Time to rebuild economy and put pensions and savings at heart of it

Dear Editor, I read with alarm the article attacking public service pensions – a piece based on myth, a lack of understanding and more than a little prejudice (‘unions please think again before striking’, September 29).

The author, Russell Luckock, says that unions ‘would not accept any change in their pensions’, yet only a few years ago unions negotiated substantial reform of public sector schemes with the then government.

As a result, new cost-sharing arrangements were put in place so that if life expectancy rose faster than anticipated, the resulting cost would fall mainly on scheme members rather than on the taxpayer. Lord Hutton said in his report earlier this year that these changes alone reduced the value of the schemes to current members by 10 per cent, rising to 25 per cent once the impact of the change in indexation from RPI to CPI is factored in.

However, none of the changes this government has announced – a further increase in contributions, a rise in pension age and a change in indexation from RPI to CPI – were done so with any consultation. More importantly the proposed increases in staff contributions have nothing to do with the long-term affordability of the schemes, but are pure and simply about taxing low-paid public sector workers in an attempt to pay down the deficit.

The changes risk making public sector pensions more unaffordable and could see thousands of low-paid workers leaving the schemes. Without pensions provision in their old age the state would be faced with picking up a very expensive benefits bill as millions of pensioners are forced into pensioner poverty. This is the reality of the government’s race to the bottom.

The unions want to see ‘pensions justice’, not just for public sector workers, but for all workers in the UK. Rather than undermining the basic rights of public service workers, ministers should be legislating to improve pension provision in the private sector.

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