15,000 on retirement after a full career could receive £6,600 a year with a lump sum of £19,700. To get that from a private sector personal pension you would need to put away at least £200 per month.“   This means that together with the new proposed flat rate state pension of £7,280 the hospital porter could retire on an income which is 92.5% of his (or her) earnings at retirement. Plus a lump sum equal to more than a year’s pay.

The second example: “A nurse earning £30,000 a year on retirement after a full career could receive £13,100 a year with a lump sum of £39,400. To get that from a private sector personal pension you would need to put away at least £400 per month.” Again adding in the new proposed state pension the nurse could be retiring on 2/3rds of her (or his) earnings at retirement. Plus of course the lump sum on top.

No statement was made as to what investment or annuity assumptions have been made for the private sector equivalent!

Even with the changes proposed by the government; which will see a career average rather than a final salary scheme being introduced from 2015, with retirement being increased from 60 to 65 for those not already within 10 years of retirement, and with employees earning more than £15,000 being asked to pay on average 3.2% more into their schemes, the public sector pensions will still be pensions that “you simply cannot get anywhere else” as Ros Altman states in the article.

Perhaps a little more work on engagement by the Government so those in the public sector realise what a generous benefit their employer (and the tax payer) is providing to them may avoid further strike action and disruption to those working in the private sector whose working arrangements need to change as a result.