Public sector pensions: what you find if you ask the obvious question
In the debates over public sector pensions, it has been very common to have figures quoted that are supposed to show how low public sector pensions are on average. In better coverage this sometimes results in some juggling about of means and medians so that the ‘average’ quoted is more meaningful. What is usually lacking, however, is the answer to the obvious question: how many years work has someone put in to get that apparently low average pension?
Talking about how much pension someone gets without talking about how many years they work is odd, to put it mildly. For example, I built up a fairly small public sector pension entitlement, but then I spent several years rather than several decades working in the public sector. Factor in the number of years and rather than having got a dreadfully tiny pension, I got a decent pension.
Here then are the answers to the obvious question, showing the average (mean) pension in 2009-10 along with the average number of years people work to get that average pension:
Local government (England) – £4,052 / 7-8 years
Civil Service (UK) – £6,199 / 13 years
NHS (England & Wales) – £7,234 / 11 years
Armed forces – £7,722 / 10 years
Teachers (England & Wales) – £9,806 / 23 years
That context makes the figures look rather different. The local government pension figure is indeed small, but it also reflects people spending a small proportion of their working life in local government on average. At the other end, it makes the teacher figures look somewhat less generous, especially when you consider the amount of time it takes to get the necessary qualifications and when you compare teachers with the armed forces or NHS – a decade more adds only a couple of thousand in round terms.
Source: Hutton interim report Table 1.B and final report paragraph 5.11. Thank you to Thomas Gault for helping me locate these figures.
UPDATE: As has been pointed out in comments on Lib Dem Voice, there are some problems with these figures. I took them from information provided by the House of Commons Library but on querying them based on the comments made, they now say that the years of service figures quoted above include people currently in work and are not just for those currently in receipt of a pension. Apologies for that.
The ‘correct’ figures look to be available for only one of the areas of public service quoted above, namely local government where the average number of years of service that goes with the £4,052 figure is 16 years.
Do we have any more info on the figures for teachers? They don't seem right to me from what I've seen elsewhere. I'm pretty confident an average teacher racks up more than £4200/decade of pension payout.
Tommy – the full source information is in the Hutton report, linked to from the post. By all means let me know if you spot anything odd in them, though they look like they're from very credible/ authoritative sources to me.
Mark Pack the numbers all look good to me, it just goes against what I'd heard from other sources.
Mark Pack I think what I had in mind was that the TPA stated that a teacher who works for 30 years, retiring on £50k will get £25k per year in pension payments. Obviously not all teachers will get to £50k but it still seems like quite a disparity… http://www.taxpayersalliance.com/home/2011/11/taxpayers-alliance-information-public-sector-strikes-pensions-unions.html
Tommy Long Have you got links for any of those? By all means email me details and I'll see if I can work out the reason for the differences after conference
Mark Pack I did post a second response with a link but it doesn't seem to have turned up! The TPA posted an article that said that a teacher retiring on £50k after 30 years should expect £25k/year pension. Of course, the average teacher probably doesn't currently quite hit £50k but it seemed quite a large disparity. http://www.taxpayersalliance.com/home/2011/11/taxpayers-alliance-information-public-sector-strikes-pensions-unions.html
What is never pointed out, is that civil servants had their pay downgraded by 13% as a contribution to their index-linked pensions.
Now if you PAID a contribution to a pension and were subsequently told you weren't getting what you had paid for (and, anyway, it would make you sufficiently comfortable for the rest of us to get jealous), at the very least you'd want your 13% of pay back, together with the substantial interest that would have accrued had you saved that contribution in a bank/building society.
That you may now wish to downgrade pension benefits for future years may be reasonable, but to take away that which has already been earned and paid for is theft or fraud.
For the record, I am not, nor ever have been, a civil servant entitled to a civil service pension, so the facts are not of self-interest to my personal income. I do however believe in honesty and fairness, and theft/fraud is neither.