Sunday, 4 December 2011

How to solve public sector pensions...... without shooting anybody!

I strongly suspect that the injustice seen by the private sector against ‘gold plated’ civil service pensions does not apply to the millions of relatively low paid clerks, nurses, back office workers, classroom assistants, part timers and the like struggling on low incomes but to the increasing numbers of the public purse supported elite and management class, those earning many tens of thousands per year, accruing huge pension entitlements and often large golden handshakes every time they hop from one state funded job to another. Even senior teachers nowadays can be earning twice the national average wage on retirement and can expect a pension, with state pension, totaling well over the wage of an average working person.

So why not set a simple top limit, effective for all public contracts, such that any public funded wage has pensionable entitlement capped at average UK salary? This should equally apply to quangos, fake charities and any organization, including contractors, that are directly taxpayer funded for more than (say) half their income. 

Those on less than the average wage could stay exactly as they are now, same payments and same entitlements. For anyone working their full years that would provide an index linked basic pension of at least £17,000 when added to the ordinary state pension for people on an 80th scheme, or well over £20,000 pa for anyone on a 60th scheme. 

For the lower paid tax funded employees that remains hugely more generous than any ordinary employee on average wage with a private pension could hope for. Even so it would save huge amounts of money while removing well over half the civil service from the cuts and therefore from any protests. It would not solve the other problem, the need to reduce the entire size of the public payroll, or the wage inflation at the top end but it would help.

For those earning more than the national average salary the excess over the average would simply not count towards their employer (taxpayer) funded pension. No payments and no entitlements. People affected could of course, if they wished, pay as much as they wanted into a private scheme or market AVC scheme just as anyone else, but they would take the rough and the smooth of that investment along with everyone else. These people would no doubt squeal, and some transition arrangement would be needed for those already in post to guarantee benefits up to the present because they were contracted, but basically would it be unfair, and would anyone else really care?

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