Foreign Perspectives

Pension payments for all but the lowest paid in the public sector are going up (mostly doubling) and they’re going to have to work longer before they are entitled to the maximum pension. Surely it must only be right that the well paid public servants in secure jobs pay more for their gold plated pensions? Why should the rest of us pay for their pensions anyway?

The snag with public sector pensions is that the employer is the government so therefore, yes, the rest of us do have to pay for their pensions. Unless you’d rather that they get no pensions at all (in which case, I hope you don’t mind doing without schools, hospitals, etc.) then the government (ie taxpayers) must act as responsible employers and pay for those pensions. The other snag is that, unlike private sector pensions, the public sectors operate on a pay as you go system which means that the current workers pay for the pensions of the current pensioners or rather taxes do (that’s how the normal retirement pension operates too).

OK, so we should pay them a pension, but surely we shouldn’t be paying the well-paid public servants gold plated pensions? Actually, well-paid public servants are very much in the minority with a considerable number getting close to the minimum wage. Courtesy of a number of changes in recent years, that “gold-plating” is looking distinctly tarnished with three separate schemes being introduced over the last 10 years, the prior schemes being closed to new members and each new scheme being markedly poorer than the one before. The latest offering is a lurch towards an average salary rather than the current final salary scheme which will be a major, major drop in the pensions that people will be eligible for though, as usual with pensions, a magnitude of a drop that most people wouldn’t realise until it was far too late.

In some ways it could be a good thing. The net effect, for public servants who realise it, is that their lifetime earnings is being cut quite dramatically so it might encourage more to leave for the private sector. The only snag with that is that we need those public services that the people most likely to leave provide. On the whole, those most likely to leave would be the higher earners. Do you really want to have an exodus of teachers, nurses, etc.? What about the well-paid Whitehall people perhaps? Surely they can be done without? Certainly, if you’re happy to have poor advice given to the government on all kinds of matters, you could do without them.

Should you strike? Despite being what I’d say was one of the most right wing union representatives ever, I think, yes, this is a time to show that you support your union negotiators.

Should you support the strike as a taxpayer? I think yes too as it’s really going to impact on the quality of public servants and hence public services that you get over the years to come.

2 Responses to “To strike or not to strike for public service pensions”