Wednesday, 30 November 2011

Pension reform strikes

There is a high probability that this post will divide opinions. This blogs readership is pretty evenly split between US and UK residents, it is likely that it will mean more to UK readers.

Today has been a national day of protest by many public sector workers, who are protesting about changes to their pension provision. A reported 2 million staff walked out. The country is divided on opinion, in many cases the opinion held depends on if you are employed in the public or private sector. At this point I should remind readers that as I run my own business I am firmly in the private sector, Mrs RJR however as a Physiotherapist employed by the National Health Service is a public sector employee. She is also a member of the Chartered Society of Physiotherapists, who voted to strike today.

You may, or may not, be wonder where my opinions fall. I could say that the public sector has excellent pension provision in comparison to mine. I could argue that the country needs to sort out its finances and can't afford to pay pensions at the current rate. I could also argue we are all living longer and therefore pensions paying out longer, cant be as big. But I am not going to! To be honest I think that the government is really trying to divide the nations opinion and turn the private sector against the public sector by telling a one sided story.

There is a popular misconception that the Public sector all get gold plated pensions handed free on a plate. In Mrs RJR's case she has paid a high percentage of her salary into a works pension fund since she started work 20 years ago. If I had paid as much into a private pension fund, I too would have a good pension. When she started working as a Physio she was offered specific pension provision, relating to age, value and contributions. Due to the physical nature of her job, moving people, in many cases taking large proportions of their weight, the retirement age for a Physio's was set at 55. 

3 years ago all National Health workers underwent a pension review and compromises by staff were made in order to meet changing funding levels. These changes were to ensure the fund would be sufficient to sustain its members. Today's action is to protest at further changes to provisions. These include raising the retirement age from 55 to 67, an increase in contributions by a further 3% and a considerable reduction to the pension to be paid. These changes apply to many public sector workers including teachers, civil servants, nurses and many more.

It is easy to say as someone in the private sector " I wish I could retire at 55" or "I wish I could get a pension equivalent to my average working salary" but I remind you of my earlier comment. If I had contributed large amounts to a pension, as she has, then I too could have had such a pension. This discussion is not about feelings of being bitter, because the public sector have better pensions than me. My situation is purely because of my financial planning, or lack of. The discussion is more about an employer, in this case the government, moving the goal posts and making sweeping changes to a pension plan. The new deal is not what public sector workers signed up for.

The argument that the country cant afford it, is weak, when you consider that the Physio's pension pot is in surplus. The ageing population argument is hard to justify, when youth unemployment is running at a record high. Will these youth ever get a job if old folk never retire?

The Government argue that what is on offer is fair. As a private sector worker with poor pension provision, as a result of personal choices, I can't see how what the public sector is being offered is anything like fair.

Just to add insult to injury, having been subject to a pay freeze for 3 years, yesterday on the eve of the industrial action, the government announced that public sector pay increases will be capped at 1% until 2013. This is not subject to negotiation or talks.

In my opinion, what is happening to public sector employees is anything but fair. It amounts to a 3% tax that will help the government balance its books. Of course they need to balance the books, especially as they have just sold the bank they bailed out to the tune of £1.4billion for a fantastic price of £750 million. Perhaps they need to have a think about how they are doing it ! 

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Alex J. Cavanaugh said...

Messed up of both sides of the pond I see. If your wife has paid in all that money, I can understand why she'd be angry.

Susan Flett Swiderski said...

I'd say it rather compares to American politicians characterizing social security benefits as an "entitlement", as though it were a hand-out. NOT! It's OUR money that WE paid into the fund, which the government chose to raid (in spite of their own laws forbidding them from doing so!) So Alex nailed it. Messed up on both sides of the pond.

Susan Kane said...

It is not just a mess, it is a disaster. I have been in the public and private sectors. Seen it both sides. What happens now?

Duckie. said...

Can't complain really,I've been drawing my NHS pension for 20 years,but there again I and many others were given a chance to retire early so they could give our jobs to people who would earn only a fraction of our pay, they want the cake and the halfpenny as well as usual it would seem!.

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