Double whammy for public sector
As far as I can tell, employers are becoming more and more concerned about the likely long-term costs of the promises they were erstwhile happy to make to their staff pension-wise and it looks like, en masse, they've decided to do something about it by getting the hell out of the way of the problem.
My latest investigations indicate that this worrying trend is no longer limited solely to private sector pension schemes, but is spreading to the public sector too. The Civil Service scheme got its card marked just before Christmas, signalling that the writing is surely on the wall for rest of the public sector. The most recent announcements about the National Health Service pension scheme catching a bullet appear to bear this out; it's beginning to look more like a question of when, and not if, for all the other public sector schemes.
Worse still, in that sector at least, one of the big hits seems to be coming in through a sharp increase in the normal retirement age, so the unwelcome pension reductions come hand in hand with the prospect of even more years tied in harness. A double-whammy if ever there was one.
But it's not all doom and gloom. Amid all the bad news I've turned up in my investigation, I found at least one shining example of some people fighting back and actually getting their employer to increase the value of their prospective final-salary benefits.
The MPs, who tirelessly work their little socks off for the greater good of us all, have somehow found the time to persuade their employers to increase their, albeit measly, accrual rate from mere fiftieths of final-salary to the lightly better level of fortieths. Well, good for them.
Hopefully, they will also be able to buck the trend of ever-increasing retirement ages and be successful in getting their employers to reduce the length of the working lives they are currently saddled with.
First published in Pensions Management, 1 February 2005