How to end pension ‘double-dipping’ in the public sector

The Mail on Sunday always has something shocking as its cover story. It is the nature of the beast. But last week’s Scottish lead was particularly irritating. It explained the system of ‘double dipping’ in the police force. It works like this.

Officers retire on the usual “lucrative” pension terms (think two-thirds of their final salary) at 50. Then they get re-employed by their old stations in civilian roles on new salaries. The net effect, as the paper puts it, is that the public is “paying twice over for the services of the same police officer”.

In the Lothian and Borders force in Scotland, retired officers apparently make up some 8.5% of the work force. In the Strathclyde force, eight members of staff are retired policemen on salaries over £30,000. Four of those retired with a final salary of over £70,000 in the first place. The overall cost? “As high as £10m a year”, says the Mail.

I don’t think many people would be much bothered by the idea that police officers might work after 50, but I would think a good many would be bothered by the idea that the already grossly overstretched taxpayer pays them twice if they do.

So what’s the solution? There used to be a very simple one in the army (perhaps there still is – I don’t know). It worked like this: if you took a retirement job with the army, the amount of your pension was subtracted from the salary of the new job. The effect was to give you an income above your pension income as long as you worked, but not one higher than any non-pensioner taking the same job.

Something for the police to think about perhaps?

And just in case you think it is just a UK problem, here’s something on double dipping in the US. “Does it look bad? Yes. No question about it, it looks bad. Was it legal? Yes,”  says one US double dipper (who has taken home $1.14m in pensions at the same time as drawing a salary).

46 Responses

  1. 08/01/2013, Dr ray wrote

    I can’t see how you can legislate against retired people taking a job and it seems sensible to take a job one is already familiar with. The problem here is that people are allowed to retire with a full pension at 50. I thought that was a Greek thing.

  2. 08/01/2013, Steve T wrote

    #1 Dr Ray – spot on. Why exactly do the police retire at 50? As a civil servant in Customs & Excise I spent several years working alongside the boys in blue chasing drug smugglers and dealers. My retirement entitlement at 60 (after 40 years, not 30 years like the police) is a 1/2 salary (not a 2/3 salary like the police). Same job different conditions. If the police job is so difficult, why not a retirement from the front line job into the back office, then a 1/2 salary after 40 years service. That seems fair doesn’t it?

  3. 08/01/2013, N wrote

    The same applies to doctors in the NHS. Retirement followed by return to running the same clinics is widespread.
    So why should they have a retirement age earlier than others?

  4. 08/01/2013, dr ray wrote

    @ 3 “N” Retirement age is 65 for most doctors. Was raised from 60 but since most doctors dont qualify until their mid20s it was almost impossible to get 40 years sevice and a full pension at 60 anyway.
    There is an odd exception for psychiatrists
    Also if a dr goes back to work and draws a pension they are likely to pay tax at 62% marginal rate with no opportunity for tax rebate on pension contribution

  5. 08/01/2013, Ellen wrote

    I think the theory goes that police officers need to be young and physically fit. It would be silly to have a fifty year old chasing after 25 year old criminals. 50 is, of course, far too young to expect to be fully pensioned off but their job needs to turn into something that is more suitable for an older person.

  6. 08/01/2013, GFL wrote

    I agree, the rules for retirement in the police force is madness. What is the logic behind it?

    Like all benefits, once you give someone something it’s very hard to take it away :/

  7. 08/01/2013, Boris MacDonut wrote

    #5 Ellen. As I have been at pains to point out, everything is getting delayed as we live longer. The 55 year old bobbies could be employed to chase the 75 year old criminals. Most 50 year old coppers have worked very hard in difficult circumstances for over 30 years. Should they be punished for choosing to do so? After all the decent pension was the main selling point for rubbish hours, a relativerly poor salary and constant abuse.

  8. 08/01/2013, JT wrote

    And I suppose, Boris, we will pay for all this from the magic money tree?

  9. 09/01/2013, Steve T wrote

    @7 – Boris, what ‘relatively poor pay’? According to the Met web site after 2 years service in London a bobby on the beat will get £32.6K basic, housing benefit £5.8k, free travel (say £2.5k value) and of course that pension. I make that over £40 grand. And that’s for starters. There are no current recruitment plans for the police force – no vacancies! Now there’s a surprise considering it’s such a badly paid, difficult job . I must go, I can see a money tree with lots of money growing on it and I feel the need to do some fruit picking.

