The Staggers

The New Statesman’s rolling politics blog

Public-sector pension reform is part of a wider agenda

Pension obligations are the biggest barrier to further privatisation.

By Peter Wilby Published 10 March 2011 14:21

The report on public-sector pensions from the former Labour minister John (now Lord) Hutton must be understood as part of a wider agenda.

First, after private-sector recklessness, greed and incompetence plunged us into financial crisis and recession, Tory politicians and right-wing newspapers aimed to deflect popular anger on to public-sector workers. They eagerly pointed out that, while stock-market falls and near-zero interest rates had slashed the value of most private-sector pensions, teachers, nurses, firefighters and local government bureaucrats continued to enjoy the prospect of a "gold-plated" retirement, on up to half their final salaries, with ample protection from inflation.

Government measures, notably changing the inflation index used in calculating payments, have already cut their value by around 25 per cent. But ministers reckon there is mileage in continuing the jihad.

Second, pension obligations are the biggest barrier to more privatising and outsourcing of public-sector services. Public services, we are repeatedly told, are run for the employees, not the public. They are being "reformed" so that they can be run for the benefit of capital.

This blog post is taken from Peter Wilby's First Thoughts column in this week's New Statesman, available now.

Tags: pensions John Hutton

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21 comments

Thu, 2011-03-10 21:04 — K J Kearns (not verified)

Luddite.
Fact. No Firefighter can retire before their 55 birthday.
Fact. Any firefighter that joined after april 2006 cannot retire before their 60 birtday.

68 year old frontline Soldiers and Firefighters are not viable as the top brass in the army or the fire service will tell you. Can't comment about the army but that is why Firefighters pay 11% of their wages into their pension as we can't do the job in our 60s

Thu, 2011-03-10 21:47 — Luddite (not verified)

MEN - a rough guide to retirement

• Under 32s. can get state pension at 68*

• Aged between 32 and 41. can get state pension at 67*

• Aged between 42 and 57.can get state pension at 66

• Older than 57.can get state pension at 65

WOMEN - a (very) rough guide

• Under 32s.can get state pension at 68

• Aged between 32 and 41.can get state pension at 67

• Aged between 42 and 57.can get state pension at 66

• Aged between 57 and 59.can get state pension at approx. 65

• Older than 59.can get state pension at 60

This should apply to all, why should some, be more equal then others.

Thu, 2011-03-10 23:21 — Chris Bergin (not verified)

See the comments by Richard Murphy for 10th Mar on this item (TaxResearchuk.org)to see a rebuttal of the current propoganda on this subject

Fri, 2011-03-11 00:16 — Iain (not verified)

Well before the recession when Debt/GDP was a mere 40% there was a consensus that the ageing population would lead to an unsustainable increase in government debt by the middle of the century. No surprise that the current administration is looking to reform the pension system as this would have been necessary even if there had been no banking crisis.

Fri, 2011-03-11 00:31 — K J Kearns (not verified)

Luddite your guide is a guide to when men and women can expect to receive a state pension which is a different thing altogether. Most male manual workers are on the scrap heap in their early 50s in this country. The idea of 68 year old Paras and Marines is laughable and if my wife and kids are in a house on fire I know I don't want Firefighters in their late 60s trying to rescue them.

Fri, 2011-03-11 07:32 — Luddite (not verified)

K J Kearns. Do you think, if we had a Labour government, it would be much different. Asking troops to fight in their 50s and 60s is ridiculous, and firemen to tackle fires with arthritis, is a none-starter. Many manual workers after 60 are physically unfit to carry on. All this is true. A combination of Gordon Brown's tax raids on pensions, and the fall in the stock-market, has pushed pensions to the top of the political agenda. We either do nothing and hope for the best, or we confront this difficult political situation and deal with it. Something both Labour and the Tories have avoided.

Fri, 2011-03-11 15:59 — Katherine (not verified)

I am amazed by the number of people arguing that public sector pensions and retirement age should be brought in line with the private sector in the name of equality. Surely a better way of achieving equality would be private sector workers pressuring their employers for better working conditions?

Also, without such a pension scheme how is the public sector supposed to attract the necessary talent when those people could be earning more in the private sector? You can't have good public services AND bad pay and conditions for public sector workers. I am extremely happy for public sector workers to receive generous pensions if it means my doctor, nurse, or the teacher of my children will have talent to match that found in the private sector.

Thu, 2011-03-10 14:31 — Andrew Pratley (not verified)

I can see the benefit of the pension reforms to the government to help them privatise the public sector.I think it is another good reason for doing it.
Pension reform would be better if it meant a better state pension for all citizens. This public/private divide needs to be seen as a thing of the past.It is so 20th Century!

