The Futility Monster

He'll pointlessly derive more enjoyment out of your resources than you

Public Sector Pensions

Posted by The Futility Monster on June 17, 2010 @ 10:10

I don't get it, but it was from an American website. Still, it looks funny.

A few days ago, Nick Clegg was sent out to tell everyone, again, that public sector pensions are a spectacular disaster. Not for the people who receive them, of course. They’re All Right, Jack. But for the rest of the population, the ones who have to pay for it, they kinda make the books look a little, well, Enronish.

The problem is enormous. We’re not just talking about the mega civil service pension scheme, which is very good indeed, but the dozens of local government pension schemes, some of which are truly gold-plated. I’ve seen the pension arrangements for my mum – who hasn’t been on the local government payroll for very long, and earns £14k a year – and they are something special indeed.

On top of all that is the enormous future obligations held in the state pension scheme, a cost which will only rise if the coalition restores the link with earnings as promised. Furthermore, the burden of an ageing population, and not enough people of working age to support it is difficult enough without the growing, already large, difference between pension age and average life expectancy.

Simply put, we just aren’t dying quickly enough to afford this burden.

Those on the right would suggest that the best thing to do is to close all public sector pension plans to new entrants altogether, and get out of the market. Leave the private sector to provide all pension arrangements, and let people buy into them as they please.

A little bit of me sympathises with that argument. Amidst the billion things government does, maybe it shouldn’t also be its own pension company.

Having said that, I’m also torn because public sector workers in many parts of the country are often those who need the most help. Cast adrift to the terrors of the private sector, on an issue so extremely important as this, may only exacerbate inequalities in retirement between the haves and the have nots. The rich can afford the advice that brings them a very generous pension pot. The poor cannot.

Ah, the point where my liberalism and socialism collide.

Maybe a fair middle point would indeed be to phase out the public sector pension plans, in return for a more generous state pension, which would provide a minimum guaranteed standard of living for everyone in their old age. But should that then be taxable, or in some way tapered for those with more money?

And in just 400 words, I have barely scratched the surface as to why this is such a political minefield, and a total disaster zone. Careers will be ended over trying to resolve this problem. And, sadly, my brain is not good enough to find an answer.

Gee, that long grass sure looks comfortable.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: