From the TUC

The CBI on public sector pensions

15 Dec 2008, by in Pensions & Investment

The CBI have joined the fray on public sector pensions.

Of course they are more subtle than the Taxpayers’ Alliance and right-wing tabloids in their arguments, but they will still be seized on by all those aiming to stir up pensions envy from private sector staff understandably angry about not having a pension. And I thought it was the left that was accused of the politics of envy.

The second sentence of the report leapt out at me:

“Private sector employers have taken  decisive action to control pension costs”

You bet they have.  Just look at the Government’s Pension Trends (pdf). In 1967 there were more than 8 million members of employer run pensions in the private sector. That figure had almost halved to 4.4 million by 2006 – around one in four private sector staff.  In other words around three quarters of private sector workers have had their pension costs controlled pretty decisively.

What you won’t find in the CBI report is any estimate of the cost to the tax payer of paying means-tested benefits to the huge numbers of people already retired or due to retire in the decades to come whose employers have not provided any pension. The CBI report could just as well said, “Private sector employers have taken decisive action to transfer their pension costs to the taxpayer”.

Indeed the retreat from pension provision by employers was one of the main reasons why the government set up the Pensions Commission under Adair Turner, and why a new obligation on every employer to contribute to a pension – one of its main recommendations, and a long time union demand – will start in 2012, thanks to the Pensions Act 2008 which has just received Royal Assent.

(links to CBI report will be added – this was written while it was still under embargo, but I’m sure it will be prominent on their website)

One Response to The CBI on public sector pensions

  1. Robert Day
    Dec 29th 2008, 11:33 pm

    What everyone forgets (and even supporters of the public sector forget to remember) is that in the Civil Service scheme, about 7% is shaved off the total paybill right at the top by the Treasury to help pay for all this before money gets handed down to Departments. Now, I’d be more likely to consider changing my pension arrangements if I got that 7% uplift in my salary so I could make alternative pension provision.

    And all this also forgets that public sector workers also pay taxes! I know that the deal is that a proportion of my taxes pays for the pensions of colleagues who have already retired. On that basis, I think that it’s a reasonable expectation that my pension, when I finally get it, will be supported by colleagues still working.

    Those with long memories will recollect that the Divine Margaret huffed and puffed about the Civil Service pension scheme before coming into power, and engaged one of her cronies (Lord Sainsbury?) to investigate almost as soon as she moved into No.10. His conclusion was that given the balance of monies paid in and paid out under various budget heads, the scheme was as fair as any other alternative.

    I suspect that a lot of the sound and fury over the public sector pension bill comes ultimately from the private pension industry, where a small number of people appear to get very rich on administering private pensions and ultimately have their own interests at heart. As it takes more people to administer public sector pensions (whether occupational schemes or the State pension), the number of people who get “rich” through administering the scheme is larger, but the largesse they get given for administering the scheme is correspondingly smaller. Seems like a more equal redistribution of wealth to me.