My Dad was a Doctor, in his later years he became a politician, by a fluke of politics he became leader of Dorset County Council- the first liberal (socialist) leader .
For Dad it was about fairness and he always thought first of the people who had no voice. This blog is for Dad and for the people who don’t get pensions.
Corin Taylor has written a great paper on The Pensions Apartheid which argues that the Government’s failure to tackle the divide between the haves (public sector employees) and the have-nots (the rest of us) is socially divisive and will be ruinous to the public purse.
He argues that the Government are misleading us by underestimating the cost of unfunded pension liabilities by 40%.
I had an argument about this yesterday.
“It’s a tax/Government borrowing issue …. not a pensions issue” said a good friend of mine. She gets pensions;
I spoke with my Dad . He was the taxpayer’s representative in the management of the Dorset CC Pension Scheme, He made a proper point.
“When budgets are squeezed Council Pension costs are ring-fenced- they cannot be reduced. Pension costs in Dorset have led to a reduction in the basic services pensioners need to have a decent life.”
You don’t think public sector pension decisions matter? Take a look at your council tax bill – these things are becoming second mortgages to many of us!
This is how crazy it gets. My local paper reported this week that a senior officer of our local council got a £250,000 pension pay off. The details aren’t reported but I can work it out. That person had been in his council pension scheme forty years, he was given an increase of salary of 10% just before he left…that gave him a lifetime pension increase of £10,000pa which will cost us £250,000. That’s how ruinously expensive public sector pensions can be;- and the vast bulk of the cost goes to a few fat-cats at the top.
It’s not just us every day Joes who should be concerned..the cost of poor public pension policy decisions will feed through to higher corporate taxes, which will impact on the ability of companies to support their pension schemes. It will reduce public spending for the poorest pensioners in those schemes (who need it most) and it will create increasing anger and social division which will bring the pensions into (further) disrepute.
As and when the ratings agencies pick up on the Government’s dodgy pension accounting it will be too late. Just like British Telecom which has seen its credit rating and share price collapse following the disclosure of the real state of its pension finances, UK plc will get a mauling from the likes of Standard and Poors that will relegate us to the Greece/Ireland/Iceland category of European States.
This matters to all of us, a credit downgrade means that the third mortgage we are paying (Government debt) will go through the roof as Britain gets its version of a County Court Judgement.
We will feel the pain of not tackling pension decisions through higher VAT, higher national insurance, higher fuel bills, higher income tax and higher booze and fag costs.
There is a huge body of pension experts in this country who are keeping remarkably quiet at time when the public policy debate is at its keenest. The General Election is currently being fought on the price of white cider and the Government are doing a great job of keeping this dark and dangerous issue out of the public eye.
I hope one or two people who read this blog will be prompted to start asking a few awkward questions.
Henry an issue very close to my heart and something no-one seems to pay a blind bit of notice towards.
Several figures I’ve seen suggest a deficit of around £765bn in unfunded DB promises by the treasury. With a government already taking us to the brink of economic bankruptcy, this could easily tip us over the edge.
I have a view that DB provision IS still appropriate for key workers, but for key workers only. I.e. teachers / policemen and women / soldiers / nurses etc. who are at best modestly paid.
But for a cap of (say) £50k or maybe even £70k and above, there is a level of earnings whereby people can afford to independently create wealth themselves with their earnings.
Let us not underestimate the hidden council tax costs of provision for retired council workers when we see double digit increases in our bills!
As I say, an area very close to my heart. And don’t even get me started on the risk mitigation that HMRC are NOT doing i.e. mortality swaps etc.
Grrr! But great article!
What is so infuriating is that we have stopped getting angry about this!
Is there a general disillusionment that says”nothing can be done”?
Have we so lost confidece in the democratic process?
Are people so constrained by the thought of being “offline” that they have retreated into their shells?
Or is it that the people who should be taking action have become so fundamentally selfish that they don’t give a damn for anyone but themselves.?
Thanks for the comment Andy.
Reading this for the first time, so thanks for re-booting. Think I will enjoy reading The Pensions Apartheid, which I assume is the paper you referred to in your comment on my blog.
Our office was very deflated by the final outcome of Hutton, which promised so much and has delivered so little.
As for linking CARE revaluation to average earnings and the ridiculous pension packages you refer to above, don’t get me started… (no doubt the senior office you refer to was pensioned on prospective service and with no reduction for early payment – terms which might even have embarrased Sir Fred).
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