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Savings and Investments thread

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  • I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
  • I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
  • I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    Lies, damned lies and statistics and all that - but assumptions can be false as well as true.


    Snippet:

    Trends in public sector pay

    In April 2023, median weekly earnings for full-time employees in the public sector were 8% higher than those in the private sector. The gap had been narrowing prior to the pandemic, but increased again in 2020, partly because of greater use of furlough in the private sector. It has been narrowing since 2021.



  • I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    I think a lot of that is a fallacy. Especially when it comes to teachers, nurses & doctors. Not sure where else they can work on a comparable job where they would get an annual bonus. 

    And you forget the inflation linked pension. Every year they are getting guaranteed increases in retirement. Try building that into an annuity or a drawdown pension. 
  • I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    I agree. I don't see it working properly. Certainly not with equity based. Maybe like a corporate bond, but even then would have to be guaranteed by the government to convince pension trustrees it's sensible. As a trustee for a pension scheme that's my take anyway. 
  • bobmunro said:
    I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    Lies, damned lies and statistics and all that - but assumptions can be false as well as true.


    Snippet:

    Trends in public sector pay

    In April 2023, median weekly earnings for full-time employees in the public sector were 8% higher than those in the private sector. The gap had been narrowing prior to the pandemic, but increased again in 2020, partly because of greater use of furlough in the private sector. It has been narrowing since 2021.



    Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc. 

    My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere  especially the likes of teachers and health workers. 

    Historically at least the public sector has offered / advertised the pension as a genuine element of the remuneration package.  

  • I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    I think a lot of that is a fallacy. Especially when it comes to teachers, nurses & doctors. Not sure where else they can work on a comparable job where they would get an annual bonus. 

    And you forget the inflation linked pension. Every year they are getting guaranteed increases in retirement. Try building that into an annuity or a drawdown pension. 
    Not forgetting at all. It’s part of the overall package. 

    But I take your point about finding direct or like for like comparisons. 

    Surely there are a lot of relatively average paid civil servants who might do better in a private sector role in more generic roles - finance, HR, marketing etc?
  • bobmunro said:
    I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    Lies, damned lies and statistics and all that - but assumptions can be false as well as true.


    Snippet:

    Trends in public sector pay

    In April 2023, median weekly earnings for full-time employees in the public sector were 8% higher than those in the private sector. The gap had been narrowing prior to the pandemic, but increased again in 2020, partly because of greater use of furlough in the private sector. It has been narrowing since 2021.



    Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc. 

    My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere  especially the likes of teachers and health workers. 


    You mean not like the automatic pay scales that doctors & nurses are on. Pay scales that mean they get pay rises every couple of years due to just being in the job. This is above any CPI or pay award body increases. And no real fear of redundancy either. 


  • bobmunro said:
    I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    Lies, damned lies and statistics and all that - but assumptions can be false as well as true.


    Snippet:

    Trends in public sector pay

    In April 2023, median weekly earnings for full-time employees in the public sector were 8% higher than those in the private sector. The gap had been narrowing prior to the pandemic, but increased again in 2020, partly because of greater use of furlough in the private sector. It has been narrowing since 2021.



    Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc. 

    My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere  especially the likes of teachers and health workers. 

    Historically at least the public sector has offered / advertised the pension as a genuine element of the remuneration package.  


    It would seem the figures are across all public sector versus all private sector and would presumably come from HMRC data. It also says very clearly 'median'.

    Of course there would be some roles where public sector pay lagged behind private and vice versa - that's the nature of averages.

    Also, the vast majority of private sector employees do not get 'big' bonuses - don't be swayed by the bonuses paid to FTSE 100 CEO's - there's only 100 of them!

    Yes - no surprise that DB pensions, index linked forever, are a pretty good recruitment tool.
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  • bobmunro said:
    bobmunro said:
    I'm not sure on this as I origjnally thought when I heard about it last night that they were talking about large public sector schemes.......but they are mostly unfunded - and the ones that are (and are DB schemes) have to keep a certain amount in fixed interest (Gilts) as they have guarantees to cover.

