04 November 2011

Public Sector Pensions Crisis

I am sick of hearing some private sector workers bleating on about how their taxes are being used to pay public sector pensions.  It is true that state pension is paid from taxes and all of us who pay tax, whether in the private or public sector, are therefore funding state pension.  That means that I, a public sector worker, am playing my part in supporting retired private sector workers just as much as anyone else is.

It is a myth that private sector workers pay public sector pensions through their taxes.

Let me point out that for the last 34 years I have been paying income tax, just as private sector workers have.  For the whole of that time I have been paying into a pension scheme (unlike some in the private sector) and so it is I who have made provision for the pension I will eventually receive.

Down the years, government has taken my pension contribution and promised, through a contractual agreement, benefit in retirement through the NHS Pension Scheme.  Government has not, however, taken my contributions and invested them in order to generate those benefits.  No.  My contributions go into the treasury and government uses the money as it sees fit.

You could consider that government uses the contributions of working public sector employees to pay the pensions of retired public sector workers.

The unions have suggested to government that a proper investment scheme be set up using public employees' contributions so that public sector pensions are self-sustaining and clearly independent of the tax system.  This is, of course, unpalatable to government because it would no longer have access to a very large amount of money to mismanage.

What is truly tragic is the failure of government to ensure that private sector workers are signed up to a decent, properly regulated and ring-fenced pension scheme, that people like Robert Maxwell cannot make off with the pension funds of those who are, and that companies are not allowed to take pension fund holidays so they can pay bigger dividends to their shareholders.

Private sector workers should be up in arms to make sure they are treated well rather than trying to see that the public sector gets done down.  Instead of moaning, 'Why should they have that?' they should be demanding, 'Why can't we have it too?'  As far as I am concerned, everyone should be able to look forward to financial security in their declining years.  There are no free hand-outs to be had, however.  Future security means giving up otherwise disposable income now in contribution to the fund.

I pay my way in society through my taxes and make a contribution to society through my work.  I am paying for my pension.  I am not a parasite!

4 comments :

  1. Hear, hear. I'm a public service pensioner, albeit from the Armed Forces. The government says that it's a non-contributory scheme. However, what they don't say is that they deduct a notional amount from salary scales prior to publication to pay for the individuals pension. So, in effect, it is similar to other public service schemes, where pension deductions are made after pay is given.

    My spouse is a civil servant, low paid, under £18000, and has worked for 36 years to pay into her scheme. As she is nearing retirement, she will not be effected by the proposed Career Average scheme, proposed by the government, but has been effected by CPI rather than RPI since last year, and is about to have her annual contributions raised by 1/3rd this coming year and doubled the following year.

    Her pension will be after tax, is below the living wage and she will probably be obliged to stay on at work to try to get a bigger pension pot.

    As you say, public service pensioners pay their taxes (they have little choice given their employer) and contribute to paying for their pension, in the same way as other taxpayers.

    I get tired of all of the tabloids such as the mail,the express describing the pensions as gold plated. After working from the age or 17 to age 60 in the Armed Forces, I was discarded as I had reached the upper age limit. No appeal, no recourse to unfair dismissal - they are exempted from that piece of legislation. I would have enjoyed working on for another 5 years, but wasn't given the option.

    My pension is adequate, but not great, and certainly not gold plated. I suffered a 2/3 drop income on retirement, the only compensation being a lump sum, which allowed me to bring the cost of our mortgage down. Due to my pension I am not eligible for benefits and there is no point in signing on for employment as at age 60, they regard you as unemployable.

    I volunteer, do stuff with my church and have a fulfilling life, but if I was a union person, I have supported their campaigns against the cuts, and as my spouse is in a union, she might very well soon, find herself out on strike. She has never been on strike before, but feels so strongly about this, that she probably will this time.

    The betrayal of good faith and broken agreements means that no longer can the government rely on the loyalty of long suffering public servants, they are being forced to be militant, against their better judgement in most cases.

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  2. Thanks, anonymous, for reading my blog and more so for your impassioned comments.

    Obviously, I don't know what branch of the Armed Forces you were in or what your role was, but that makes you more than a Public Servant in my book, and deserving of better treatment.

    I would like to see David Cameron made to live for just one year on your income and see how he feels about pensions after that.

    I will be able to retire in a couple of years and I'm looking forward to having more time for serving my community through my church. The 'Big Society' will not work very well if all the people who could have time on their hands if their pensions were adequate have to spend that time trying to make ends meet. I've yet to see a government capable of joined up thinking, or even being aware of what life is like for the normal citizens of this country. Frankly, they don't have a clue.

    Cheers, and thanks again.

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  3. No problem, I came to your blog via that of Changing Worship, Rev Rob Sutherland. I posted as anonymous because I wasn't thinking straight at the time I posted.

    I was in the Army, started as a Private, retired as a Major, after a short (one day) career break from Regular Army to Reserve Forces Permanent Staff. So, my active service was mainly Northern Ireland, prior to my moving from Regular Service to a new contract with the Reserve Forces in 1989, which meant being in uniform, but not liable to be deployed. Off course, there was involvement in deploying reservists as part of the job.

    I'm glad to be retired. I miss the friends and comradeship, but have found similar friendships and community in my parish.

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  4. Respect. I wish you a long, happy and fulfilling retirement, and hope, for all our sakes, this unhappy debacle over pensions is soon resolved favourably.

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