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Truth time for pensions
For too long we've been drip-fed a diet of rubbish about public
sector pensions. Over and over again we're told they're supposedly
“gold-plated“, “unreformed“, “unaffordable“.
WRONG.
These so-called facts just don't stand up. It is high time that
the nasty and just plain wrong myths were debunked....
Public service pensions are 'gold
plated'?
WRONG. Most public sector pensions pay less
than £5,600 a year. It'e even less in local government at a paltry
£3,000 a year.
Half of women public service pensioners get less than £4,000 a
year.
Even John Hutton, the former minister charged by the government
with looking at the sector's pensions, said his Commission
report:
“The Commission firmly rejected the
claim that current public service pensions are ‘gold
plated.”
Public service pensions are
unreformed?
WRONG. Tough negotiations with the last
government resulted in an agreed deal to reform public sector
pensions.
Independent assessment by the National Audit Office shows that
this deal would reduce the future cost to the nation by 14%.
Changes included higher pension ages for new starters and higher
contributions in some schemes. And if people live longer than
expected, their pensions will cost would first be shared by
employer and employees together. But the employer cost was capped,
so higher costs of any further extra increase in lifespan would
fall entirely to members.
This deal is now at risk. The present government want to impose
such overwhelming changes that it is doubtful whether people will
even be able to continue paying into their pension schemes. Where
is the sense in that?
Public service pensions are
unaffordable?
WRONG. Talk of public sector pensions
being out of control is nonsense.
Of course, if every pension payment for decades to come had to
be paid tomorrow morning that is a big, scary number.
But it is also a meaningless number. That is not how pensions
are paid.
Both the National Audit Office and the Hutton Commission say the
best way to measure whether public sector pensions are sustainable
is to work out the likely cost of future payments as a share of the
wealth the country will produce (GDP, economists call this.)
This was been done twice in recent years. First after the
changes negotiated with the last government, and again to also take
account of the switch to CPI indexation.
So what did these show?
The deal negotiated with
the last government in 2007 made costs
stable.
the 2007-08 changes are likely to reduce
costs to taxpayers of the pension schemes by £67 billion over 50
years, with costs stabilising at around 1% of Gross Domestic
Product (GDP) or 2% of public expenditure. This would be a
significant achievement (National Audit Office)
So before this government made any changes at all
therefore, public sector pensions had both been reformed and made
affordable.
The government is protecting the
low-paid?
WRONG AGAIN
“We are proposing in particular that the
lowest earners will face the least, or even zero increase in their
contributions. Our proposal would not increase contributions at all
for those earning less than £15,000 a year, and we propose a limit
of 1.5 percentage points increase for those earning up to £18,000.
This would be progressive and fair.”
Danny
Alexander, Chief Secretary to the Treasury, 17 June
2011
The government wants pensions contributions to rise by an
average of 3.2 per cent. They say they want bigger increases for
the high paid and smaller increases for the low paid.
But they are not using people's actual pay to measure whether
they are low paid, but their full time equivalent pay.
This means that many part-time workers who take home a low wage
will not get this protection.
Take Sue - she works in the NHS and works half time. Her pay is
£14,000 a year. But even though she works only half the week the
government still counts her pay as £28,000 a year - the full time
equivalent.
At the moment Sue pays 6.5 per cent of her pay into her pension.
By 2014 the government wants her to pay 9.5% - an extra £416 a year
or £8 a week. That's a 45 percent increase.
Sue's pay is currently frozen for two years, even though
inflation is higher than it's been for many years. And by the
government's own estimates prices will have jumped by 16 per cent
by 2014.
If Sue is to stand any chance of keeping up with both the rising
cost of living and her extra pension contributions she would need a
19% pay increase by 2014. That's not very likely - and shows how
wrong the government's changes are.
According to the TUC, more than a million public sector workers
are like Sue, the vast majority of whom are women.
It's your pension
- you've paid for it
- you're owed it
- don't let them take it
Defend it - Vote YES
Click here to download our
'naughty, naughty' leaflet
