He should be, if he was a civil servant. Do you mean that his pension is nowhere near the level of his final salary? The usual model is that if you work for the requisite number of years, then you get a pension equivalent to half of your final salary.
Originally I think the scheme was based on a 40 year career ending at 65, and you needed to work the full 40 years to get a full pension (40 / 80ths = half of your final salary). I was in a scheme similar to this.
However, the main civil service scheme has been altered a few times over the years, with a 60 retirement age, and fewer years needed (perhaps as few as 30 in some cases, but I don't think that was normal). You can criticise this, but don't forget that for many years there was a general movement towards earlier retirement - partly to get rid of dead wood, and partly that was just the way society was going....working to live, rather than living to work, sort of thing.
It has changed again now, and newer entrants can no longer retire at 60, and have to work longer to get a full pension. Plus ca change.
The old model of retirement is so far out of date it's crazy. Retiring at 60 or even 65 is simply not feasible without radical change in either how pensions are funded or what people receive in retirement. People are simply living much longer and our current model is unaffordable.
Greece is all over the place at the moment, but the true state of the country is much scarier. A few years ago there was a completely ignored report (I think from the OECD) that estimated Greece's public pension costs at 25% of GDP by 2050. Ageing societies are in for a very rude wake up call - the current riots in Greec are nothing compared to what's coming.
There is nothing wrong with final salary pension schemes, but the vast majority of civil service and related pensioners are actually on pretty modest pensions - the high fliers with telephone number pensions are few and far between. There was always a trade off to be made between working in the public sector - moderate pay, but at least a reliable pension and reasonably secure employment - versus working in the private sector - in boom times, high salaries and bonuses, but much less job and pension security.
Many decent private firms also had final salary schemes and they should have worked a bit harder to keep them.
The only thing wrong with final salary schemes is that they are horrendously expensive. Most public sector pension provision will have to be paid for out of taxation - there is no fund, and this is madness.
You are correct that most public sector pensions are quite modest. I don't know if you saw QT a few weeks ago - a woman in the audience made the point that the average public sector pension was around £4,000. Leaving aside why anyone would consider the average to be of any significance, the woman was outraged by this. However, I would be surprised if she fully appreciated the cost. Roughly speaking, a person retiring at 60 would have an annuity rate of around 4%, assuming (as most public sector pensions are I believe) the annuity was indexed and provided for a 50% spouse's pension. Thus a person would need to build up a fund of £100,000 to provide this pension on their own - this is after tax free cash (now PCLS). Is it likely that they would have accumulated such a sum in private employment?
I have a friend who is an actuary, and he calculated the contribution that would be needed to fund his sister's NHS pension - 18%. Het actual contribution was 6%.
How does it go - you don't make the poor richer by making the rich poorer. Well, it's similar with public versus private sector pensions: you don't make private sector pensions better by making public sector pensions worse.
You certainly don't help the poor by walloping the rich. However, the tax burden needed to support public sector pensions is becoming crippling, and will become completely unsustainable before long. There is no fund - it all depends on future taxation.
Admittedly, Gordon Brown wants shooting for his "pensions raid", but that's not the whole story. Private pensions have always been a bit of a rip-off, and mostly still are, sadly.
For that and quite a few other things.
Some pensions have had ludicrous costs, although this has certainly changed. The Government has been rightly lambasted over the Stakeholder nonsense, but one effect that it did have was to accelerate the process of bringing charges down.
Scottish Life has a contract that can have a 1% annual charge. This includes drawdown (or USP if you prefer), bits and bobs such as lifestyling, and 0.5% to pay for ongoing advice.
For those that want something a bit more interesting, SIS has a pension whose charges are simply the TER of the underlying fund (so exactly as they would be direct, in an ISA etc), plus a £50 account charge and an extra £50 once you start drawdown (or phased drawdown if you want). This too would include 0.5% for ongoing advice.
£100 a year for a phased drawdon contract is dirt cheap (obviously you would need to have a resaonably large fund, although if you were considering dd that would ususally be the case anyway).
In addition, the account charge covers all your holdings - one charge would pay for your pension, ISA, bonds and unwrapped collectives. The platform has no initial charges and no switching charges.
So the pension rip-off thing is very outdated (unless you go to some rip-off merchant, and sadly there are still plenty of those about).
