"You may say that I am a dreamer/But I am not the only one" John Lennon: "Imagine"

"So come brothers and sisters/For the struggle carries on" Billy Bragg: "The Internationale"


Elizannie has a reading room at 'Clarice's Book Page' http://www.villiersroad.blogspot.com/

Thursday, 10 March 2011

Are Public Service Pensioners Being Demonised?


Starting the day by listening to Radio 4's Today programme is usually a good way to clear the overnight sleepfog from my brain and get the thinking parts working. This morning was not so good because my brain clicked straight into anger mode even before the breakfast cereal I was consuming had had chance to raise my blood sugars to a sufficient level to cope properly.

From this explanation, the photograph and the blog title you will probably have realised that I was listening to Lord Hutton talking about his just published independent review into Public Service Pensions {PSPs}

The main points, to quote briefly from the BBC News website http://www.bbc.co.uk/news/business-12703232 :


Lord Hutton's key recommendations included:

Linking the pensions of public sector pensions to average salaries over workers' careers, rather than their final salaries, possibly by 2015, to make pensions "affordable"

Aligning the public sector pension age to the state pension age, which will be 65 initially and is likely to reach 68 for men and women

Uniformed services, such as police and firefighters, working until 60

Honouring in full the pensions that workers have already built up in final-salary schemes.

The government has already accepted a previous recommendation of Lord Hutton that public servants should soon pay higher contributions.


The government said it would give the proposals "careful consideration".

Whilst Hutton explained that pensions earned so far should retain their link with final salaries he went on to say that future pensions earned should be built up in new 'career average schemes' - should be in place by 2015. These will be cheaper to fund whilst producing lower pensions unless members work longer to make up the difference.

There was much talk of how 'the taxpayer' could not continue to pay the 'generous' pensions that so many Public Sector Pensioners are now receiving. But what no-one seems to be pointing out is that the present pension payments are really deferred wages - they have been promised to the retirees in past negotiated wage agreements and have formed part of employment contracts over the past years. Any Pension scheme member will have planned their retirements whilst taking into account what money will be coming in - from savings and pensions [private, state and employment] Whether their employment was as a nurse, a banker or a factory worker etc it is obviously to those pensioners an important form of their life savings.

The fact that there is no 'pension pot' to fund PSP pensions and therefore 'the taxpayer' is paying those pensions is not the fault of the PSP pensioners. That money was promised to them - therefore those who promised it should be held to account. By keep repeatinging 'the taxpayer' is funding the pensions it seems as if those 'taking' the PSP pensions are as 'bad' as all the 'social security scroungers' everyone seems to know about but few ever actually really know. [Bankers' massive bonuses and George's Osbournes trust fund were never mentioned as comparisons btw]

So the PSP pensioners - what do they do with these generous amounts of money? Do they rush off to their villas in the sun and their third and fourth houses abroad and buy items of foreign luxuries boosting those economies? They may of course save for a foreign holiday - but most of their extra monies will probably be spent in this country on replacing goods and employing household services. And if they really are getting so much money that they 'don't deserve' - well like all the other 'high earners' there will be tax bills to pay!

The Unions have already spoken of strike action if talks on these problems are not solved amicably. And of course there have been many commentators on both sides, on the radio in the press and undoubtedly on BBC Question Time tonight. But one view from the 'other side' which really surprised me was in a press release, part of which was also quoted on the BBC website:

Ros Altmann, a former government pensions adviser and now director of Saga, said: "Lord Hutton's recommendations on public sector pensions have led to calls for industrial action by public sector unions, but the reality is that his proposals will still leave them with hugely generous pensions that most private sector workers could never hope to achieve."


What do you call a 'hugely generous pension'? Please remember that PSP retirees have always earnt during their working lives lower wages than those in the private sector on the promise of these 'generous' pensions. Truth is these PSP pensions are around £4,000 - £5,000.

Lord Hutton was born in 1955 so I calculate he will probably become due for State Pension when he is 66. Whether that will be the only pension he has to rely on is another matter.

Photograph is courtesy of Wkipedia

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