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Hutton: Nothing ruled out of public sector pension review

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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Comments

There are 21 comments at the moment, we would love to hear your opinion too.

  1. Crazy gang IFA member 28th June 2010 at 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.

  2. Please proof-read the first para of this article, carefully.

  3. 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.

  4. @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.

  5. Andrew Buchanan 28th June 2010 at 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.

  6. Patrick Callaghan 28th June 2010 at 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.

  7. 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!

  8. 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 ?

  9. Crazy gang IFA member 29th June 2010 at 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’.

  10. lynn pattinson 2nd July 2010 at 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

  11. Martin Lefley 7th July 2010 at 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?

  12. seems like the spotlight for this financial mess has been shifted away from the fat cat bankers and greedy stockbrokers who caused all this mess along with the Labour party spending billions in fighting wars and now all the blame rests with the new wipping boys – public sector workers!

  13. Mr Anonymous hit the nail on the head. Both private and public pension workers should be united in stopping this theft by this Tory/libdem govrenment. Each one of us has a contract of employment. Mines was to work for 30 years pay 11% to my pension and retire after 30 yera or later and get my pension. Any change of this by the government is a breach of contract and I and many others will sue them.

  14. I fully agree with Tony’s post.
    I may be forced to leave my job with 25 years service in order to get my present pension rather than stay on for 18 months when I should retire, if I stay I may lose a lot of money that I rightfully am due. I love my job and like other Police Officers face on a daily basis the threats of violence and dealing with incidents that the average person should never see. I don’t complain I try and make a difference. Now I find that due to some poor miss-management of funds I have to pay the price. I know we cannot strike but other public sector workers will and it may be dark times ahead for the UK…. Where has the common snse gone???

  15. The public sector is being squeezed enough. Two years of pay freezes and the downgrading of indexation on pensions from RPI to CPI. What more do they want? This is madness.

  16. I take exception to the term “gold plated” as a retired NHS employee. I worked for 34 years full time and contributed a sizeable chunk of my monthly salary towards my pension. This was not easy during the early years when I worked in junior nursing positions when salaries were quite low in comparison to the private sector. Many private sector companies at that time had non contributory schemes in place.
    I object to the inference that public sector pensioners are crippling the economy. I spent my early nursing career lifting heavy patients with no lifting gear and as a result have a chronic back problem.
    What surpises me and other retired colleagues from the NHS is that the contributions we made in good faith were not invested but used as revenue to keep the economy going.
    The question which need to be asked is why the pension issues have not been adressed before by successive governments.Dont start knocking the public servants who have given the country their best years.

  17. I have been a police officer for the best part of 14 years, prior to that I served 9 years in the British army. So since 16 years of age I have wore a uniform both of which I am proud of. I currently contribute the best part of £350 pounds a month to my pension (11 %) this is a huge punt of my net salary every month. I’m sure if the average Jo bloggs was aware of this figure they wouldn’t begrudge police officers their pensions. You cannot expect roles such as mine to be done competently at the age of 55/60. I am a firearms officer who is regularly in situations that demand high levels of physical and mental agility. I am now 40 and already know that in10 yrs time when I hopefully retire, my capability to do this demanding role will be at an end. Leave our pensions alone.

  18. all accured rights should be upheld also we should able still to retire at 60 as a right as we joined the pension scheme with those rights in place legal action should be taken against the goverment if they try to change this

  19. my wife is a police officer and been contributing for 6 years and is more than happy with the contribution, but if you agree to pay in you expect back. However my father used to work for will hutton at the work foundation and now faces a pension crisis, there pension scheme now faces a 23 million shortfall due to the insolvency caused by will hutton how can we have him part of the pension reveiw when he destroyed the organisation. Dont take his advise we might as well ask the former head of the post office to suggest the changes.

  20. Rather than atacking those in society who contribute to the country, I think there should be a review on benefits. It is all but handed on a plate to the leaches of society that, they are better off on benefits if they earn less than £15,000.

    I don’t know if I have just been mis-informed by the press or this is true, but would ot be surprised if this is correct.

    I am also frustrated by the recent revelation that the government have decided to remove a smoking shelter from a hospital, which cost £700, and the Private Finance Initiative (PFI), who now own some NHS hospitals and rent the properties back to the government, have decided to now charge £52000 for cleaning up as the shelter will no longer be there.

    This information is from the radio and may need looking in to further, as I might be getting outraged by one persons opinion and not in possession of all the facts.

    If this is wrong then I apologise in advance and would love someone to put my mind at rest.

  21. I am close to a well earned retirement after 33 years service in the armed forces and Police. I am still in uniform supporting society every day. I understood that the pension was an intregal part of the overall pay package which was taken into account when our wages have been set over the years and reflects the committment we have to show for a whole lifetime of service at low wages relative to those in the private sector with comparable roles based on responsibility and danger. I am afraid the country has a legal obligation to keep its contract with us and whatever individuals or governments think my understanding is our society rests on been legally responsible and upholding our legal undertakings.
    The real issue here is the ecconomy which apparently was very poorly handled by the New Labour govenment especially our “Iron” Chancellor Gordon Brown who gave our money to failing banks, perhaps it would have been better to let them fail and keep the money I have paid in over decades for the legal comittment the country has to me, after all I worked and paid in all those years and the banks appear not to need it as they are still queueing up at the Ferrari garage with their bonus cheques. I am genuinely sorry for those who have also worked and paid in and now find their pension pots depleted by the greed of the financial sector but don’t turn your anger on me, save it for the Labour government who presided over your situation and the banks who caused it, it is not my fault and it is unfair of you to blame me.
    The country is not “bankrupt” so it HAS to keep it’s legal obligation to it’s pensioners, if it fails to do so it HAS to be taken to court (in europe if required) and the world will be looking on so they have to be very carefull of sending out the message that the UK is open to corruption allegations

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