  10. 09/01/2013, Nick V wrote

    I think if there is such youth unemployment. Those who choose to retire (if they can on a good pension) should not return to work. Give the younger people a chance to get into employment. After all they need to work to fund those in retirement.

  11. 09/01/2013, NeutronWarp9 wrote

    Perhaps some people take a job in the public sector because they evaluate the terms and conditions of service from day 1 – including pension provision? To change those conditions mid-term is not only unfair but plain wrong.
    Now, the ‘talent’ in the private sector perhaps didn’t consider this and is now resentful or plain jealous. However, don’t whinge at the terms of a police or fire officer et al. Blame yourself for being too numb to see the bigger picture.
    Given current circumstances, if new entrants have to sign up to a revised package, fine, but to unilaterally change the terms and conditions of existing workers is undemocratic. Why vote for traditional parties if the best they can do is think-up fascist-like policies?
    Of course, many private sector jobs have less job security, etc, etc but again oh ‘shining ones’, that is known from the outset and is another reason for some to choose the more mundane public sector.

  12. 10/01/2013, Steve T wrote

    @11 Neutron Warp. On the grounds of fairness you are right, but why should the police pension be a special case. I paid into my govt pension for 40 years to retire at 65. Now the requirement is 30 years to retire at 67, affecting current pension contributors. The civil service pension used to be based on the best of the last 3 annual salary payments. Now it is based on the average of salary over the whole employment period – a massive downgrade to entitlement (think difference between pay 20 years ago and today), and again affecting current pension contributors. Fairness isn’t the yardstick, it’s more about what is affordable.

  13. 10/01/2013, Dr Ray wrote

    Steve and NeutronWarp, you are both quite right. Paying into a pension is entering a contract on the day you start paying in not on the day you start drawing the pension out so it shouldn’t be possible for one party to change the terms of the contract. The TUC did take a case to court but lost the case.
    Also the sudden demonisation of the public sector seems politically driven. It is not so long ago that people with boring public sector jobs were considered chumps by the high fliers in the thrusting better paid private sector but now the situation has changed there is widespread support for retrospective change to T&C going back 40 years in cases or pensions and retirement age.

  14. 10/01/2013, Critic Al Rick wrote

    One day it will be realised that certain remunerations and pensions in the Public and Quasi Public Sectors have killed the Golden Goose.

    F*****g Parasites.

  15. 10/01/2013, Steve T wrote

    @14 – that’s a bit strong. I wouldn’t like to live in a country that didn’t have a functioning civil service and a police force at all. The problem is the State has grown too big, that’s all. Not all State employees are parasites – no State = no rule of law = no private enterprise.

  16. 10/01/2013, Ellen wrote

    @ 13 Dr Ray. What companies have done in the private sector is fire and rehire to get rid of final salary schemes. The final salary scheme stays intact – but only up until the contract is terminated and a new one drawn up

  17. 10/01/2013, Norris wrote

    I’ve seem similar where people in the public sector have taken voluntary redundancy (and paid off) only to be immediately re-hired in pretty must the same job / department.

  18. 10/01/2013, Critic Al Rick wrote

    The State has grown too big, yes Steve. It has also, it could be argued, publicised a sizeable proportion of the Private Sector (Quasi Private Sector) or privatised a sizeable proportion of the Public Sector(Quasi Public Sector).

    But regardless of whether or not this Quasi Sector is termed Private or Public, it is rife with corruption – pseudo cartels and virtual monopolies – giving rise to those levels of remunerations and pensions far in excess of what the country can afford; it’s not just the undeserved Benefits that constitute Parasitism.

    No Steve, I don’t think I’ve been “a bit strong” or, indeed, too strong. And, furthermore, if any of those Remuneration Parasites emigrated because of reduced remunerations then I, for one, would be highly delighted – the country’s way over-populated as it is.

    It’s the Parasites (rich, poor and intermediate) that’s killing the Host. No Truly Private Sector – NOTHING.

  19. 10/01/2013, Boris MacDonut wrote

    #9 Steve,You begrudge a qualified copper in London, one of the most expensive citioes in the world, where the cost of living is at least 505 or more higher the the rest of the UK an income of around the natiional average and some help with the expensive housing.
    #19 Rick ,your moaning falls on increasingly deaf ears as it gets more irrational.

