The motion under consideration covers a wide range of issues including state pensions and the devastating impact of the switch from RPI to CPI in calculating inflationary increases to pensions and John Hutton’s review of public sector pension provision.
Much of the debate on pensions is currently focused on the public sector and in the context of a media and politically hyped hostility to the current pension settlement. The coalition government and organisations such as the Taxpayers’ Alliance regularly make the claims that public sector pensions are ‘gold-plated’, ‘too generous’ and a ‘burden’ on the public purse. This is then routinely repeated unchallenged in much of the media.
The public discourse on pensions needs to be reset and based on fact rather than hyperbole.
There is indeed a growing gap between public and private sector pensions, caused primarily by private sector employers failing to provide any decent pensions. The answer to this widening gap is not to level down public sector pensions to the level of the private sector but to create the conditions for all workers to save for their retirement.
However, David Cameron’s solution to what he described as in November 2008 as a ‘Pensions Apartheid’ is to trigger a downward spiral in pension rights across the public and private sector.
The TUC has undertaken detailed research* which accurately sets out the facts on public sector pensions, for example:
• The average pension in local government is around £4,000 per year, and just £2,000 for women.
• Half of all women pensioners who have worked in the NHS get a pension of less that £3,500 per year.
• For every pound spent taxpayers pay towards public service pensions, they pay £2.50 in tax relief for private sector pensions.
In addition, public sector pensions were last reviewed in 2006, and significant reforms made to the majority of schemes including limiting the liability to the public purse and to taxpayers. All parties, including the then government, agreed that these reforms sustainable and affordable schemes and resulted in massive savings to the Treasury
Pensions inequality does exist but the problem resides in the private sector, where highly paid directors benefit from the real ‘gold-plated pensions’. The TUC’s 2008 Pensions Watch study found that the directors of the UK’s top companies are set to receive an average annual pension of £201,700, 25 times the average workplace pension that ordinary workers receive.
The key to future pensions provision is ensuring every worker has access to a decent pension scheme and must not be about the government prompting a ‘race to the bottom’. The UK needs good quality pensions in the public and private sectors with financial security and dignity in old age for all.
Progressive centre-ground Labour politics does not come for free.
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