On a bad day on the trains I indulge fantasies of renationalisation. I’m interested in your experience.

By and large, are things better now? Or is it difficult to say.

As an aside, this isn’t all about public vs private, as final salary pensions do of course exist in the private sector, it’s just that they’re on the wane in a big way, and most schemes are shut to new joiners. Thus we have the gross situation where 2 workers sat next to each other in a private company are doing the same job but one got in on the deal, and one (usually younger) didn’t. This should be challenged in the courts one day, as it’s a form of inequality. Hannah might say that both workers should get the good deal, but that view does not appreciate the demographics and costs of the situation. I’m not saying that both should get the shit deal, merely that the status quo is grossly unfair. A 3rd way is needed. Anyway, I digress.

Mushti, some thoughts on the details you have offered.

– Your scheme is relatively expensive. While it is great that you are continuing to accrue, I bet this same scheme isn’t open to new joiners in your organisation. If it is then that is very rare indeed. Only Tesco and a few others do so now.
– You yourself are putting a lot more in than the average pension contributor, and more than in most public sector schemes.
– Yes, your scheme sounds well-run and seems to be working, but extrapolate the cost of your scheme over 20% of the workforce and you can see how this is a growing issue.
– You say the scheme is not in deficit, which is great. Again, this is not the private sector norm. Out of the 7,400 schemes analysed in the PPF 7800 Index 6,389 are in deficit, which puts 83% in the red. Some are seriously in the red, despite throwing many millions at their schemes – millions that could’ve gone on investment or jobs. BA is often referred to as a pension fund with an airline attached. So the question arises, Hannah, is BA there to look after its current and future pensioners, or is it there to service the rest of us, and try to compete with global outfits who don’t have these pensions?

In short, Mushti, you and your employer are both trying to fund a relatively generous scheme, and that’s admirable. Your scheme also seems very flexible in that all parties understand the need to raise contributions if there is a deficit. This is the sort of thing that would have folk striking in the public sector.

Your situation differs from the vast majority of the public sector in that:
– Your scheme is funded and transparent and seems flexible. If there is a deficit then you know about it. Accounts don’t exist in this way for most public schemes.
– You are paying for your pension from profits or whatever, not from the taxpayer’s pocket.
– You are plugged into the stock market. The great majority of public schemes are conveniently not so.
– You contribute more of your pay than many public sector workers, and much more than the national average.
– Your employer contributes more. Remember, in the public sector there isn’t this funding. A lot of it goes on the tab for later and is conveniently forgotten about.
– Though I don’t know the ins and outs of your scheme, perhaps it is not as generous as, say, MPs and Police.

Now, local authority pensions are different in that they are funded and a bit more transparent. Perhaps this is what you’re referring to, in which case you do have a point of sorts. However, they remain just as expensive, as NickW has noticed, and the employer contributions are rising and taking more of our council tax. So yes, the schemes are funded a bit like your’s but as the tax take needed for this goes up and up then I’m sure more folk will start to question their sustainability, particularly if they’re giving 20 year olds these deals. Whether local councils would ask employees to fill any deficit gap is an interesting thought. Incidentally I myself have a local authority scheme. Maybe I should’ve stayed there, eh.

If your scheme became the public sector norm then the liabilities that are being shored up would suddenly go on the balance sheet and government expenditure would rocket (yes, even further). People would become more aware of the costs of public pensions, the labour market (already cocked up in parts of the UK thanks to this issue) would react, and I suspect people might wise up a bit about their own pensions too, which would only be a good thing.

I hope this might conclude what has been an interesting discussion as I fear I may get banned if I post further on this issue. I welcome any other thoughts though.

And remember, Michael Jackson never reached retirement.

Your friend
Phil G

Sadly trimming boardroom pay would not go any real way to filling some of these pensions holes. Though it would be a welcome message.

So, you seem to think the public sector is carrying an admirable torch of good practice, but it isn’t. It only continues because, instead of being funded by companies, the state treats their funding as a bottomless pit.

Course, this isn’t just a public vs private thing. It’s also young vs old.