Like many people I have a pension with my employer. I pay into it every month. A hefty 6.5% of my salary, in fact. I have done this for years and have paid in thousands of pounds. When I signed up to this contract my employer agreed that they would take my contributions and in return give me a set pension at a set time. It’s not a bad deal, I admit. Unlike most pensions, I don’t have the option to vary the amount I pay in and I can’t move my money to a fund that I think might give me a better or less risky return however I am able to get a better idea of what my pension will be which helps me plan and gives me a bit of security. It seemed a fair compromise and that’s why I signed up.
Now my employer tells me not only must I work at least an extra five years and get less when I retire, which obviously I’m not happy about but at least I can plan for this over the next 30 years, but the kicker for me is I must now pay in 10% of my salary if I want to stay in the scheme. Like many of my colleagues in their 20′s and 30′s with young kids in full time childcare I was already struggling to pay 6.5% of my gross salary every month. 10% is just not an option and I would have to pull out of the scheme. So for me this debate is not about how big a pension I can get. It’s about whether I can get one at all. To add insult to injury even though my employed wants to change the terms of my contract without my agreement I can’t get any of the money back that I have already paid in or transfer it to a private pension fund so it is essentially worthless. Does that sound fair?
Now before you remind me that savings have to be made I should point out that we have already accepted a pay freeze which, with inflation at over 5%, is essentially a pay cut, there will be hundreds of thousands of job losses over the next couple of years and the public sector has been making efficiency savings in many areas. We are not getting off lightly. These pension changes will not help in any way with the short term belt tightening that we all accept needs to happen. They just mean that in a few years time as the economy and stock prices begin to improve and unemployment is once again under control all public sector workers will be stuck either with no pension at all or one whose benefits don’t justify their cost.
It is also important to remember that had successive governments invested our contributions rather than spending them (as private sector pensions have been required to do since all the pension scandals of the recent decades) there would be more than enough to make the payments they committed to. If a private company used their pension pot to buy new equipment or pay wages because they were running out of cash they would be breaking the law. If my employer is the government that made these laws surely I should get the same protection.
Most of us have not joined the public sector for the money. We care about what we do and often put up with quite a bit of abuse to try and do a good job but the government can’t rely on our good will to keep us in line while they attack our ability to plan for our future and provide for our family. If all of these changes go through even the most committed public servant will be questioning whether they should be looking elsewhere for work.
There will be two outcomes. Firstly, many of us will find work in the private sector which will make it harder for those already looking for work and have a deflationary effect on your wages because we’ll be cheaper to employ. Secondarily, working in the public sector will be so unattractive that these important services will be run mainly by the people who can’t get a better job. For me that is a truly scary thought.