Thursday, July 21, 2011
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Before you strike, consider the benefits of pension offer

David Heath MP, writing for the Western Gazette, says: "There are a few things that need to be said a little more clearly on the subject of public sector pensions.

"Quite a lot of people on both sides of the "argument" don't quite seem to recognise the facts of the position, preferring to rely on either their prejudices or their quite proper but in some cases misplaced concerns.

"Firstly, it is simply inappropriate and silly to describe all public sector pensions as "gold-plated". Most retired teachers or local officers certainly wouldn't recognise that description. Nor are those who see the prospect of changes to their pension arrangements outside their rights to express their concerns and to seek to do the best for themselves and their families.

"But certainly those who earn the most from public service have very advantageous pension arrangements indeed. A top civil servant earning £200,000, and there are more than a few, could retire at 60 on £100,000 a year with a £300,000 lump sum. In the private sector you'd need a pension pot of nearly £4 million to get that. And the contribution made by the pensioner will have been between 1.5 and 3 per cent of their salary, while the taxpayer currently pays a contribution of 19 per cent.

"Final salary schemes are almost unobtainable in the private sector, and have been for some time, and yet the best paid civil servants have schemes subsidised by less well-off taxpayers.

"But the design of the pension schemes is just one aspect. There is a cross-party consensus that pensions need to be made fairer and more sustainable, and part of that problem is that people are living much longer. That's why Lord Hutton, who was, you will remember, a Labour Secretary of State, recommended that people should work for longer before drawing a pension.

"But what he proposed, and what the Government is seeking to implement, has safeguards. Low income workers, for instance, will be protected. Those earning less than £15,000 will pay nothing at all. A teacher on £30k would pay £40 per month after tax relief. A civil servant on £70k to £80k would pay £150-200 per month. And further, the pension a public sector worker will get is linked to their average salary rather than either their final salary or what their pension pot is worth.

"And the retirement age will be linked to the state pension age, with the exception of uniformed workers such as police and firemen. And of course, no-one is taking away the pension rights that people have already accrued.

"That's still a pretty good offer. It's still better than the great majority of workers in the private sector can hope for from their pension schemes. I hope that those who plan to go on strike today realise this, because they may find that they get a pretty dusty response from their neighbours who may be on lower pay, worse pensions, and rather resent that they are through their taxes subsidising the enhancements they're on strike to keep."

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