FORUM – Work longer, pay more, get less…

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In the wake of the Hutton report, workers facing retirement on pensions below £8,000 a year after a quarter century’s service are heartily sick of pensions hypocrisy, argues George Binette

Published: 17th March, 2011

IF one were to believe accounts in several national newspapers – and not all of them Tory-supporting tabloids – the typical taxpayer is furious at subsidising the public sector workers’ “gold-plated” pensions, while many private sector workers are either green with envy or choking with rage.

Not surprisingly, then, many a commentator has heaped praise on the work of the New Labour peer, Lord Hutton, for the recommendations he made in his recently published review of the Local Government Pension Scheme (LGPS) and public sector schemes, conducted on behalf of the Conservative-Lib Dem coalition. 

In essence, Hutton’s prescription can be boiled down to:

• Work longer.
• Pay more. 
• Receive less on retirement.

Now to inject some reality into the discussion – according to the council employers’ own umbrella body, the Local Government Association, the average annual pension payout barely exceeds £4,000 a year. 

The reality is that most Camden Unison members, who are in the LGPS, already pay at least 6.5 per cent (and in many cases 6.8 per cent) of our salaries towards our retirement.

Obviously we don’t, as yet, know what contribution bands the government will seek to introduce post-Hutton, but there is good reason to believe that for most there will be an increase to more than 9.5 per cent and for those on salaries exceeding £31,000 a year up to 11 per cent of earnings.

One of the leading figures in British business had 750 words to contribute to the pensions debate in the nation’s leading liberal daily. 

Writing in The Guardian on March 10 the Confederation of British Industry director general, John Cridland, welcomed the Hutton review of public sector schemes. 

But he went still further: “Pension reforms will also help the prime minister’s Big Society programme to really get off the ground. Public sector pensions remain the biggest barrier to the private and third sectors providing public services.” 

I’ll give Cridland some credit for honesty even as he peddles myths about the schemes. 

However dubious his claims “of a £10billion gap between the amount that public sector employees contribute to their pensions and the value of benefits they are paid or promised” the real problem for Britain’s biggest employers’ lobby is that surviving final salary schemes deter companies from swooping for an even greater share of public services. 

And, after all, as David Cameron has made clear in the pages of The Daily Telegraph this is the essence of the Big Society privatisation on a scale still greater than envisaged by Margaret Thatcher.

Cridland writes “In the private sector… nearly all employers have undergone a painful process of bringing their pension liabilities back under control.” 

But painful for whom? Undoubtedly, millions of ordinary workers have suffered the closure or dramatic erosion of defined benefit schemes, yet the same can hardly be said for their top corporate bosses. While nearly two-thirds of private sector workers now lack any occupational scheme, the majority of big corporate directors have enjoyed robust growth in their pension pots, even during recession. 

A TUC Pensions Watch report highlighted that between 2007 and 2009 the average value of a FTSE 100 director’s total pension shot up by from £3million to £3.4million. In 2007, the average annual payout received by a FTSE 100 CEO was £147,000. By 2009, the comparable figure had risen to £179,540, a 22 per cent increase, and £70,000 more than the projected pension for Camden Council’s chief executive, Moira Gibb.

Theirs are the pension schemes that society really cannot afford and these figures reveal the truly grotesque pensions inequality, which the mainstream media ignores as it seeks to stoke anger at the public sector workforce.

With hundreds of other branch members, I shall be joining the TUC’s March 26 demonstration. We shall march for many reasons: the threat of 700 redundancies in the next year, the closure of day resource centres for vulnerable older people, a 65 per cent cut to play services. But we shall also be marching, without shame, to defend our pensions and oppose the Hutton report’s call for 50 per cent hike in our pension contributions as our real pay falls by 4-5 per cent. 

Workers facing retirement on pensions below £8,000 a year after a quarter century’s service are heartily sick of John Cridland’s pensions hypocrisy. 

The coalition’s attack on our pensions just might be the final straw that leads us to shout with one voice “we will not take this any more”.

• George Binette is the branch secretary of Camden Unison. This is an expanded version of an article written for the Guardian’s ‘Response’ column.