From the TUC

From the department of the bleeding obvious

06 Nov 2009, by in Pensions & Investment

Financial Adviser reports:

Harry Katz, principal of London-based Norwest Consultants, said public sector pensions are paid for exclusively by the taxpayer. He said:

“The government is an employer and wants to attract an employee, for most people in business that has to be paid by the employer. The government promises to pay the employee a pension, but does nothing about it to pay for it, which is a pretty lousy way to go about things. Years ago government employees did not get paid as well as those in the private sector, so it was made up giving them a pensions promise, but that is no longer the case.”

Well fancy that! Something provided by the public sector is paid for exclusively by the tax payer. Isn’t this something of a definition of the public sector? It doesn’t get any better either:

“The government is an employer and wants to attract an employee, for most people in business that has to be paid by the employer.”

Well yes, what a fantastic piece of original analysis. Occupational pensions are paid for by employers. They make contributions – and so do the employees, but still out of the wages paid by the employer.

And the last sentence too is fascinating. Note that unspecific “years ago”. I’ve gone right back to 1984 and discovered that public sector workers have had a higher median wage than private sector workers every year. It’s not surprising as jobs in the public sector tend to be higher skilled than jobs in the private sector – and indeed with contracting out and privatisation particularly affecting lower paid jobs the gap has got greater. Sectoral means and medians do not tell you whether people doing the same job in the public and private sectors get paid more or less than each other, but other studies – quoted in our Decent pensions for All (pdf) show:

Highly skilled workers in the public sector earn 5.5 per cent less than they do in the private sector. But low paid public servants largely do better than their equivalents in the private sector as they earn above the minimum wage and have access to a pension. Unskilled workers in the public sector earn 7.2 per cent more than they do in the private sector. Only one in five private sector employees earning between £100 and £200 has an employer sponsored pension, compared to 70 per cent in the public sector.”

I wonder how much Mr Katz gets paid. I suppose on his logic he is admitting to being not very competent as he must have failed to get a better paid job in the public sector.

And while some people in the pensions industry hate unfunded public pensions because they don’t get a cut of them through charges, they are perfectly affordable as Decent Pensions for All shows.

2 Responses to From the department of the bleeding obvious

  1. MPs’ expenses row is symptom of wider inequality | ToUChstone blog: A public policy blog from the TUC
    Nov 6th 2009, 6:11 pm

    […] state the bleedin’ obvious myself) most people don’t earn anything like the top decile. They think that MPs should be […]

  2. HEATHER WAKEFIELD
    Nov 7th 2009, 7:50 am

    And let’s not forgot that the Local Government Pension Scheme – which also covers education, Police, Probation and Fire and Rescue support staff as well as the Environment Agency – to name but a few, IS a funded scheme and generates a third of its cost through its investments. Not to mention the fact that UNISON’s survey of 10,000 of our local government members in 2008 showed that 10% aren’t in the LGPS – mostly because they say they can’t afford to be. That’s the extent of their rampant public sector pay rates!

    Being a funded scheme also (rightly) makes it more transparent than other publivc sector schemes and allows the Taxpayers Alliance and others to crawl all over it and come to nonsensical conclusions.

    Well, you can’t win ’em all……………..