Friday, 25 November 2011

Pensions - We're Not All In This Together

Its not all music, films and idle celebrity chit-chat at Messiah HQ. Sometimes we have to get serious.

The thorny spectre of pensions has once again reared its boring but important head with confirmation of a mass walk out by staff at the UK Border Agency on Wednesday that is likely to make air travel a major pain in the ass.

Its not just customs officials who are downing tools. We will see coordinated strike action by 2m public sector workers threatened with pension reform that will force them to pay more into their pensions, work for longer and accept a pension based on a "career average" salary rather than a final salary.

Now it depends on which side of the fence you sit on as to whether you agree with the strikes or not.

If you work in the public sector you are understandably going to be pissed off at having joined a defined scheme, budgeted your life and expectations around that scheme only to have changes imposed arbitrarily.

Alternatively, with private sector pensions being steadily eroded and final salary pensions being as rare as hen's teeth many private sector employees resent the fact that they have subsidise hefty public sector pensions that they in the private sector can only dream of.

For the sake of transparency I need to make clear I work in the public sector. A few years ago we were told that we had Hobson choice of accepting a revised contributory pension or sticking with the generous final salary pension and risk bankrupting the company. So we had no choice but to swallow the bitter pill and go with the lower deal. This type of downgrade has occurred universally across the entire private sector.

The previous government did nothing to tackle the gaping pension shortfall caused by a greater amount of the population living into old age and a stock market that has been in the toilet in the last few years. Whether the status quo has been kept for ideological reasons or because Labour's major funding comes from the public sector unions who they were scared to upset is now immaterial.

If pushed I would have to say that whilst I sympathise with those in the public sector I don't believe they should be immune from the cuts and have to accept that we are living in difficult times and cuts are inevitable. To think other people have to fund their unwieldy pensions. Mass strikes are only going to alienate the rest of the working community who will have to change travel plans and take time off work to look after their kids when the schools go on strike.

If we are all going to take the pain then we aught to look at ALL public servants. One small section seems to have escaped the cuts. Who do you reckon that could possibly be? Whilst millionaire cabinet ministers are keen to trumpet the fact they have taken a pay freeze MP's like pensions minister Steven Webb keep schtum on the fact they still have these gold-plated tax-payer funded index-linked pensions. After just 15 years’ service an MP can retire with an annual pension of £24,000. A worker in the private sector with a defined contribution pension would have to have built up a pension pot of around £700,000 to be able to enjoy a similar annual pension.

It's about time M.P's set an example. How on earth can they justify their mandate when the public can see it is case of do as I say not do as I do?

We are all in this together? Don't make me laugh.


  1. Several points:

    In 2008 public sector workers accepted a new deal relating to their pensions. This was to ensure the viability of their pension scheme for the next 30 years and saw workers increase their contributions. Having agreed this deal I at least can understand why public sector workers are rather hacked off.

    As for the claim the last government did nothing to tackle the viability of pensions, it was the last Labour government which brought in legislation to raise the retirement age for a state pension from 65 to 68 for men, and to equalise women's pension age with men. This was a key proposal of the Hutton report - commissioned by, yes, the last Labour Government.

  2. I'll be honest I did not know about the 2008 reform. I too would be annoyed if I renegotiated a pension only to have it change 3 years later.

    That said the offer being given is still massively better then that available to public sector workers.

    Don't think massive strike is going to generate much sympathy witht he general public.

    Labour may have introduced limited public sector reforms but they are nothing compared to their public spend which went through the roof and has proofed unsustainable.

    Its about time we all started living within our means.