Friday, October 8, 2010

Hutton Delivers

For policy-geeks like me, these are great times. Things which I have been obsessed with for years - like public sector pensions, are finally being dealt with. Shame it has taken the near-bankrupcy of the country to get us there, but here we are.

Yesterday, former Labour Minister John Hutton nailed this issue for what it is - one of fairness, not only between public sector staff and the rest of us - but also, less conspicuously, across generations. The Baby Boomer generation is about to retire - en masse. Many of them will live into their 90s and beyond, ensuring their retired-life is nearly equal in years to their time in paid work. Paying for this will be those left working - a much smaller cohort of people which has had to pay for its own education and paid over the odds for property owned, on the whole, by this older generation.

Yesteday's report, then, was calling time on this generation of privilege. No final salary deal - just a lifetime average. No retirement at 60 - go to 65 like the rest of us. And pay more in if you want if you want more out. Just to give you an example, my own pension to which I have paid 5% of my salary for 15 year is worth considerably less than my brother's, who also pay in 5% - who has been working for a local authority for less than three years. His pension is, in effect, worth an extra 30% on his salary, were he to enjoy comparable benefits through a scheme like mine.

Isn't this all about levelling down? Should we not be talking about levelling up? Well we should. But the only way to do this to encourage the majority of private sector staff without pensions to take one up so that 85% of people across ALL sectors - not just one - provide for retirement. And the only way to do this is to
untie the Government's hands from its massive obligations to former state employees. At the moment, the unfunded pensions `black hole' is 790 billion. It doesn't leave much spare for encouraging everyone else through tax-breaks etc to kick off a private pension, does it?

So I was delighted with Hutton yesterday. Seeing Dave Prentis and Co trying to defend the indefensible make me queasier that usual, particularly as all that lot are, themselves, on up to 200k (Derek Simpson being the best paid), living for free in union property etc. Not exactly in tune with the lives of ordinary people, I would suggest.

1 comment:

Rob 'Arris said...

Craig, you are aware of my previously published, blogged & twattered, sorry twittered, views on this. Very well put by Hutton; realistic, honest and forward looking.

There are massive problems with this situation and any planned change though. A complete culture change, an economic impact for this generation and its children, and a government that will consistently be derided for having to deliberate in troubled times. Fortunately for Labour, they will regain power around the time we begin to prosper again........ hopefully the unions will have been killed off by then - idealism is someting we all do but feathering your own nest is as much the territory of union leaders as it is of politicians. A shameful landscape in my most humble opinion.
Have a good weekend all.