I have sympathy with some but by no means all of the three million or so public service workers who are expected to strike today. As I understand it the strike is to protest against three things: the increases in pension contributions, the postponement of the age of retirement and the switch from final salary to career average as the basis for assessing the size of the pension.
My sympathies are with the lower paid: the dinner ladies, care workers and those at the bottom of the pile, and especially those under threat of privatisation, with pension rights greatly reduced. I find it hard, however, to have much sympathy for the professionals, and am dismayed to see that my own old union, now called the NASUWT, is joining the strike. I've read somewhere that the average teacher now earns £34 000 a year, and head teachers' scales rise to over £100 000 a year. No one needs a pension based on half of salaries like that in order to fend off penury in old age.
It seems to me to be common sense that, as life expectancy increases, then contributions need to increase to fund the extra years of retirement. I'm less sure about the postponement of the age of retirement. Given the number of people, especially young people, who would like employment but can't get it, there is a strong case for enabling people to retire earlier (which, I can assure them, is a very pleasant option to take). This clearly implies a combination of both higher contritions and lower pensions in order to produce the necessary funding.
The switch to career average rather than final salary as the basis for calculating pensions seems to me to eminently sensible. It has the advantage of providing perfectly adequate pensions and at the same time unclogging the top echelons of various organisations (certainly some schools) where the people in charge are burned out but hanging on ineffectively in order to qualify for a higher pension.
If we accept that the purpose of a pension is to provide an adequate standard of living when one's earning life is over, then a pension equal to half the median wage, currently about £21 000 per year in the UK, should be quite adequate. In my view there should be no tax relief on any pension contritions designed to provide a "pension pot" which would generate a pension above the median wage rate.
One of our problems is that, in pensions as in so much else, we are not "all in this together." Fat cats in the private sector can award themselves pensions in the millions, funded perfectly legally by tax avoidance, and former ministers and MPs feather their nests. Until the government has the courage to tackle these abuses it will be difficult to have a rational discussion about pensions.
Wednesday, 30 November 2011
St Andrew's Day Strike.
Posted by Peter Wrigley at 07:17
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