    If they are actually talking about DC schemes then that opens up a whole new can of worms. Most are in default funds, which again are usually quite defensive in nature. Imagine finding out that the pension you've been paying into for 20 years has just changed its investment strategy and is now investing into HS2 or the new local prison/hospital/wind farm.

    I dont think this will go down well & probably wont get off the ground.

    But of course the millions of public sector workers in DB schemes like teachers, nurses & doctors will be just fine as they can retire on their fully funded  inflation linked pension. 
    For which they have likely sacrificed relatively bigger private sector salaries and bonuses.

    Swings and roundabouts is my point. 
    Lies, damned lies and statistics and all that - but assumptions can be false as well as true.


    Snippet:

    Trends in public sector pay

    In April 2023, median weekly earnings for full-time employees in the public sector were 8% higher than those in the private sector. The gap had been narrowing prior to the pandemic, but increased again in 2020, partly because of greater use of furlough in the private sector. It has been narrowing since 2021.



    Depends of course what part of the private sector you compare to and how you calculate averages- by band and then mean, median etc. 

    My broad point is that the majority of public sector workers likely don’t get ‘big’ bonuses and significant wage growth opportunity as you might get elsewhere  especially the likes of teachers and health workers. 

    Historically at least the public sector has offered / advertised the pension as a genuine element of the remuneration package.  


    It would seem the figures are across all public sector versus all private sector and would presumably come from HMRC data. It also says very clearly 'median'.

    Of course there would be some roles where public sector pay lagged behind private and vice versa - that's the nature of averages.

    Also, the vast majority of private sector employees do not get 'big' bonuses - don't be swayed by the bonuses paid to FTSE 100 CEO's - there's only 100 of them!

    Yes - no surprise that DB pensions, index linked forever, are a pretty good recruitment tool.
    Depends how you define big. 

    Anything when you get nothing in public sector seems ‘big’. 

    Within that report it does also say this:

    Skills/occupation: The public sector employs a higher proportion of upper-skilled employees than the private sector. Many of the lowest paid occupations (for example, elementary sales occupations, bar and restaurant staff, hairdressers) are largely found in the private sector. However, high earners in the private sector tend to be paid more than high earners in the public sector.


    A case of lies , damn lies and statistics perhaps?

    I think we agree that it’s probably fair not to generalise too much. But it may be unfair to imply all public sectors have an advantage in some way. 

    We make our own choices  

    For the record I was not a public sector employee so no axe to grind but very aware different employees pay differently and pension benefit is part of the overall remuneration package individuals need consider 


  • The public v private thing is an interesting one but the more interesting one and will be more as tome goes by is PAYE vs Self employment. For years I'd listen to people in the pub take the piss about what my day rate was compared to them. I didnt give much of a shit as I knew I'd see my money at the end of the month, would not have to save up to cover lost wages when off work as well as pay for a holiday and didn't have to be looking over my shoulder for the tax man to finally strangle some honesty out of me. However, these guys were all demonstratably materially wealthier than me, working as PAYE in the private sector. 

    One of the trade offs people make choosing to work in the public sector is the promise of a better pension at the expense of not having a dynamic wage increase each year. 

    The more I think about pensions and CGT, inheritance tax, tax on investment properties the more I think genuinely the powers that be desire us not to have retirements. It should be a goal to have saved and invested prudently to be able to give up work early and enjoy life but at every turn the doors slam shut. Pensions are now basically endowment policies, and any type of aspirational investment success is taxed so much it is barely worth it 
  • Some private sector workers didn’t have pension schemes until the change was made. my wife worked in Halifax bank but was not employed buy the bank but by the estate agent owner who did not have a pension scheme so has 20 years or so with no pension.
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