Public Sector Pensions; Have Your Say
There’s been plenty in the news for the last week or so about public sector pay issues. Pensions are pay, as my BeeLine from Monday pointed out. So when I hear talk of public sector pay issues I hear ‘public sector pension issues’ at one and the same time. Nearly two years ago I wrote a BeeLine about what I then saw as (and still see as) the three separate pension crises that affect us here in the UK these days (Our three pension crises).
One is the fact that nearly half the people in the workforce have little or no pension savings to their names. Another that our private sector final salary pension schemes are in terminal decline. And the third, that we hardly ever talk about, that our generous, but unfunded, public sector pension schemes will have to be paid for eventually by some people who have poor pension prospects themselves. Our pension system, in short, is seemingly leading us to a strange polarised world of pension outcomes where the ‘haves’ would be in the public sector and the ‘have-nots’ in the private sector. That may be a generalism and a little alarmist, but I think it picks up the tone of many of the press articles we read on the subject these days.
It’s tempting, of course, to say that the decline in private sector pensions should be mirrored by a similar decline in public sector pensions, particularly as the bar has been set so low for the new Personal Accounts scheme that is aimed at those currently without pension savings. But to me that sounds pretty defeatist.
I’d personally prefer it if we could use the strength of the public sector pension promises to persuade those who govern us that there is an urgent need for the Personal Accounts scheme to set a much higher benchmark for private sector pensions than the 3% employer contribution that is proposed. A decent pension for all can only really come about if much higher levels of investment are made by both employers and employees. A good final salary scheme comes at a rough cost of something like 20% of payroll; that, of course, might be too much for people and their employers to fork out.
But what do you think? We’ve just put the following question up as a new straw poll on the BeeHive home Page:
“Do you think that private sector pensions, including Personal Accounts, should have a higher total contribution requirement than currently proposed?”
“If so, how high: 10%; 15%; 20%?”
As usual, let us know why you plump for the option you choose when you vote by using the comments box.
18 September 2008
Any research and analysis has been provided by us for our own purposes and the results of it are being made available only incidentally.