29 November 2011

The Local Government Pension Strike

Just a few things to mention.

1. The LGPS is currently in surplus by around £5-6bn, i.e. it is fully funded for quite a few years to come. Yes, predictions of future returns on investments and increasing life expectancy suggest that in decades to come, there might be a shortfall of several billion for the taxpayer to find. But these are predictions, not certainties and surely the overall savings to the taxpayer of having people on occupational pensions rather than claiming benefits in their old age more than make up for this.

2. When people sign up for a pension scheme they are doing the country a favour by providing stable finances to companies and government and expect the government to honour agreements in the long term. Already the government has put people off the LGPS by not keeping their promises. Those who decided not to join have been proved right - paying into a scheme where the terms can be changed on a whim of government policy is no advert for joining. People are gambling not only that they are going to live to 67,68 and beyond but that they are going to be in any sort of health to enjoy this money when they get there. Personally I think anyone on less than £21,000 a year (which is the average wage) is not getting that good a deal (paying £100 a month for 40 years for just £13k p.a. on retirement), when their life expectancy is only around 71-73. They need to live this long just to get their money back (and the government are going to make the scheme worse. Remember life expectancy is lower for people in lower wage jobs. They are generally subsidising those on top salaries who not only get a better return, but live longer as well. Those on £40k plus are rightly kicking the door down to get on and stay on this scheme.

3. Saying public sector pensions are better than the private sector is hardly saying much. Putting your money under the mattress would have been better than most private pension schemes.

For these reasons and the fact that this is an attack on pay and conditions make the strike perfectly reasonable in my humble opinion.

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