The gap between the public and private sectors is nowhere as self-evident as in the question of what happens when you’ve stopped working. Of course there are differences day-to-day, but when the day comes for the golden carriage clock and the warm goodbye you can really tell whether someone has spent their life working for shareholders or working for the taxpayer.
Final salary pensions are long-gone out in the big, bad world of business. In the public sector they are alive and well. The last Government knew this was a problem, leaving the taxpayer liable for ever-increasing sums as former civil servants lived for longer and longer, enjoying the generosity of the tax base. This Government knows it is a problem too and they commissioned John (now Lord) Hutton – a former Labour Minister – to come up with some solutions. Today the first of those solutions have been announced.
Hutton wants public servants to contribute more to their pension schemes – 1 or 2 per cent more – in order to fill some of the gap. This will be difficult to accomplish in light of the public sector pay freeze, and will inspire outrage in the already combative union movement. But it is necessary. If public servants wish to continue to be cushioned by massive pension provision then they must pay more for the privilege. It is a no-brainer.
However, one of Hutton’s other recommendations – whilst superficially populist – is dangerously unjust and unfair. Hutton wants public servants to work for longer, bringing them into line with the 65 years retirement age that the private sector has to live with.
Now, I don’t care how long we make public servants work for, and it is right that we look at how we can ensure that working for the state resembles working anywhere else, but this move would create victims who are not to blame for the mess we are in. Young people – disproportionately impacted by the recession – are struggling to find work. They are unlikely ever to experience the low-tax, high-benefits, growth economies that helped their parents. They will not be able to join the property ladder that made mum and dad filthy rich and they will spend years paying the pensions that previous generation entitled themselves too.
Bumping up the retirement age of public servants means barring young people from the opportunity to get a foot in the door, to join the public sector, to do their bit and make their way. It represents an intergenerational injustice and a kick in the teeth for a generation that is, to put it lightly, already very much ‘down’. Public servants must pay the way for their pensions, but not at the expense of a generation that has already been very much betrayed.