The Strike now seems inevitable, as a person I dislike strikes, they are disruptive and penalize the general public, but on this occasion the Teachers and NHS workers have a just cause, which has not been listened to.
It is as if the Government wished to provoke this action in order to bring the cause into disrepute, there appears to have been a policy of misinformation and a failure to disclose the facts on Public Sector pensions. There has been a firm intent to create envy and a distortion of the limited figures available, pensions for the majority are not gold plated and offer poor return on contributions made.
In Pensions overall the sums do not add up and the figures do not make sense, nowhere is this more apparent than in the State and Public Sector Pensions, The Hutton report gave no real facts, figures or details on the different schemes, their viability and actual financial state and followed closely an earlier CBI report. In fact it is uncertain whether these even exist or anyone in the Government understands them.
All give conflicting and varied statistics and reports almost designed to confuse and older pre-election information has been archived and not readily available. Freedom of information has become misinformation
The solution to the present dispute is simple, return the unsubsidized pension system back to its members. They all pay good contributions in addition to the NI State pension and therefore have the right to run their own schemes without Government interference.
Total contributions are no different to those paid in private DB schemes, the conditions and benefits are much less and with the frequent reviews are diminishing steadily with less security. In a private scheme with the same contributions they would receive two to three times the pension, linked to what they paid in; choose when they retire; with annual information in an efficiently run and well managed scheme.
The average pension in the NHS is £6,000 (GAD report) for their contributions of 6.5%, SERPS contract out of S2P of 5.1% and employers contribution of 7.3%, which should give a pension of half their final salary or more. Yet they only get a further pension equal to the below poverty State pension, are expected to increase contributions by 3%; work longer with an uncertain pension which may not even keep up with inflation.
A nurse on the average female salary of £20,000pa has contributions of £1,300,SERPS rebate of £1,020 with employer contributions of £1,460, which even in a fund keeping up with inflation would yield a pension of £9,600 and double this in a good scheme. GAD figures indicate £5,000, almost half this figure.
It is not surprising, but lamentable that they are reluctantly reduced to strike action; the fault lies completely with the Government, who having completed and agreed a lengthy review in 2008 now want major drastic changes for the worst. They want further annual reviews; large increases in contributions, etc.etc.
The real problem is that the State has squandered the Pension Funds and is now forced to pay pensions from existing members contributions as they receive them, as an unfunded scheme, this is a clear abuse of savings and anyone else would be sent to prison for the criminal misuse of monies entrusted to them.
At present in the NHS total annual contribution income is £8bn and exceeds pension payments by £2.1bn (OBR), although earlier figures showed £3.6bn (GAD), even in a modest funded scheme over forty years, this should yield payments of some £20 to £28bn per year, four times the present pension levels. They could run as such a successful funded private scheme, free of State interference, if allowed and even meet existing pensions, which are clearly a State liability.
Police and Fire are in a similar position, although Teachers only break even due to more generous pensions, the Civil Service, Armed Forces, MP’s, etc. are subsidized with little or no contributions, whilst Local Government have good Funded schemes. It is little surprise that dissatisfaction occurs.
The only sensible and long term solution is to change the unsubsidized Public Sector schemes into normal funded member schemes free of State interference and involvement, in the way any normal employer would do, as University and similar schemes. Existing pension payments are a State liability and should be paid by the Government, although the current pension liability could be afforded and met by the new schemes.
Even the projected population increases could also be met, without the major changes being proposed and with substantial cost savings to the State who would relinquish all liability for future pensions and large benefits to members with a secure retirement future.
I am one of the lucky older retired with no axe to grind.
Savings Annuities Public Sector NHS Teachers Police Local Government State Work Benefit Social Education
John, I appreciate your considered support.
ReplyDeleteI wouldn't trust the FIRE section to run pensions though, given their poor returns and excessive fees, charges.
Given the weakness of private employers finances and the reality of many people having many employers in their lifetimes it seems to me to make far more sense for the government to run pensions as our government will be their as long as our nation/s will be as long as we stay monetarily sovereign and don't join the lunatic Euro( with it's instability and stagnation pact the Franco-German access still break the rules unpunished while crucifying the rest of the zone!) or any fixed currency regime, remember the Lawson/Major/Lamont 1992 farrago?
The government should guarantee an anti-poverty pension of 66% of mean wages, whilst also having a Job Guarantee at decent living minimum wages, currently £8 an hour, pegged to labour productivity, so the 5 million unemployed are found useful community, environmental, health, social, care, child care, youth work services instead of paid to do nothing whilst made to do humiliating useless and wasteful off the job training whilst applying for non-McJobs that aren't there! Like in Norway but from 4 weeks not 6 months.