Today (23rd march), Governments have announced plans to implement Lord Hutton’s recommendations on public sector pensions and are considering making similar changes to the pensions of MPs.
In a bid to incorporate measures to help people this year and make the tax and benefit system fair and sustainable, Chancellor, George Osborne has accepted Lord Hutton’s recommended reforms to public service pensions.
Lord Hutton said in a report released earlier this month that public sector pensions should no longer be related to final salaries, but by 2015 they will be connected to average career earnings.
National Association of Pension Funds’ chief executive Joanne Segar’s said:
“This is a turning point for pensions in the UK. Over half a million new pensioners a year will get a simpler and more generous state pension and reliance on means-tested benefits will be slashed. “For too long, we have put up with one of the most complicated and meanest state pensions in Europe. “This reform provides a clearer foundation for saving for old age. For the first time in a generation, people will know that it pays to save.”
I think that Lord Hutton and Joanne Segar forget that the Local Government Pension is not a state pension, from the report above which implies the two are connected. It is a pension backed by contributions from the employee and employer as part terms and conditions of employment. Easing the state pension for all irrespective of contribution will not make the situation easier for those of us that have been saving towards a small public sector pension for many years.
The truth is that the vast majority of those pensions are much less than £10,000 per year. This is not an improvement. It will encourage those people on the lowest income, and that is the majority to keep their money and not invest in the public sector pension scheme at all. Thus making more people reliant on state pension as sole income.
The public rally in London was just the start. Where is the negotiation or respect for the workers and their unions on the pensions issue?