  20. 10/01/2013, Critic Al Rick wrote

    An axe to grind – eh Boris?

  21. 10/01/2013, Steve T wrote

    #20 Boris, good to see you traveled safely back from la la land. Obviously you don’t live in the UK because your country has a £40,000 average wage.

  22. 10/01/2013, Steve T wrote

    rvices and no larger. Public expenditure should not exceed government income (taxation) taken over a complete economic cycle. The logical end point of your argument is chaos.

  23. 11/01/2013, Critic Al Rick wrote

    No Steve, it is not I who is necessarily disagreeing with you, it is you who has misread me.

    @14. I put “*certain* remunerations and pensions…” not *all*. I agree, not all state (or QPS) employees are Parasites.

    But it’s not just about excessive remunerations and pensions. As you put @23. “Public expenditure should not exceed govt income…”. And nor should charges levied by the Quasi Public Sector penurise the Ordinary Joe to the extent that they need Benefits to, in many cases, eke out an existence (are you reading this Boris?) in order to effectively subsidise the unsustainably high remunerations and pensions wherever applicable in the QPS.

    Effectively, a substantial proportion of govt income is being used (not so much to give Benefits, but)to subsidise excessive, wherever applicable, remunerations and pensions in the Public & QP Sectors.

    And outside of the Fantasy World, if that’s not corruption …!!

    The status quo is so rotten it STINKS!!

  24. 11/01/2013, Steve T wrote

    #24 – but Rick, aren’t those truly excessive remuneration levels in the private sector, as are the duopolies e.g. the utilities and the railways and the cartels. So surely the answer is to bust the cosy private sector clubs that allow the excessive remuneration levels to continue, by virtue of the top elite sitting on each other’s remuneration committees?

    Admittedly. there are anomalies in public sector remuneration – this article highlights one of those – but individual pay levels in the civil service for the 99% who are on fixed salary scales is not excessive. Google ‘civil service pay’ if you don’t believe me – I left the civil service because the pay simply didn’t support my modest lifestyle.

    No, I maintain the problem is not the rate of pay; it is the number of people being paid by the State. So shrink the State (the public service and the level /number of benefit claimants) and the problem will diminish accordingly.

  25. 11/01/2013, Norris wrote

    I’ve seen people given voluntary redundancy (VR) only to be re-hired in a similar position / sometimes even more pay. I’ve seen people ‘awarded’ promotions in the run up to retirement which appear more about boosting the value of a pension based on final salary than merit.

  26. 11/01/2013, Boris MacDonut wrote

    #22 Steve T. Average UK wage is £28,700pa, average income is just under £34,000. The cost of living in London is 50% higher than the rest of the UK and housing is about double. You quote a salary of £32,600 for a very demanding job with very unsocial hours (ever heard of shift distrurbance allowance?) and it factors in the well known health risk of working a mix of night and day shifts. The housing allowance is courtesy of your beloved free market that dictates absurd prices to live in our vile capital.
    You are begrudging in your contempt. It is funny how you try to accuse me when I do my best with a plethora of information to make informed posts,while you merely rely on gut feelings about your fellow man’s untrustworthiness.

  27. 11/01/2013, Norris wrote

    @27 – do the police have trouble recruiting in London?

  28. 11/01/2013, Romford Dave wrote

    There isn’t any current recruitment Norris, primarily due to reductions in their budget announced by the oddly attractive Theresa May back in 2010.

    I guess they’re hoping her rottweiler appearance will deter the would be offenders.

    But it highlights the problem with suffering from successively weak Government and even weaker management.

    Instead of dealing with a predictable and widely discussed pension problem, we end up with a situation where police numbers are effectively cut rather than the more sensible option of police pensionable age being raised.

    Wanting to be popular should be made a crime.

  29. 11/01/2013, Boris MacDonut wrote

    #25 Steve. “cosy public sector clubs”. You seem to resent that some public sector salaries are decent, perhaps those of doctors, generals, or headteachers. Whereas you make no comment on your free market private sector where some earn £22 million (Diamond Bob)or £200,000 a week for pansying about with a pigs bladder.
    #28 FYI . In London there are 10 million people,only 45% of whom are culturally part of the UK. There are 150 languages spoken and 24 different religions adhered to. There is massive disparity of wealth, appalling drug misuse,transport is a nightmare, housing is ridiculously expensive and those are the good bits. PC Copper deserves every penny.

