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The Government's plans for public sector pensions, announced today, set it on a collision course with the unions.
The reforms, largely those recommended by Lord Hutton earlier this year, seek to reduce the ballooning bill for public sector retirees. They would do so by stipulating that pensions could only normally be taken at the state pension age, 65 - and 66 from 2020 - instead of at 60 or earlier as at present.
They would also base the value of public sector pensions on career average salaries rather than final salaries, and would push up employee contributions for those making more than £15,000 a year.
Already the PCS union has voted to strike on June 30 in protest at pensions reforms; teachers are striking too. Now Chief Secretary to the Treasury Danny Alexander, leading the charge for the Government, appears to be throwing fat on the fire - not least by threatening that if unions refuse to accept these proposals, the Government will make even bigger cuts to public sector pensions.
There is doubtless an element of brinkmanship in this threat. Yet it is hard to see how the public sector pensions system can continue without radical change. There is an estimated £30billion black hole in the public sector pensions bill - made the more glaring by cuts elsewhere. Moreover, there will be limited sympathy among private sector employees for strikers: final-salary pension schemes are long gone in most places, as is early retirement of the kind enjoyed by public sector employees.
The confrontation with unions will get worse. But they are unlikely to achieve much. The proposed changes are not unreasonable in the current climate - and most workers outside the public sector can see that.
Greek tragedy
The continuing turmoil in Greece over the country's debt is sending a chill wind through the whole of the eurozone. The Greek government's failure to quell protest, and the worsening economic situation, mean that another EU bailout is almost certain, probably as big as last year's £110 billion package. Eurozone finance ministers meet this weekend to discuss the terms.
But so dire is Greece's situation, and so low its credibility with markets, that there is now a real possibility that it could default on its debts, causing it to crash out of the euro. That would trigger an unprecedented crisis in the zone, perhaps leading to the single currency's complete collapse.
That should be no cause for complacency here. Firstly, the UK underwrote around £10 billion of loan guarantees in last year's bailout, which we could lose in a worst-case scenario.
Worse, City chatter is now of Greece being "Europe's Lehman", the rotten apple that brings the whole system down. Being outside the euro would not save us from the damage a full-blown Greek crisis would do to the European banking system, given our banks' deep exposure to other banks' liabilities. Moreover, the EU is easily our biggest trading partner: a fresh economic crisis in the eurozone would hurt our own fragile recovery. We can only hope that the EU forces Greece to bite the bullet and accept the tough fiscal choices it has thus far refused.
Olympic dreams
The Olympic ticket allocations are in - and many who applied will be disappointed. Almost two-thirds have got no tickets at all. That is partly because many applied for wildly oversubscribed sports such as athletics and swimming. When the remaining tickets go on sale next Friday, those ready to try less popular sports stand the best chance. Handball or wrestling, anyone?
Reader views (3)
Public Sector are pleading poverty and injustice and to be honest it’s not teachers on 35 – 50k per annum we have an issue with.
It’s the fact that:
1. all public sectors workers are not on a uniform contract of employment.
2. Many retire too early, some taking their pensions after twenty years service when they are only in their 40s or 50 despite the fact that we are living longer and state retirement age is rising.
3. Final salary is outdated, unfair and unaffordable to the people that are paying it who have to work in a competitive environment.
4. There are too many non jobs / unnecessary jobs created by labour, inflating the numbers in government tax consuming jobs.
5. There are some outrageous salaries for jobs that don’t involve competitive tendering and P/L responsibility. Caps need to be imposed!
6. The rainmakers, ie the tax contributor should be more highly remunerated than the tax consumer by at least 25% that salary and pensions. The reality the tax payer would survive without the public servant but not the other way around. We can always pay people to do the jobs you do in a private capacity e.g public school!
We don’t want to hear about policemen, civil servants or councillors on six figure salaries who then go on to earn 75% of this as a pension drawn when they're 50. If you want to strike, strike against these guys because the private sector seeing this, is seething and tarnishes you all with the same brush.
The tax payer is sick of being ripped off
- Fulhamite, Fulham, 17/06/2011 18:49
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There is no doubt that the Public Service (a misnomer that)knows full well that they should not get better benefits than others and that there is little symparhy for them elsewhere. Unfortunately it is like shovelling liquid manure with a garden fork to get them to admit that the obvious.
- Geoff Coles, Cape Town and London, 17/06/2011 15:28
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I have been researching the Pensions issue now for a while and I am able to assure your readers that the quality of pension support for the most needy in society is unacceptably low at the moment.
Without naming any names, there are too many people in the decision-making chains in the Department for Work and Pensions and in local councils that make the eat-or-starve decisions about who gets what, or if any pension support.
When Danny Alexander reportedly says that he has a better offer on the table pre-strike action than the one post-30 June [strike], he is missing the meat of the crisis as it’s suffered and known on the ground.
Most people in poverty are not in states of health permitting them to go on strike. What about them?
It looks as though Mr Alexander and his Gievrnement colleagues are better ready to deal with those who can retaliate by placing on the table their answer to Mr Alexander's Government power. It is called strike power. The post 60 age groups have the highest proportions of people being led into poverty and hardship. And being neglected there. Mr Steve Webb has gone on record and said that pension credit was recognisably very important. But the people on the ground have different expenses on getting hold of the much publicised pension credit support. They are being denied. And the denial is in the delay. Some cases I have found of pension credit being denied for no earthly reason at all.
Is Danny Alexander bothered about them?
I am now completing my
- DeborahDFR, London, 17/06/2011 13:13
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