AXA’s dodgy public sector pay stats (Part 2)
It is even worse than you might expect.
It repeats the nonsense from the British- North America Committee that Straight Statistics described as “a statistical howler that would make an ‘O’ level student blush”.
And AXA Corporate Benefits’ Managing Director Paul McMahon compounds this with his personal plan for the future of public sector pensions:
“AXA believes that the transition to DC pension provision could be made smoothly if the process followed by the private sector is now replicated in the public sector:
- All new employees are auto-enrolled into a DC pension scheme rather than existing DB schemes
- The DC scheme uses innovative approaches such as “Save More Tomorrow”, which automatically increases contributions in line with pay increases
- Employers provide better financial education in the workplace
- The right tools are provided to enable people to manage their own finances easily. These should include websites where individuals can take more personal control of their savings and investments. “
This of course would be terrible news for tax payers. The pensions promises that have already been made for past service will still need to be paid. At present those costs are defrayed by the flow of employee and employer contributions.
But if Mr McMahon has his way, those future contributions will instead be put into a DC pension scheme, leaving tax payers to meet the whole cost of paying pensions in payment.
The recent NAO report shows the annual cost of paying unfunded scheme pension commitments is £15.8 billion. At present all but £2.5 billion of this is met by employer and employee contributions. If instead they were put into a DC scheme taxpayers would immediately have to find £13.3 billion – more than an extra 3p in income tax.