  30. 11/01/2013, Boris MacDonut wrote

    What appalls me most about Merryn’s silly article is the assumption that nobody should do reasonably well out of a considered decision to join public service. Nobody should, after say 35 years service, look at how the rules, under the contract they signed up to, might best suit them. But for anyone in the private sector it is fill your boots, take what you get away with and not a word to the taxman. Who in this situation is the hero?
    I fear Merryn has a soft spot for the cavalier tax avoider and simple contempt for those who rationally decide to serve their fellow man. This website is at heart about making money, but there is a nasty right wing tendency to assume this must be in the free market. The rich are not just preoccupied with how much they can make ,but how much they retain. Merryn sings their praises without often realising it.

  31. 11/01/2013, Steve T wrote

    #30 Boris you are so wrapped up in your fantasy world you can’t even read my posts properly. Go back and re-read post #25, belatedly realize I was criticizing the private sector and defending the public sector, then think carefully about what you are going to write next.

    Suggestion – Steve I’m really sorry for being such a complete wally, next time I will actually read what is written before responding in a totally predictable fashion. Good grief.

    PS London population 8.2million as at 27.3.11 census. Facts, Boris, research, Boris – it ain’t difficult.

  32. 12/01/2013, dr ray wrote

    Steve,
    Much as I hate to agree with Boris he has made some good points on this thread and he is always thought provoking and an original thinker. Regarding London’s population, there are Statistics and there are Facts and I suspect Boris’ figure is nearer to the truth. If you go round the less salubrious parts of London you will find unofficial shanty towns have sprung up with people renting out garden sheds and mobile homes in their gardens. I doubt many of the inhabitants filed a census return

  33. 12/01/2013, Boris MacDonut wrote

    #32 Steve. Whoops.Sorry, you did say private sector clubs. As for 10 million ,I am thinking of those who live in the bit where London House prices dominate,not those who pay Council tax to the geographically London boroughs. Also the many foreigners living their temporarily but not required to be part of the UK census……as #33 drray says. In reality 12 million may be closer to the mark. There are at least 300,000 foreign students for starters, 300,000 Russians too, many EU migrant workers and Africans on short visas……oh and the “tourists”who never go home.

  34. 12/01/2013, Kawasakifreak wrote

    Boris,

    I’ve had direct, daily experience of working with the Police for nearly 10 years & I don’t buy the difficult job, unsocial hours defence of why these semi-skilled people are paid so much.

    H & S rules over the last 2 decades have removed most of the physical risk in the job which was the primary argument supporting pay increases by Mrs Thatcher.

    Unsocial hours ? So what ? So do most factory workers on less than £10 an hour (enhanced rate).

    National recognition of the above has been slow but plans to re-evaluate Police pay are emerging to better reflect most Officers real skill-value & contribution.

  35. 13/01/2013, Steve T wrote

    #35 Boris. OK I’ll put away my sabre until next time, and leave you with the words of Abraham Lincoln that will perhaps illustrate my disquiet over the direction we are going and why Big Government with all its parasitic followers should be resisted.

    “Corporations have been enthroned …. An era of corruption in high places will follow and the money power will endeavour to prolong its reign by working on the prejudices of the people… until wealth is aggregated in a few hands … and the Republic is destroyed”.

    We are almost there now. The State knows the best way of enslaving the people so the status quo is not disturbed is to make them dependent on the State, so the employee numbers get bigger and the benefits list gets longer, until the State collapses.

  36. 13/01/2013, Steve T wrote

    A query to the Money Week moderator – why did you remove my post from yesterday? It was made in accordance with your T&Cs and broke none of the message rules? I’m just interested, as no doubt all your readers will be- what are your censorship rules?

  37. 13/01/2013, StevieG wrote

    Ther is still a HUGE discrepency between public and private sector pension provision that remains the great ‘unfairness’ of modern Britain.

    Unlike I suspect the majority or people, I happen to think that our MPs are underpaid; and hugely over pensioned. I propose a pay increase for them to £100K p.a. allied with a move to a Money Purchase pension scheme with 8% employer’s contribution, just like the best private sector employers.

    I would love to hear their responses to that proposal.

  38. 13/01/2013, Critic Al Rick wrote

    @ Steve T

    I agree that the number of state employees presents a greater economic challenge than does the aggregate of excessive remuneration, etc.

