Hutton: Nothing ruled out of public sector pension review
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Former Labour Work and Pensions Secretary John Hutton says “nothing is being ruled out” as he begins his review into pubic sector pensions.
Writing in today’s Financial Times, Hutton warns the public sector “cannot remain immune from the major demographic and structural changes” taking place in society.
Prime Minister David Cameron recently hired Hutton to lead an independent review of public sector pensions.
Writing in the FT, Hutton highlights the fact that few private sector employees are members of open final salary pensions whilst recent National Audit Office statistics show the cost to the taxpayer of the four largest unfunded public sector schemes has increased 33 per cent in real terms over the past ten years.
Hutton says all accrued rights will be honoured and his review will be focused on fairness. Over the weekend, The Daily Telegraph reported that Cameron was considering giving the unions a seat on Hutton’s review as a way of appeasing them over the scale of public sector cut-backs.
Hutton says: “Workers in the public sector perform functions that are vital to our economy and society. The dinner ladies in our schools, the nurses looking after the sick and dying, and the soldiers fighting for us in Afghanistan, are all right to expect decent pay and pensions. Many of these jobs do not attract high salaries. That is why the retirement needs of those on the lowest levels of the public sector pay ladder will be one of my main concerns.
“I will do my best, guided by these principles of affordability, sustainability and fairness, to find the right solutions to the complex issues this inquiry must, rightly, address.”
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Readers' comments (21)
Crazy gang IFA member | 28 Jun 2010 9:31 am
'all accrued rights will be honoured' does not say to me 'nothing has been ruled out'.
Civil Servants are the worst offenders in terms of the contributions they don't make. I am afraid that they must start to make reasonable and appropriate contributions to their 'gold plated Classic Scheme' and this should be start as early as next tax year. Also this bloated scheme's retirement date should be extended to 65 next year. Hutton talks about workers in the public sector having 'a right to expect decent pay and pensions'. What about the same tier of workers in the private sector, who have seen their final salary schemes close and working conditions deteriate. Call centre employers paying almost slave wages, without proper pensions or working conditions for our young people who are taken on as 'Temp' staff to avoid any responsibilities in this area. No, the public sector need to get off their collective large behinds and stop leaching off the rest of us.
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Darren Millard | 28 Jun 2010 10:33 am
I ama Police Officer with 23 years service.I ave contributed eleven per cent of my wages every pay day towards my pension which is far more than other public sector workers(Fire Service excluded). If more contributions are required for my pension so be it, but lets have an equal playing field with everyone paying the same percentage of contribution.
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Kevin Smith | 28 Jun 2010 11:17 am
@David Millard
Quite right! People should contribute to their schemes.
In the private sector most people are in the situation of no pension unless they contribute and nothing from their employers.
As I said to my friend who works in the welsh assembly, they could save job justs by reducing their holidays (34 days plus bank holiday they get basic!!!) sickness and pensions benefit. If they reduced the holidays just by 10 days, thats 1 new person employed for ever 26 people who give up those 10 days...
But of course the unions wouldn't accept that.
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Andrew Buchanan | 28 Jun 2010 12:35 pm
Darren Millard
The reason police and fire service scheme members pay higher pension contributions is that they need less years' service for a full pension than most other public sector workers. It makes perfect sense that if you're contributing for less time, you have to accept either less benefit or additional cost.
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Anonymous | 28 Jun 2010 2:05 pm
I am a public sector office worker, and I cannot see how people in my position (ie. working in an office like countless thousands in the private sector) can complain about our retirement age going up to 65. Other commentators are right that we have to knuckle down and pay our way; but there needs to be a proper review of the retirement age for front-line staff like services personnel, police officers and fire officers - there are no private sector equivalents to compare with, and there may be a bigger benefit to these public servants retiring early set against the costs of keeping them in work until 65.
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John Hutton | 28 Jun 2010 2:11 pm
Police officers now retire on average at 51, at a time when it can be expected that men will live for another 34 years and women for 37.
I understand that service for pension rights is 30 years.
I think my namesake may be looking into this for all PS schemes!
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The iron lady | 28 Jun 2010 4:57 pm
So we want coppers and Firefighters working till they are 65 ?
Physically this will be very difficult for them, and there is very little sensible debate on how we achieve cost effectiveness without overly penalising them.
The pension schemes for both the police and fire service where "modernised" in early 2006. They now have to work till 60. Funny how this is never seems to be reported in the daily mailicious and the rest of the scaremongers ?
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Crazy gang IFA member | 29 Jun 2010 10:17 am
With ref to the emergency services as a whole I do believe they are a special case, and agree with Iron lady, they have to be physically able to carry out the job and also already contribute a significant amount into their pension scheme,although sadly this still isn't enough unfortunately. Having said that, making them wait a little longer for their pension wouldn't be a bad idea. It seems a little perverse to me that they are able to draw a pension at 50, when most of them could simply be re employed again in an alternative job, they are after all not disabled.
If the public sector wants the respect of others, and it is easy to castigate the whole sector, they must start coming to grips with their working practices and accept some responsibility for the state we are in. The rumblings from a few of the big Union leaders gives me the impression they are relishing a showdown with the government.(having been deprived of this opportunity for so many years.
This will be self defeating and completely irresponsible and will only serve to destroy the economy. Something I dont think really bothers them, as they are employed by the private sector and only interested in 'their members'.
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Anonymous | 2 Jul 2010 8:28 am
A member of my family has been a police office for 29 years, he will be retiring next year at 48 on a full final salary pension. He has served his country with total commitment in a country where law and order is becoming out of control.Whilst I believe the retirement age for all Public Sector Works should be reviewed, I do thing the retirement age should be considered differently for the police, firefighters and the armed forces
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Anonymous | 7 Jul 2010 9:36 am
Just what the rich want - divide the working classes (private vs. public) so they queue up to beat each-other into further poverty thus missing their real enemy - the real leeches - the proviliged few who just keep getting richer. Solidarity is what we need - or are you all, as it seems reading here, just easily manipulated mugs?
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