UNISONActive is an unofficial blog produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective.

Sunday, 6 March 2011

Lord Hutton - a £70bn Raid On Our Pensions?

As much as £70bn could be grabbed from our pensions by a shift away from final salary pensions a consultancy firm has estimated. This would be done by breaking the earnings link for the calculation of our pensions.

Everyone in the pension’s world is expecting Hutton to recommend a move to career average for our pensions. The issue for us is will the link between our wage rises and our current pensions remain?

Speaking ahead of the publication of Lord Hutton's report into public sector pensions, John Ball, UK head of pensions at the consultancy, said that if the former Work and Pensions minister recommends breaking the final salary link, it may result in savings, at our expense.

He predicted that, if the change happened, the final salary for us would be the salary at the date of the changeover, with any further increases instead linked to the lower CPI inflation rate.

"Implementing the move away from final salary pensions this way could reduce the combined liabilities of the civil service, NHS and teachers' pension schemes, as recorded in official accounts, by around £70bn," he said.

He added: "This is because, despite being held below inflation at the moment, public sector pay should rise faster than prices in an average year

What sounds like a technicality could have a far bigger impact on the public finances and on the incomes of the people affected than some of the most contentious deficit-reduction measures.

While wages are suppressed and jobs slashed the raid on our pensions is moving toward a staggering £200bn…£85bn will be grabbed out of public sector pensioners by cutting their pension increases as a result of moving from Retail Price Index to Consumer Price Index, £70bn by breaking the earnings link for final salary benefits and £10bn for the proposed contribution increases starting next year.

The austerity programme of the Con Dem's must be met with the full force of the public sector trade unions or else we will be pushed into deeper into poverty.