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What the government isn’t telling you


Large sections of the public sector fund their pensions with a 6-8% deduction from their salaries alongside an employer’s contribution. These contributions are paid into the fund for the whole length of employment. For the majority of public sector workers, this amounts to a pension of less than £5,000 per annum to top up their state pension. This is not ‘gold plated’ but goes towards making themselves less reliant on state benefits upon retirement. Many of these employees’ would have paid into their scheme for the whole of their working life.

Public sector pension schemes, such as the Local Government Pension Scheme are more than adequately funded; in fact the LGPS could carry on meeting its requirements for nearly 20 years if no more contributions were paid in from tomorrow. This scheme was assessed and reformed under the last government to ensure sustainability and to ensure a continuing reduction on taxpayer liability. The real crisis in pensions lays elseware.

In 1997, the then Chancellor of the Exchequer, Gordon Brown, abolished Advanced Corporation Tax (ACT) relief, this basically meant that employers could no longer claim tax relief on the contributions made into their company pension funds. The result of this action created a crisis that left huge shortfalls in pension pots as it starved funds of a key source of money and forced hundreds of firms to wind up final salary pension schemes as employers drastically reduced their contributions so as not to impact on their profits.

To be blunt, the situation was government created. In 2006, in a report by Mr Terry Arthur, a fellow of the Institute of Actuaries, he stated that a conservative estimate of the ongoing raid on the assets of UK company pension schemes by the Treasury after only 9 years had now reached £150 billion, more than twice the pension’s deficit of the county’s 350 biggest companies (Daily Telegraph 2006). Not satisfied with the previous government decimating the retirement plans for hundreds of thousands of private sector workers in theUK, the present coalition government is now determined to do the same to all public sector workers. The government is using highly selective parts of the Hutton Report to justify their attack on public sector pensions, for example, they failed to mention two very important and highlighted statements. These are “Although some private sector schemes receive less, this should not affect public sector pensions. It should not”, he says,” be a race to the bottom”. It also states that he ‘regards public sector pensions as far from “gold plated”. These clear statements are conveniently being omitted as the government continues to manipulate the public and the media.


  • People are living longer which means they’re claiming their pensions longer.


  • The schemes were revised to take account of this 3 years ago-so scheme benefits and costs are now 25% lower. Life expectancy for manual and low paid workers is lower.


  • There is a big public sector pension’s deficit that has to be repaid.


  • There is no funding gap-the public sector schemes were assessed for long term risk and adjusted accordingly 3 years ago and are now very secure.


  • Public sector workers have it too good with huge pensions and it’s unfair.


  • The average director of a FTSE 100 company has a final salary pension entitlement worth £3.6 million or £174,963 a year while the average occupational pension generally is £9,500 a year and public service pension is £7,800 per year. The average for local government is around £3,800, that’s real unfairness.


  • Public service workers retire early at 60.


  • The normal retirement age for many in the public service sector pension schemes is 65. Would you be happy with a 67 year old policeman taking part in a high speed car chase or a 67 year old fireman rushing into a burning high-rise building to rescue trapped people or children?


  • The proposals mean that public sector workers will be paying around 3% more each month-that’s not very much more is it?


  • 3% of anyone’s pay is a significant chunk, especially in times of austerity when you have been subject to a 3 year pay freeze. Pension scheme members already pay between 6-8% of their salary into the funds, this would mean a 50% contribution increase but the increase would not go towards their pensions, but direct to the treasury coffers therefore becoming a public sector employee tax.

It is interesting to note that there is one section of the public sector that is totally reliant on the taxpayer to fund some extremely attractive retirement pots. The Government Civil Service, a collection of approx 700,000 bureaucrats, do not contribute a single penny from their salary towards their retirement. To compound the burden on the taxpayer, the Coalition Government has, since taking power, compounded the tax burden in two ways. Firstly they have, under David Cameron’s so called ‘Bonfire of the Quangos’ made 2,500 quangocrats redundant on lucrative packages (Daily Mail August 2011). What they do not wish you to know is that since May 2010 they have recruited an additional 4,538 staff into 8 Ministries and associated Quangos’, these include some of those who had already benefited from those lucrative redundancies.

Statistics show that theUKcurrently has a workforce of 29 million people. Some 23 million of these are employed in the private sector. Of these, only 3.2 million contribute to a workplace pension scheme that includes a contribution from the employer. The number of people actively saving in a company pension scheme in the private sector has halved since1991. The remaining 6 million workers are in the public sector and of these approx 5.3 million save in a workplace pension scheme. The 20 plus million workers in the private sector who have no access to company pension schemes is where the government should be concentrating its efforts. The Work Retirement Income Commission recently reported that millions of private sector workers faced a “bleak old age” because of the state of pension provision. Millionaires David Cameron, Nick Clegg and George Osborne now want the same for the public sector.

Harrow Unison LG Branch


This Branch has now a pension’s advisor {Steve Compton}. Please contact the branch for more information.




Last Updated on Tuesday, 13 December 2011 15:03

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