Latest post on Left Futures

Most public sector pensions are too low

So the new Office of Budget Responsibility (OBR) is daily earning accolades as the Government’s arms-length battering ram to hammer away at the targets the Tories have long had in their sights for shrinking the State.  

Yesterday it was their announcement that the structural deficit (the part of the overall budget deficit that still remains even when the economy has returned to its trend economic growth rate of about 2.5%) was in their view much larger than previously estimated, namely about three-quarters of the current deficit or about £120b.   That conveniently allowed Osborne to ‘justify’ much deeper spending cuts in order to eradicate it in the course of this Parliament.   If he is serious about this, and he appears to be, the cuts will be the deepest since the Second World War, deeper even than Thatcher’s.   And now it’s public pensions next in the firing line.

Today it’s gold-plated public sector pensions that the OBR has set up for the Tories to bash.   It claims that the net cost of these pensions will more than double in 4 years.   However, this ignores the enormous differences within the public sector (as also within the private sector) between the rich elite, the highly paid, and the huge army of poorly paid and very poorly paid pensioners.

A recent Pensions Watch study of 346 directors from 102 of the UK’s top companies found that they are set to earn a yearly average pension of £201,700 (£3,879 per week).   The most senior directors had average pension funds of £5.2m, yielding an annual pension forecast of £333, 400 (£6,411 per week)!   These of course are the same people who, having accrued generous terms in a final salary scheme, are now denying the same benefits to their employees.   So much for the Tories’ favourite motto ‘We’re all in it together’.

Yesterday Nick Clegg was attacking “unaffordable” public sector pensions.   Does he realise that the average pension in local government today is £3,800 a year ( £73 a week), and that this drops to £2,000 (£38 a week) if you look at women only?      If you add in the much-maligned civil service pensions as well as local government, average pensions are still just £4,500 a year (£86 a week).   The average pension for a female NHS worker is £5,000 (£96 a week), but the median is much less: half of all women pensioners who have worked in the NHS get less than £3,500 a year (£67 a week).   These pensions are not unaffordable – they’re unacceptably low.

By all means let’s have a debate about public – and private – pensions, but not Ministers and super-rich City and corporate executives grabbing the cream and telling everyone else their rations have got to be reduced.

One Comment

  1. Matthew Stiles says:

    Even the BBC’s Stephanie Flanders is casting doubt over claims that public sector pensions are unaffordable. She wrote that on reasonable assumptions about rising life expectancy and future growth in earnings and contributions, the annual cost of servicing public pension schemes is projected to rise from 1.7% of GDP today to 1.9% in 2018-19, before falling back to 1.7% by 2059-60.

© 2023 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma