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Public sector pensions – the elephant in the room

Public sector pensions – the elephant in the room

The last time I wrote about the inequity of the taxpayer funding huge pensions for those citizens in the public sector while giving minimal basic pensions to those in the private sector, I wasn’t surprised when the only response I received from the public sector side was of the ‘here come the usual suspects to attack the public sector’.

Rather than tackle the issue head-on, those representing public sector workers use a classic deflecting tactic, generally of the ‘let’s not let them divide the workers – the issue is the need for higher private sector pensions’ variety. This conveniently ignores the fact that the biggest division between the public and private sector workers is the fact that the former can look forward to a heavily or completely state subsidised pension related to their previous earnings whereas the latter are generally stuck with a state pension topped up with a low pension based on the small pension pot they have managed to accumulate over their working life.

It doesn’t surprise me that public sector unions are avoiding discussing the issue as the basic fairness of the public sector having much larger pensions subsidised by the same private sector workers who have to do without is difficult to maintain in an era where earnings-related pensions are rapidly evaporating from the private sector.

The government’s financial position is worsening and it is becoming clear that austerity economics won’t be going away anytime soon. So it is imperative that we look at all the spending of taxpayers’ money to ensure that it is spent fairly and effectively.

If there is only a fixed amount for government to spend on pensions then surely it should be spent across the entire citizenry, not just on a select few. That way a higher basic level of pension could be provided which might move us away from the situation reported yesterday by LV=, whose research showed that fifteen per cent of pensioners have an income of £8 per week, after essential living costs.

This is scandalous in a G8 nation but it’s clearly no use just shouting for more money. With limited means and spending on health and pensions set to rise significantly, it’s clear we need a minister who is prepared to look strategically at the problem and devise a solution which will equalise the system. Of course it can’t be done overnight, but closing the public sector schemes to new entrants and following the auto-enrolment process for new recruits would start the process of treating all our elderly equally.

With the savings that this would bring over time, we could plan to raise the basic state pension to a decent level so that the smaller self-saved pots would actually contribute to giving pensioners a decent retirement lifestyle. By refusing to engage in debate, or look at the issue at a national level, the public sector representatives can be said to be looking after their own, but by doing so they are directly reducing the money to be spent on other citizens in the economy and creating division themselves. It’s time they stopped talking about equality so much and started practising it.

Tom Murray

Twitter: @TomMurrayDublin or @Exaxe

Google Plus: TomMurray

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