    But you don’t appear to distinguish between Truly Private Sector (TPS) and Quasi Private Sector(QPS); you appear to tarnish both with the same brush. The TPS is governed by market forces and hampered by a corrupted playing-field rigged by the Govt (inadvertently – by the State) to largely insulate the QPS from market forces.

    The QPS (aka Quasi Public Sector) is thus enabled to aford extortionate remunerations, etc; the Public Sector (a virtual monopoly) sees what the QPS has and wants to be in on some (at least) of the action.

    It’s only in the QPS and PS where (some) remunerations have followed trends in House Prices since the mid 90s. It’s not just HPs in the realms of fantasy.

  39. 13/01/2013, Boris MacDonut wrote

    #40 Rick. QPS, TPS,PS. The paranoia is getting worse. You refer to your QPS as both the private and public sector,which is it?
    The bit that makes you as funny as Mr Funny the hilarious bloke is the closing line on HP’s. HP’s are in a free market thanks to Mrs T. The free market is , I am told, always right, so HP’s are right.
    So many come on her to say HP’s should be 20% lower, why? Because they wish the market was rigged and not free.

  40. 13/01/2013, Boris MacDonut wrote

    #41 Yikes. I meant come on HERE. No offence folks, it’s not an episode of the Inbetweeners. Especially given that I cited Mrs T in the previous sentence. The shame of it all!

  41. 13/01/2013, Critic Al Rick wrote

    Boris, if you hadn’t been so wrapped-up in your delusional fixations for so long you’d have noticed I refer to the CeS(pit) [Cartel, etc Sector] as aka QPS [Quasi Public Sector or Quasi Private Sector].

    The CeS(pit) includes, in simple terms, that part of the Private Sector corrupted by aid from Govt. and that part of the Public Sector corrupted by aid from Oligarchs, etc; the parts are often indistinguishable without hindsight.

    Your reference to HPs as being “in a free market” should leave noone other than an imbecile or someone of a similarly corrupted mindset as possessed by yourself in any doubt as to the severity of your delusions.

    I wonder to what extent Civil Servants (including Quasi Civil Servants) have been similarly indoctrinated.

    Or perhaps (hopefully, but doubtfully) an appropriate name for you would be Mr Wind-up?

    As usual dear Boris – no offence taken or meant.

  42. 13/01/2013, Romford Dave wrote

    A market where 11 million homes are mortgaged out of a total of 18 million homes (source Council of MortgageLenders 2011 annual report) hardly constitutes a free market given the ‘success’ of QE in acting on interest rates.

    Add in the plethora of Government schemes to maintain house price status quo and there’s little doubt we’re looking at a rigged market.

    Whether its rigged for the good or rigged for the bad depends on your perspective, but free it isn’t.

  43. 13/01/2013, Boris MacDonut wrote

    #44 Of course you are partially correct. The market is kept artificiaaly sluggish by the limited flow of credit. In a free market HP’s would be much higher.

  44. 13/01/2013, Romford Dave wrote

    I’m sure the banks would have loved to have continued with their lending spree Boris, unfortunately the backstopping taxpayer run out of money.

    Think back to what happened to house prices back in 2009, that was a market in free fall (emphasis on free). Had it been allowed to find its level without interference from Merv and his crew, maybe buyers would be enjoying price levels in keeping with their incomes, along the lines our American cousins currently enjoy.

    There might of course not be any financial institutions around to provide the mortgages, nor any jobs to pay the mortgages with, but that’s purely speculation as we’ll never know now.

    Or perhaps we will…..?

  45. 13/01/2013, Boris MacDonut wrote

    Romford Dave paints such a depressing picture he must be being paid for it. Nobody could be that pessimistic based on genuine facts.

  46. 16/01/2013, Moderator wrote

    SteveT – as far as I’m aware, we didn’t delete a comment from you. We tend to delete comments which are offensive, abusive, off topic, or spammy – and duplicates.

Commenting on this article closed

MoneyWeek magazine

Latest issue:

Magazine cover
A new dawn for energy

Our experts pick the stocks to buy

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues
Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.

More from MoneyWeek

FREE REPORT:
What you should really do with your money (2014 Edition)


How to buy and sell penny shares

A beginner's guide to investing in gold

How to invest in British fracking