posted 03/04/13 17:53:22 GMT
“The strikes are proestting the triple whammy Westminster is levying on public sector pensions.”Nothing there about it being the previous government that kicked off the rise in the state pension age. The way you’ve worded it, it sounds like you’re trying to blame the Tories for all three, when in actual fact it’s just the change from CPI to RPI and the increase in contributions that they’re responsible for. Far be it from me to try and let the Tories off the hook with anything, but let’s not (appear to) accuse them of things they’ve not done… They aren't even solely responsible for them either.The Unions are being extremely disingenuous about the cost of public sector pensions figures they'e quoting from the Hutton Report specifically that there is no need for reforms as the cost was expected to peak at 1.9% GDP last year and decline to 1.4% GDP by 2059-60. Those figures, however, specifically take into account the change from RPI -> CPI.If you go back to the Treasury's December 2009 forecasts, the cost is predicted to increase over the next two decades and then remain stable until 2059-60 quite a big difference in budget terms.But even that doesn't tell the full story of the unions' duplicity. You have to ask yourself why did the Treasury expect the cost of pensions to remain stable post 2030 at a time of increasing longevity, a large bulge in the public sector workforce passing into retirement, and smaller active public sector workforce?Part of the answer lies in employee turnover and previous changes to the retirement age existing employees with lower retirement ages are replaced with new employees with higher retirement ages, all with the agreement of the unions. But this rather begs the question, if it's okay for new employees to work longer while isn't it okay for older employees of about the same age?But that's still not the meat of the issue. The same 2005 agreement that increased the retirement age also included a cap and share agreement. All future improvements in longevity will be shared between employee and employer, subject to a cap on the employer's contribution. Beyond that benefits must take the strain.A 2009 GAD report explains that it is assumed that two-thirds of the cost pressures that fall on employees will be met by reductions in employee benefits. The remaining third is assumed to come from increases in employee contributions.So in other words, the figures the Unions use to claim that public sector pension costs are under control ( affordability is a different matter altogether) are based on the assumptions that employees work longer, pay more and get less generous indexation. In all respects, bar timing, these are the issues the unions are opposing. But they certainly can't argue that the system established before the Coalition entered government should continue, since significant reforms (like the ones the Coalition are now carrying out) were built into the cost estimates of that system.Perhaps the Scottish Parliament should debate that on November 30.