Sunday 7 June 2009

Final Salary Pensions? Only in Parliament

In a truly awful weekend for the UK; Government paralysed, celebrities like Suralan given jobs in Government, the Prince of Darkness promoted to be the real Prime Minister. There is another longer running story that is very bad news.

This is that many companies are using the recession to end their final salary pension schemes, even to current members. I know, pensions is not the most exciting subject, but this is sad news for all the generations of this country.

I am saving for a private pension, by my own reckoning I will end on about one fifth of my final salary is I save 10% a month of my salary. Final Salary schemes on average are 4x as generous as this. It is a huge pay-cut too all staff who are taken out of such schemes or whose companies close them.

Even worse, the reason they are closing is because companies cannot afford them at the moment and the Government has robbed with taxes the other types of pensions savings.

Only the Public sector and MP's will soon be left with such generous pensions provision. And this is payed for by the put-upon private sector who will have to find new ways of reducing employee wages in order to pay taxes and try to make profits.

The situation is untenable and will come to a head one day in a political crisis that will make today's events look like a mild disagreement at a dinner party.


Anon for obvious reasons said...

I agree the system is unsustainable.Without giving away too much about me (i fear my neighbours)i worked for the Government for thirty one years and reached a middling rank.My pension is more that twice the national average pay. I reach 65 this year and i get an Old Age Pension in excess of £7500.

On top of that we get heating allowance and i dont pay any N.I.C a tax by any other name.

My take home is way in excess of what i used to get when working and I spent less that half my life working in Government.

An old lady up the road is paying tax on savings and property rates to support me.

Another near neighbour with a good job will have to work until he is 68 to get a reasonable pension.

I retired at 49. It is madness on a large scale.

There are hundreds of thousands working for the state in the same position as me !!

Electro-Kevin said...

All this will add to housing speculation as an alternative.

If you're staying in Britain it may seem that BTL is the way to go. The better option is to get out altogether.

Demetrius said...

You assume that there will be a private sector left. On present trends this is becoming increasinly unlikely. Incidentally, I exclude finance and banking because this is now just an adjunct of government.

Man in a Shed said...

Labour are leaving this one for the next Conservative Govt.

They get their dirty work done, and the undying loyalty of the public servants.

Mitch said...

shit man ! that's depressing I`m really thinking of leaving now.

CityUnslicker said...

Anon - thanks for this. This is exactly my concern there is no way this is sustainable fiscally for the UK Government in the next 15 years.

Yet all parties have a rabbit in the headlights stance on it.

Richard Elliot said...

I can't believe that the Civil Service still get finaly salary pensions and there doesn't even seem to be a glimmer of hope about changing them. When all of the private sector (virtually) are on defined contributions, it just isn't right.

Mick said...

Currently 20% of all police rates goes on paying pensions, and this is rising exponentially year on year.

Get your 30 years in and retire.
It's clearly unsustainable but who will have the balls to tackle it?

Wine Maker Salary said...

Don't stick your head in the sand. Go to Jobnob and start searching for the job of your dreams, it's out there, you just have to try harder to find it.