What Are Public Sector Pension Schemes Really Worth These Days?

The ‘Job for Life Fairy’ has left the building

The ‘Job for Life Fairy’ who has so appealing fluttered around Public Sector organisations in recent years seems to have flown. It seems she might have made off with the family silver as well. Changes are now looking likely to the state sector pension schemes that could affect those workers who manage to circumnavigate the already legendary cuts that local government and other public bodies are facing. Life for those who remain is going to be no fairy-tale.

Jobs with benefits?

The public sector has been the last stronghold of the final salary pension scheme, which was abandoned and sank faster than the Titanic in the private sector. Though some commentators believe that the affects will not be devastating for those in the public sector the simple fact remains that they are designed to save money, money that will come in part from lower future pension payments. A key part of the proposals is to standardise the ‘normal’ retirement age at which public sector workers can retire to the same as the State Pension age. However you look at the figures civil servants and those in other government jobs will have to work longer for lower pensions.

Forgetful Firemen

Traditionally public sector workers could expect lower average salaries than their counterparts in private industry. However the benefits – specifically pension benefits – were much better. How attractive careers in the public sector will now be, with increased job insecurity, lower pensions and ‘standardised’ retirement ages, remains to be seen. While the alignment of retirement age seems fair enough at first glance, there are some worrying questions. How many sixty-five year olds make good firemen/women or police officers? Some of the vital services that public sector workers provide have a shelf-life, yet we are all being told we will need to work longer to fund our retirements. In the case of elderly fire-fighters this conjures up worrying thoughts of our rescuers stuck at the top of ladders with dodgy backs, or simply forgetting where they are going.

Long term costs

Ageist of course, but no offence meant. The reality for workers in this part of the public sector is that it may not be possible to work until sixty five and with the introduction of average salary schemes this could have severe implications for them in terms of retirement income. It seems likely that, in many parts of the government sector, the once attractive pension scheme will no longer compensate for the fact that salaries do not compete with the private sector. The savings to our public services may be vital in the short term, but the long term costs for both workers and the public seem to be mounting.