Financial Times Picks Up On Our Pensions Warning‏

The Financial Times (FT) today picks up on Dave Prentis' commitment to defend our pensions from ConDem attack. Not only that, the paper gives a more balanced view of the issues than the dogs of austerity war at the Mail and Torygraph. http://www.ft.com/cms/s/0/f1644330-78af-11df-a312-00144feabdc0.html?

Setting out the facts that the union had already gone some way to establish affordable reforms they comment "These pension schemes are not entirely unreformed, however. Most now have a “cap and share” agreement, which essentially caps the employer’s contribution at a certain percentage of pay, so that employees must pay to maintain their pensions if assumptions change about longevity. This is expected to produce an extra £1bn a year in employee contributions towards a total bill of more than £20bn from 2012, according to the Treasury.

Also, the retirement age has recently been raised to 65 for new recruits in most schemes, although not for existing employees. Given that the government is threatening to bring forward an increase in state pension age from 65 to 66 for men currently in their late 50s, one reform the government is likely to look for is a similar increase in pension age for at least some existing public employees.

Options such as switching employees to a career average pension, or some form of defined contribution scheme, are also set to be examined".

Here we look at some of the options available to the Public Sector Pensions Commission for our pension schemes and some of the obstacles in the way of those options.

One easy hit would be to raise the retirement age above 65 this would delay the payments of pensions and stretch their costs into the future.

Increasing our contribution rates would be another.

Moving from final salary to a career average would reduce the costs as well.

Any of these changes would require consultation with the union.

The real cost saver for the government and the one that appears the most attractive to the Clegg and his cronies is moving to defined contribution or money purchase. This is where all of the risk is with us, as the employer pays a fixed cost and at the end of our working lives we convert the money in our pension pot with an insurance company to provide a fixed income. This type of system requires an investment fund this is not used in the NHS at present.

To move the NHS scheme to this type of pension provision would mean closing he final salary scheme either to new starters and or current members moving everyone to the new system.

We now know that we have a fight on our hands we must avoid the opportunity presented by the reforms to divide current scheme members and those of future. workers. We need to defend our pension provision not just for now but for future workers, a right to economic dignity in retirement was a major victory for trade unions we must not throw it away.