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Are public sector pensions too generous?
While more private sector pension schemes are scaled down, the cost of inflation-linked schemes for state employees such as doctors, nurses, and policemen continues to rise. Some groups say public sector pensions are too generous and should be on parity with the private sector. But trade unions insist most public sector workers are low paid and that cutting their pension rights would hit the lowest paid workers in the UK.
Heather Wakefield, head of local government, Unison
The first thing we need to underline is that members of public sector pension schemes contribute a hefty amount to them - they're not free. Secondly, most private sector employers should emulate the public sector in providing everyone with a pension and contributing to it, but few do, meaning the state takes on the responsibility.
The private sector is effectively saying that people just have to fend for themselves. Most private sector companies have stopped providing final salary pensions so they're not contributing much to their employees' pension. Perhaps they're embarrassed that public sector pensions show them up to be irresponsible.
There's a perception for some reason that public sector pensions are gold-plated, but that couldn't be further from the truth. The average pension in local government is £1,500 a year, 75% of the employees are women and 60% of them work part-time for £7 an hour, so the idea that they are retiring in comfort is ludicrous.
The private sector paints a picture of public sector workers walking away with big pensions but they never talk about how people survive on £1,500 a year local government pensions.
Some argue that the millions of public sector workers shouldn't get the pensions they do - if this happened, the impact on government expenditure would be enormous, and where would those people be left in old age?
Stephen Alambritis, head of parliamentary affairs, Federation of Small Businesses
We believe that pensions provision should be more even-handed. There are just five million workers in the public sector compared with 25 million in the private sector, but all of us in the latter are asked to make sacrifices that the public sector don't have to make. All public sector pensions are paid for by the taxpayer, including public sector employees themselves of course, so it's not a level playing field.
We're not saying that public sector workers who have benefitted from generous pensions should be punished for their rights, but going forward the public sector needs to let go of that generosity and also bring the retirement age up to that of the private sector.
There was an argument that the public sector was more poorly paid, but in fact salaries outstrip those in the private sector, so it's no longer the case, and that's without taking more rewarding pensions into consideration.
Small companies plough anything they make back into the business, but under the Government's personal pension proposals they will have to contribute 3% to all employees' pensions. While that could be very difficult, small firms acknowledge the principle but they also want the sacrifice to be made across the board, not just by private companies.
The Government is moving towards scaling down public sector pensions and that shows it realises the issue needs to be addressed.
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