It’s not much fun being a public sector employee at the moment. As well as constant job cuts and adjustments to working conditions, the Government is also proposing changes to pension rights for many of them – though not for MPs, as many have been quick to point out.
Things have now reached the stage where Unison, the main Public Sector Trade Union, is balloting its members over strike action, in an effort to force the Government to change its mind. By and large, sympathy from people working in the Private Sector has been distinctly muted over this issue and it’s not hard to see why: most people who work in Industry or Commerce (even Bankers….) suffered major losses to their pension rights 10 or 15 years ago, when the majority of Private Sector employers began to close Defined Benefit, (or Final Salary) pension schemes to new entrants and began to offer Defined Contribution (or Money Purchase) schemes in their place. More recently, there has been a second wave of closures, where DB schemes have been closed completely and their remaining active members have been transferred to new, and generally less favourable DC pension arrangements. It’s easy to see why these people are not too worried about the demise of Public Sector DB pensions (which they are indirectly paying for, via taxation), when they faced the same issue some years ago.
It’s also worth noting that, whilst the changes include increases in contributions in return for diminished benefits, the schemes continue to be related to earnings, rather than depending on the accrual of a cash sum to buy benefits at retirement – so benefits are predictable and secure, rather than depending on the joint uncertainties of fund growth and annuity rates at the time of retirement.
The argument in favour of generous pensions for public sector employees used to be based on the fact that earnings were traditionally less in the public sector and that additional benefits, such as bonuses, company cars and the like, were less in evidence. In recent years the picture has changed somewhat and, if you believe some statistics, Public Sector employees now earn, on average, more than their opposite numbers in the Private Sector, whilst still enjoying high quality pensions and (until recently, at least) relative job security.
I have a lot of sympathy for those working in the Public Sector but, like an awful lot of people, I believe that the current strike ballots – and subsequent strike action – will not get mass support from elsewhere. Much time will be spent, and rhetoric spouted, by Unison, to little avail. Most people laugh at the idea of a multi-millionaire Old Etonian telling us that “We’re all in this together” and – I fear – the same laughter will greet the public sector unions as they try to convince us to carry on paying the ever-increasing cost of their pensions.
Help! I sound like a Daily Mail editorial………………