Public Injustice
by Max Wind-Cowie
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.
Glen Graham
It really is not that simple as Hutton would wish. The problem is that public sector jobs cover such a wide variety. Whilst there are without any doubt a lot who are vastly overpaid for thier ability and performance, the majority are on relatively low pay for thier levels of responsibility. Take the health care workers role in hospitals (not nurses) who nowadays do the unpleasant jobs in hospitals and care homes which involve dealing with excreta and so on daily - relatively low pay and often a truly vile job. I know that I could not do it! One of the things that balances this is the fact they have a reasonable pension scheme (though by no means will they be anything like well off), and this is mirrored throughout a lot of public service roles. Given the same level of unpleasentness and responsibility, in private industry a lot of people in public service jobs would receive more wages, - but a poorer pension. If we attack their pensions then no doubt we will lose the best of them - and is that what we really want? Without a doubt, above 1st level management and upwards there are some glaring weaknesses in public service pay : task ratios (and in the "non-jobs" that amazingly still exist) and thus in thier pension schemes, but we need to be very careful of attacking the hard working 95% to get at the 5% on easy street, (who also take up far more pro rata of the pension scheme payouts) because no matter how we feel about thier pensions, we really do need quite a lot of those front line health care workers, street sweepers, police support staff and the like, and the worst thing we can do is force the best of them to go elsewhere, and it will be the best of them who will most easily be able to transfer out....
David Vinter
Final salary pension schemes are fatally flawed, as they depend both on a future flow of company profits, and the general long term growth of the stockmarket. Plus members paying in.
If for example a company reduces its labour force by 50%, the there are too few paying in but for many years there will be almost
100% drawing out.