As its been a little quiet this afternoon and the Raven has been short of things to model recently he decided to look at the real cost of Public Sector final salary pension schemes. He's used current market RPI linked annuity rates to price the final salary side of the deal, historical real (as in nominal - inflation) rates and a typical public sector pay scale, with reasonable promotion and career path assumptions based on government statistics. Given this he was truly shocked to see that the value of this final salary scheme was worth about 40% of salary. Looking at ONS data the median level of full time pay in the public sector was £523 pw in April 2008 whereas in private sector it was £460 pw. Once we then add in this 40% pay kicker we get to annual figures of ~ £38k for the public sector compared to £23k for the private sector, WOW, a 65% difference!
It doesn't take a genius to work out that the UK government needs to massively slash spending, it would appear that there is plenty of room to do this!! The Government should immediately close all final salary schemes, and stop workers purchasing further years through work, switching to a defined contribution scheme, it could even increase wages by 10% to grease the unions, with the aim to holding them flat for the next 10yrs, it could also start by chopping funding for every quango and dramatically reducing government on every level.
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