The Bizarre Injustices of Public Service Pensions

As the latest arrangements stand, Public Service pension contributions, for the likes of teachers, seem to be rather iniquitous. 

For example, if my annual salary is £31,999 and falls into the 8.3% contribution bracket, then I will pay £177.06 per month towards my pension (according to the “Teacher Pension Calculator” online).  However, if my P60 says £32,000, then my contributions leap to £202.67 p/m.  Over the course of a year, for an increase of salary by £1, I will lose £307.32.   Of course, these higher levels came into force as of the April 2014 pay cheque, and who knows what hikes will be foisted upon us in the future?

How is this fair?  Surely, the tiered system needs to change to become more like income tax where contributions are calculated as they fall into different bands.  So, the first £10,000 is protected by the personal allowance; £10,001 to £15,000 yields a levy at 6.4%; £15,001 to 25,000 at 7.2%, and so forth.  This would be much better and money could be recouped by increasing the top rates of pension contributions on those who can most afford the burden. 

I complained about these iniquities during the SPPA consultation, but heard absolutely no response.  In fairness to my MSP, Richard Lochhead, he is investigating the matter and I wait to hear the outcome.  Obviously, saving for retirement is very important – and Public Service workers are still part of a generous scheme where employers contribute 14.1% of member’s salary – but the aforementioned anomalies should be addressed.  The fact I’ve heard precious little about this issue makes me wonder if our pensions are either too opaque to properly understand or our workers too resigned to relative penury in a retirement that keeps receding further into the distance.  Watch this space…

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