Hutton Report - You Will Pay More Now (but expect more pain later)‏

Summary of key points

- Past pension earnings to be protected
- Pension contributions should rise this October
- Workers are living longer this is the key pension problem
- No such thing as gold plated pensions
- No race to the bottom - will not recommend private sector solution, ie no pension
- But rising costs must be met by a structural over haul - see below
- Retirement age should rise to 65 for all
In other words, pay more, work longer and get less! http://www.lgcplus.com/5020210.article

Hutton has offered Osborne the option to increase our pension contributions when he announces the comprehensive spending review on the 20th of October. Of course Hutton has said past pensions must not be touched but Osborne could break the promise. Like child benefit promises can we belive that? He could cut our pension entitlements by increasing the rate at which our pensions are calculated from 60th to 65th for example, and that would hit pensions being paid out right now.

The 176 page report offers a detailed examination of our public pension system but it does so in isolation and makes no comment on the way the economy has been poorly managed which is the root cause of all of the issues he raises. He puts most of the blame on the rising costs on workers living longer. In an era of unprecedented wealth creation, even without the banking sector's debt bubbles, it is a disgraceful for him to blame the so called public sector pension crisis on the fact our mothers and fathers are living longer than our grand parents and we are parents.

Our economic capacity has also grown over that period our lives may have lengthend but our economy has mostly grown year on year since the 1950's more than enough to cope with us living longer.

The main thrust of Hutton's work will be on putting forward major structural reforms to benefits and the pension systems, although he has no plans at present to turn the NHS scheme from pay as you go to an investment fund or the LGPS from an investment fund to pay as you go.

Structural Reforms

These will focus on looking at different types of pension benefit provision, and he makes it clear that final salary schemes are no longer an option. Career average is an option but he will be considering others, such as a defined contribution mix, based upon those used in Sweden and the Netherlands, he will also consider capping pensionable pay. There will be enough in the pot to give Osborne plenty of choices to cut costs and cut our living standards.

Governance and cost

Hutton has obviously been confronted by the masses of misinformation and poor governance that besets public sector pensions. He calls for greater transparency and easy to understand systems. He is clearer going to take a close look at LGPS fund merger and the high costs of fund managment. Its clear at least in the LGPS that savings and increases in income can be made without increasing our contributions of cutting our benefits, which is something we should welcome and is conference policy.

So we can look forward to a yet another attack on our living standards while the banks and bankers feast upon bonuses and free money from the government.