THE last few years have seen the virtual ending of final salary pensions in the private sector and the security that they brought retired workers in their old age. Now the same fate seems to be heading towards public sector workers to add to the worries that they already face from Con-Dem cuts.
Solidarity highlighted last August how BBC employees were facing uncertainty over the future of their pension scheme. Now in the wake of Lord Hutton’s report on pension reform, they are going to be joined by many millions more in the health service, the police, armed forces, and the teaching profession, to name but a few other branches of the public sector, in having a question mark placed over the future of their pensions.
Potential changes to public sector pensions include having to work longer to achieve the same level of benefits, stiff increases in contributions from employees and the switching of pension schemes from a final salary basis to a career average salary calculation. A potentially severe aspect of the Hutton recommendations is that they may apply to even workers in their fifties, an age group that has precious little time to cope with unexpected changes to their retirement plans.
At this stage it is important to keep in mind that it remains to be seen how much of Lord Hutton’s recommendations will be adopted by the government. Nobody doubts the need to address the current £5.1bn shortfall that already exists between employer and employee contributions versus the amounts needed to meet present and future payments, a shortfall that this report projects to more than double to £10.3bn by 2016. The issue for workers and unions is that moves to ease the burden to the Treasury must be achieved with the minimum of detriment to employees’ benefits upon retirement and that any adjustments to contributions and length of service required to retire with a decent pension are not raised to unacceptable levels.
Solidarity will continue to follow developments in the area of pension reform and keep our members updated.