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Fat-cat pensions in the public sector are a myth, says the TUC.
U.K. (28 July 2009) – We all heard the claims by business groups, right wing pressure groups and opposition politicians that public sector pensions are unaffordable and out of control.
In recent months our popular media here in Canada has been filled with these mythical claims – A convenient untruth about public pension plans.
The same misrepresentation of the truth is happening in Britain, according to a recent briefing note published by Britain’s national labour central, the Trade Union Congress (TUC).
The truth is that public sector pensions now cost around 1.5 per cent of GDP and while this is forecast to slowly rise to 2.0 per cent over the next twenty years it then falls slightly. Public sector pensions cost less than state pensions and long term care, which are also set to increase as the population ages, according to the briefing note.
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The TUC briefing says that moving to a funded defined contribution pension for public sector staff would cost a huge amount of money and not produce savings for decades. Tax payers would immediately have to pay for all public sector pensions in payment as member and employer contributions would be used to build up the future pensions of current staff. These contributions currently pay for pensions in payment.
Fat-cat pensions in the public sector are a myth, says the TUC. Unlike in Britain's boardrooms, top public servants are all members of the same pension scheme as other staff. The majority of public sector pensioners receive a modest pension of less than £5,000 ($9,100 Cdn) a year. The average local government pension is just £4,000 ($7,300 CND) a year and half the women on the National Health Services pensions get less than £3,500 ($6,400 Cnd) a year.
The briefing highlights recent reforms in public service pensions. Almost all new staff will have a normal retirement age of 65, just like many existing public sector staff.
TUC General Secretary Brendan Barber said: “Many private sector employers have cut or abandoned decent pensions for their staff. The result is that many people at work today will face a big drop in their living standards when they retire.”
“Now employer groups and opposition politicians are saying that public sector pensions should be levelled down so that Britain's nurses, teachers and other vital public sector staff should face the same hardship when they retire. Each day seems to bring new dodgy statistics and scaremongering about the cost of public sector pensions, along with bogus claims that there are easy public spending cuts to be had.”
“The public sector is rightly a big employer and giving its staff a decent pension - as all employers should - does not come free. But the costs of public sector pensions are affordable, they are not out of control and far from paying out fat cat sums the majority of public sector pensions are under £5,000 ($9,100) a year. Nor are they unreformed, with big changes in almost every scheme to help cope with longer lives.”
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The National Union of Public and General Employees (NUPGE) has signed a protocol with the United Food and Commercial Workers (UFCW Canada) to support and cooperate in the UFCW's campaign to organize workers at Wal-Mart stores across Canada. NUPGE
More Information:
Exploding Public Sector Pensions Myths: A Briefing for Trade Union Members