DR ROS ALTMANN
DIRECTOR-GENERAL, SAGA
PRESS RELEASE
March 10, 2011.
PUBLIC SECTOR PENSIONS REMAIN AMAZINGLY GENEROUS.
PUBLIC WORKERS SEEM UNAWARE OF JUST HOW GENEROUS THEY ARE.
Lord Hutton's recommendations on public sector pensions have led to calls for industrial action by public sector unions, but the reality is that his proposals will still leave them with hugely generous pensions that most private sector workers could never hope to achieve, says Dr Ros Altmann, pensions expert and Director-General of over-50s group, Saga.
Dr Altmann makes a number of observations on the Hutton recommendations:
1. Public sector workers will still retain really generous pensions.
2. Even a £4,000 a year public sector pension is worth more than £100,000, and most private sector workers, especially those on low pay, could never hope to save that sum of money during their working lives. Public sector workers pay relatively little to achieve this huge benefit.
3. Pay in the public sector is no longer lower than in the private sector, so workers' pensions are no longer reflecting lower pay as was the case in the past.
4. The new proposals will be fairer for women and low paid workers, because they benefit most from a career average scheme rather than final salary.
Dr Altmann said: “There are several good points in amongst Lord Hutton's recommendations.
“An independent oversight of the costs of public sector pensions to protect future taxpayers and help provide transparency - these changes are long overdue.
A proper cost cap on employer (ie. taxpayer contributions) – again, this is essential if we are to make pensions sustainable because unexpected future changes need to be accommodated more flexibly than current systems allow.
“Linking pension age to state pension age is very welcome because it reduces the unfairness between public and private sector workers - and I would expect private sector pension schemes will look to follow this example too
1. Public sector workers will still retain really generous pensions.
2. Even a £4,000 a year public sector pension is worth more than £100,000, and most private sector workers, especially those on low pay, could never hope to save that sum of money during their working lives. Public sector workers pay relatively little to achieve this huge benefit.
3. Pay in the public sector is no longer lower than in the private sector, so workers' pensions are no longer reflecting lower pay as was the case in the past.
4. The new proposals will be fairer for women and low paid workers, because they benefit most from a career average scheme rather than final salary.
Dr Altmann said: “There are several good points in amongst Lord Hutton's recommendations.
“An independent oversight of the costs of public sector pensions to protect future taxpayers and help provide transparency - these changes are long overdue.
A proper cost cap on employer (ie. taxpayer contributions) – again, this is essential if we are to make pensions sustainable because unexpected future changes need to be accommodated more flexibly than current systems allow.
“Linking pension age to state pension age is very welcome because it reduces the unfairness between public and private sector workers - and I would expect private sector pension schemes will look to follow this example too
“The new proposals will share the cost more fairly across generations and ensure workers are paying more if the costs of their pensions is rising.”
Dr Altmann has also explained why public sector pensions remain generous even after the Hutton recommendations.
“All workers in the current scheme will have their accrued pension benefits linked to their final salary when they retire, not career average and not their actual salary when the scheme changes, which is far more generous to them because they will keep the final salary link even for the future. The new career average accruals will only start from when the new scheme starts.
Dr Altmann has also explained why public sector pensions remain generous even after the Hutton recommendations.
“All workers in the current scheme will have their accrued pension benefits linked to their final salary when they retire, not career average and not their actual salary when the scheme changes, which is far more generous to them because they will keep the final salary link even for the future. The new career average accruals will only start from when the new scheme starts.
“Anyone close to retirement or in their 50s will be pretty much unaffected.
“Public sector pensions will still be 100% inflation-linked - even if it is to a slightly lower measure of inflation, the protection is still vastly better than in the private sector.
“Public sector pensions will still be 100% inflation-linked - even if it is to a slightly lower measure of inflation, the protection is still vastly better than in the private sector.
“Meanwhile, anyone who has left the public sector will still have their pension revalued each year by average earnings - not prices - up to their retirement, so their pension will be higher than for equivalent private sector workers,” said Dr Altmann.
Ends
Further information:
Iain Macauley
07788 978800
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