Pensioned Off

As part of the Government’€™s response to the financial crisis they have introduced an acceleration of the already planned increase in the age of retirement (or, rather, of the age when entitlement to a state pension begins.) Okay, people are living longer and thus pensions will eventually cost more overall – but in the short term, when unemployment is swinging upwards, and doesn’t look set to fall any time soon, it seems counter-productive to me to reduce the opportunities for youngsters to get a job by making potential retirees stay on in their posts. Of course the posts may just be left unfilled anyway, making things worse still.

Among all this there has been a lot of talk in government and newspaper circles about “€œfeather-bedded”€ public service pensions.

Let’s be clear about this. The vast majority of public service employees are by no means well paid. [There may be exceptions in the police, the very highest echelons of the Civil Service, judges and Army, Navy and Air Force officers (as opposed to squaddies, ratings and aircraftmen/women.) Even these remain dwarfed by the salaries and bonuses of company executives and the bankers who got us into the present financial straits yet somehow still continue to benefit while the rest of us pay the price.]

In effect public provision has for years been got on the cheap. Any pension entitlement accrued during public employment was some sort of a recompense for this low pay. Yet it seems this explicit contract is to be cast aside.

Here I quote the view of a former public servant (taken from his blog which is private, for legal reasons.)

I think I was fortunate to retire from the Civil Service when I did, in respect that the pension arrangements are more or less what was promised throughout the 30 years that I worked in the Civil Service.

However for some of those still employed, the retirement age is about to be increased, the employee contributions are about to be increased, and the rate of the annual pension is about to be decreased.

So it looks like lose/lose all round.

And of course something had to be done, because the arithmetic currently doesn’t add up. People are living longer and the Exchequer apparently cannot afford to pay the levels of pensions previously guaranteed. Well, so they say.

I do not know all the ins and outs – but just let me say this – every single year while I was employed in the Civil Service the Trade Unions submitted a pay claim -€“ and every single year it was rejected by the Government, whether Labour or Tory – and every time they rejected the claim for a pay increase equal to or above the rate of inflation they justified the rejection by pointing out that the employees had generous pension arrangements. In other words, you cannot expect to get a pay increase anywhere near the private sector because you’€™ve got a comfortable pension, which in general people employed in the private sector don’€™t. And in general most civil servants accepted that reasoning as being broadly fair.

But it seems that all these years of civil servants being comparatively underpaid are now conveniently forgotten. Now there’s a pay freeze and the comfortable pension is being removed.

Let me give you a practical illustration of what I mean -€“ when I was a prosecutor in Glasgow, for example, it was a daily occurence for me to appear in a Trial court where there may have been as many as ten trials set down. Each accused person would have a different solicitor. Thus I was potentially responsible for conducting ten separate trials, while each solicitor was responsible for one trial each. I was a civil servant paid directly from the public purse via a civil service salary. Each of the solicitors were private sector workers paid from the public purse via the legal aid system. Every single one of the solicitors was paid far more in legal aid fees than I was in salary, even though much of their time was spent sitting doing nothing while waiting their turn for trial. I as the prosecutor, on the other hand, was involved in every single trial. So, at least in the court context, I was doing far more work for far less pay.

But I had a pension.

One more thing.

For teachers it used to be the case, and may still be, that, actuarially, they would die within three years of retirement if they stayed teaching till aged 65. (In effect they never got back the money they had paid in to the pension scheme.) If retiring earlier – with the concomitant reduction in pension since their total contributions and thus entitlement will be smaller – they could expect to live for a few years more. It follows that, if the age of retirement for teachers is raised, more will die before really benefiting from even the reduced pension it is proposed to allow them than if things are left as they are now.

Neat trick that.


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