Fri, 2011-03-11 17:18 — Freeman2

Katherine writes, 'Also, without such a pension scheme how is the public sector supposed to attract the necessary talent when those people could be earning more in the private sector?'

This is a myth that people in the public sector love to comfort themselves with. The truth is that most workers in the public sector (apart from the deadbeats at the top) earn more job-for-job than their private sector counterparts. What private sector workers ought to be doing is joining trade unions rather than trying to drag the public sector down to their level.

Thu, 2011-03-10 14:31 — Len Arthur

An excellent quick analysis and us pensioners are getting ready to fightback particular in support of the younger generations e.g. Pensioners for Direct Action and Solidarity: http://www.facebook.com/home.php?#!/home.php?sk=group_164641833572733&id=187954884574761&notif_t=like

Fri, 2011-03-11 17:55 — Katherine (not verified)

@Freeman
I guess I need to look up some stats on private vs public sector pay for equivalent skill levels. Having read a bit more I realise it is a controversial issue.
Re your last sentence, I couldn't agree with you more.

Thu, 2011-03-10 15:34 — Union Steve

How can you have a go at the average public service pension of about £4000 when Bankers can award them selves £6.5 million. It's time we got our priority's right. Hutton your a sellout you have joined the dark side. Wile I'm on I wonder how many more times the BBC will state the "Labour Peer Lord Hutton" Funny how the always say "Lord Archer" when his crimimal past is brought up.

Thu, 2011-03-10 15:44 — Hans Castorp (not verified)

No-where is it mentioned that even by the OBR's reckoning, pub sec pensions do not contribute to incresed spending on 65+ in next 40 yrs

Thu, 2011-03-10 15:48 — Sam (not verified)

Why must be it be understood as part of a wider agenda?

Why don't you try to counter arguments rather than throw accusations about. You merely come across as a state fundamentalist when all you bother to say is "ZEE TORIEZ R EVOL N TRYIN 2 SELL DA WORLD 2 DA PLANET NEPTUNE."

Thu, 2011-03-10 15:48 — Matthew Evans (not verified)

Can we stop playing the Tories' game by using the word "reform" to describe the changes they are making. Control of language is important. there is no reason to do the job for them. ( The BBC is obviously quite willing to do that as is shown by the ban on the word "cuts."

Thu, 2011-03-10 16:04 — writeoff (not verified)

Agreed. Just getting ready for asset stripping.

Thu, 2011-03-10 16:10 — SR819

Great, more outsourcing of services so that when we need local council services, we'll get through to some worker in Bangalore who can barely speak English, let alone understand the needs of the local population in this country.
And to make matters worse, there is still no action on immigration, so that not only are jobs being outsourced, but local employment is threatened by foreign workers.

Thu, 2011-03-10 16:15 — REPAY

essentially the real problem with PS pensions is that the system has been unsustainable for years and Labour did not want to upset its vote bank. The people at the bottom should not be impacted by any change - the people on six figures should have the tax payer liability capped at 60k - about a 1.5million private sector equivalant or have to pay to make up the difference...that would be about 35% of their salary. 30% the rises in expenditure trumpeted in heathacre by all governments end u in the pension pools...Why should a consultant being paid 150,000 per annum not make more provision for their retirement.

Thu, 2011-03-10 18:45 — Luddite (not verified)

What is Hutton actually saying, the usual retirement age of 60 would be brought into line with that of the private sector workers, which is currently 65 and due to rise to 68. Our Armed Forces, along with the police and firefighters, who can currently claim full pensions at 50, would have to wait another 10 years before they are eligible. What is wrong with that, isn't that equality!! Or have our state workers become the our new aristocracy, and aren't we also forgetting something, pensions are for 'old people' that can no-longer support themselves, not a second income for someone that can!!!

Thu, 2011-03-10 19:26 — Chris (not verified)

Totally disgraceful that a card carrying Labour party member is allowed to help the Tories kick millions of workers in the stomach and the Labour party does nothing. Where exactly is Ed Miliband today? Nowhere to be seen and hardly a glimmer of protest from any senior Labour figure as one of their own acts as an outrider for the Tories. Why should I pay my party subs for this??

Thu, 2011-03-10 19:57 — Luddite (not verified)

Millions in the private sector have already lost their final-salary pensions, and are now paying more into far-less generous schemes, also millions of private sector workers are having to work longer. So what makes the public sector worker special?