Book contents
- Frontmatter
- Contents
- List of tables and figures
- List of acronyms
- Preface
- 1 Origins
- 2 Evolution
- 3 Related markets: immigration – two sectors, no competition
- 4 Youth custody
- 5 Related markets: electronic monitoring – fall of the giants
- 6 The quasi-market: characteristics and operation
- 7 Comparing public and contracted prisons
- 8 Comparing quality of service
- 9 Costing the uncostable? Civil Service pensions
- 10 Costing the uncostable? PFI
- 11 Comparing cost
- 12 Impact of competition on the public sector
- 13 Objections of principle
- 14 Related markets: probation – how not to do it
- 15 Has competition worked?
- 16 Has competition a future?
- Appendix Prescription of operating procedures in prison contracts
- Bibliography
- Index
9 - Costing the uncostable? Civil Service pensions
Published online by Cambridge University Press: 01 September 2022
- Frontmatter
- Contents
- List of tables and figures
- List of acronyms
- Preface
- 1 Origins
- 2 Evolution
- 3 Related markets: immigration – two sectors, no competition
- 4 Youth custody
- 5 Related markets: electronic monitoring – fall of the giants
- 6 The quasi-market: characteristics and operation
- 7 Comparing public and contracted prisons
- 8 Comparing quality of service
- 9 Costing the uncostable? Civil Service pensions
- 10 Costing the uncostable? PFI
- 11 Comparing cost
- 12 Impact of competition on the public sector
- 13 Objections of principle
- 14 Related markets: probation – how not to do it
- 15 Has competition worked?
- 16 Has competition a future?
- Appendix Prescription of operating procedures in prison contracts
- Bibliography
- Index
Summary
The elephant in the room
Before comparing costings, we must acknowledge the elephant in the room – what is the real cost of Civil Service pensions? Not, perhaps, the most enticing of invitations. But pensions are, as it happens, the key to comparing public and private sector costs:
• Pensions are now by far the biggest single cost difference between the two sectors.
• The historic gap is ineradicable: accrued pension rights must be met.
• The issue is systematically ignored in competitions.
• The problem is arcane and little understood.
The question
It is important to be clear what the question is. It is not:
• Are Civil Service pensions fair, compared to the private sector?
• Are Civil Service pensions economically or fiscally affordable, now or in future?
• Do civil servants contribute a fair share towards their pension, compared to their employer's contributions?
Though those issues are important for other reasons. It is this: have the contributions of employees and employers towards the pensions of staff in public sector prisons been enough to cover those pension liabilities? If not, then there is an invisible, unrecognised but real cost attached to the public sector, and cost comparisons have to be adjusted to take account of this.
The Principal Civil Service Pension Scheme
HMPS staff are members of the Principal Civil Service Pension Scheme (PCSPS). This is a defined benefit scheme: where you are entitled to a certain level of benefit based on salary and time served. The other type is the defined contribution scheme, where you cannot know what pension you will get, because your entitlement is defined by what you (and your employer) put into the scheme's fund, and how those investments perform. Many defined benefit schemes in the private sector have closed, because longer life expectancy, lower returns, and legislative and tax changes have made them impossibly expensive to fund. Numbers in private sector defined benefit schemes has fallen from 8 million in the 1960s to just over 2 million – and most remaining schemes are closed to new members (Independent Public Sector Pensions Commission, IPSPC, 2010).
The PCSPS was, and still is, extremely generous (and it was getting more generous: average pensions increased 10% in real terms in the 2000s: IPSPC, 2010).
- Type
- Chapter
- Information
- Competition for PrisonsPublic or Private?, pp. 133 - 142Publisher: Bristol University PressPrint publication year: 2015