Mists and Mysteries about Pensions

In a Guardian article John Cridland, Director General of the CBI, paints a glowing picture of public service pensioners living off the fat of the land on pensions funded by the taxpayer whilst the sternly realistic private sector cuts its coat according to its cloth. Somehow he fails to mention the absurdly high pensions paid to Fred the Shred and others of that ilk, nor does he mention what pension he expects for himself.

Several facts reveal Cridland's views to be somewhat distorted to say the least. Lord Hutton's report shows that the flow of income into public service pensions actually exceeds the amount paid out, and that the costs of public service pensions will fall dramatically once the current "spike" of baby boomers has been passed. Unions point out that the average ex-public servant's pension is very modest indeed because most are low paid, and a friend of mine who has worked in local government and knows about these things assures me that in Yorkshire at least local government pensions are funded from investments and the "pot" is healthily in credit.

Clearly if we are going to live longer then we need to pay more for our pensions or receive less, or a bit of both, but the debate should be based on facts rather than the bias of "private sector good public sector bad." We also need to recognise the purpose of a pension, which is to avoid penury once one's earning life is over, rather than to provide vast funds for the life of Riley or to finance advantages for ones children and grandchildren. I should have thought that about half the average income would be enough to avoid destitution, and the average income should be enough to provide a very comfortable existence.

At present values the average income is about £24 000 a year so I see no reason for any pensions to rise above that, and the minimum pension should be around £12 000 a year or £230 a week. It seems to me that the minimum figure should be provided by the state out of taxation, regardless, and the "top up" from contributions. Then we could all get on to enjoy the luxurious lifestyle that our sophisticated economy can sustain without all this fuss, distortion an jealousy.