OUR PENSIONS ARE IN DANGER
Demonstrate March 26th.
The Independent Public Service Pensions Commission, headed by John Hutton, released its report two days ago. Even before the report was released, the Government announced they were increasing employee contributions by 50%. The government also announced ahead of the report that pensions will be accrued using the consumer price index (CPI) rather than the current retail price index (RPI). This will slash about 15 per cent from the average pension values.
A crucial proposal of The Hutton report is to change public sector pensions from a final salary based pension to a “career average pension”. This follows last autumn’s proposals in the Comprehensive Spending Review to increase pension contributions by 3%. Unite General Secretary, Len McCluskey, described it as a “£2. 8 billion annual ’raid’ on public sector pensions” and said: “Ministers were using the public sector pension funds as a piggy bank.”
The report supported the government’s plans to raise the retirement age to 65, which will further reduce pension calculations as people begin to retire before the pension age. It also reaffirms George Osborne’s plans for a Pension tax that seeks to impose an annual £1billion levy on members of the Local Government Pension Scheme.
Already many lower-paid public service workers cannot afford to be part of the pension scheme. One in four workers who are eligible to join the scheme opt out, and participation levels are on a downward trend. Huttons recommendations will exasperate the situation. Many workers, after a life time of public service will retire at 65 and live out their retirement in penury. A GMB Union survey of its members, who are in the LGPS (Local Government Pension Scheme) found that 39% – 53% would opt out if the Osborne Pension Tax was imposed.
Mark Serwotka, general secretary of the PCS Union (Public and Commercial Services) said: “For civil servants, increased costs would go straight to the Treasury to pay off the deficit. Even the Bank of England governor Mervyn King admits it would mean the wrong people were paying for the recession and agrees with us that public spending did not cause the financial crisis”.
National Union of Teachers General Secretary, Christine Blower said: “increasing pension contributions by more than half will cost newly qualified teachers up to £61 a month and experienced classroom teachers up to £102 a month – an additional cost which will see many leaving the Teachers’ Pensions Scheme”. She added: “The real pension problem is in the private sector where two-thirds of employees are not in any employer-backed scheme. We need decent pensions for all.”
Dave Prentis, Unison General Secretary, remarked yesterday: “There is a lot of nonsense talked about public sector pensions – they are not gold plated. The average is very low -in local government, the average is just over £4,000, falling to £2,800 for women”.
Matt Wrack, FBU general secretary said: “This is the great pension’s robbery and is completely unacceptable to fire-fighters across the UK”. “Expecting fire-fighters to work until they are 60 is wrong. Fire fighting is a physically arduous job. Peak fitness is essential where seconds can cost lives. The public will not want an ageing frontline fire and rescue service.”
“These proposals are unacceptable. The Fire Brigades Union has a warning for the chancellor. Reject Hutton’s pension proposals or you’ll be playing with fire. Fire-fighters simply won’t accept them.”
Bob Cow reacted to the report saying: “Pensions are nothing other than deferred wages – staff pay into these schemes to avoid freezing to death in their old age”. “The Hutton Review will be the spark that lights the blue touch paper of co-ordinated strike action”.
Most Union leaders are offering nothing more than vague threats of unspecified “co-ordinated action”, whilst wasting their time begging the government to sit round the table and discuss the pension issue.
The UCU (University and College Union), however are already planning strikes across the country. These are due to take place between the 17th and 24th of March. Sally Hunt, the general secretary said: “pensions compensate for the lower salaries lecturers receive for researching and teaching in universities, compared to what they would get if they chose to use their highly-specialised knowledge and skills elsewhere”.
There is a lot of misinformation about public sector pension schemes. The facts are:
- The local government and NHS pension schemes were renegotiated in 2006 to make them sustainable and affordable.
- Both schemes are cash rich – more is going in than coming out.
- Currently the NHS Pension Scheme returns a surplus of £2.3bn to Treasury enabling it to fund Government spending in other areas, such as boosting state pension provision for all. The LGPS has an annual cash flow surplus of £4bn.
- The legacy of making swingeing cuts to the pension provision for 20% of the population, or pricing them out of pension saving altogether, will be increased pensioner poverty and more pressure on state benefits and public services.
- The average pension in public service pension schemes is very low, for example in local government, the average is just over £4,000, falling to £2,800 for women.
- If these people didn’t save for their retirement, they would have to rely on means-tested benefits paid for by the taxpayer.
- Pensioners are already being hit with the move from RPI to CPI to calculate annual inflation increases – this will reduce their value by 15%.
- When the NHS scheme was renegotiated, protection was built in for current members to retain their retirement age of 60. New members have a retirement age of 65. If that agreement is broken, industrial action could follow.
- Government cuts to local government employers grants mean that the shortfall in pension contributions has to be made up by employees. They may have to pay between 50% and 100% more for a reduced pension. This is effectively a tax on low paid workers.
- Studies have shown that if the contributions rise too much, workers will desert the local government scheme and it could collapse.
- The local government scheme invests more than £100billion in the UK economy. If the scheme collapsed, it would have a devastating impact on the economy.