Socialist Worker

Lord Hutton opens Tory assault on pensions

by Viv Smith
Issue No. 2223

Lord Hutton’s pension review signals an assault on the living standards of five million workers.

It opens the door for chancellor George Osborne to launch a massive attack on public sector pensions when he announces the government’s “spending review” on 20 October.

It is vital that the trade unions representing public sector workers come together to respond—quickly, and with the force needed to drive back the attack. Hutton’s report is based on lies:

Are public sector pensions hugely generous?

The average public sector pension is less than £5,000 a year (£100 a week)—and a quarter of civil services workers get less than £40 per week.

Shockingly, women local government workers get £1,600 a year on average—less than £5 per day.

Even Hutton admits that pensions are not “gold plated” and that since 2005 they have already been effectively cut by 25 percent.

For example, when the coalition government changes the way pension increases are calculated, a pension that would be worth £27,043 in 2030 will only be worth £19,517.

Do the rich deserve to be rewarded for pensions “saving”?

The richest 1 percent get 60 percent tax relief on their pensions. That’s the equivalent of £10 billion a year.

Are public sector pensions “unaffordable”?

Who have the real unaffordable pensions? According to the TUC, the biggest director’s pension at oil giant BP is a staggering £21.5 million. The vast majority of company directors get to retire at 60 or earlier—with “golden goodbyes” that for many are worth millions upon millions of pounds, tax free.

Do we need to increase workers’ contributions?

Most public sector workers have already endured a two-year pay freeze, and some three years. Increasing pension contributions would in reality mean a further wage cut.

For example, some of the lowest-paid workers—home carers, librarians, social workers and school meal staff—already pay in 6.4 percent of their wages.

NHS workers pay on average 6.6 percent.

If you are one of the 26,000 Birmingham council workers facing an imposed wage cut of between £1,000 and £5,000 a year then this is not only

unaffordable, but could mean that many people will opt out of their pension scheme all together.

Since we all live longer, shouldn’t we work longer?

Many nurses, home carers, cleaners, paramedics and refuse collectors are already forced into early retirement because of the physical nature of their jobs and the damage it does to their health.

For most working class people, life expectancy has risen by less than two years since the 1970s.

And life expectancy for the average female hospital cleaner, for example, has not increased by one day since those days.

Do we need a new scheme?

Hutton wants to scrap the existing final salary pension schemes, and replace them with a career average scheme.

Final salary schemes pay out a specific amount when you retire based on the salary being drawn at the end of your working life.

Career average schemes, meanwhile, pay based on the average wage from start to finish of your working life.

The change would potentially slice tens of thousands of pounds off lifetime income, as lower earnings in a worker’s early life drag down the potential payout.

A simple switch would benefit almost nobody—but it will hit low-paid workers the hardest.

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Tue 12 Oct 2010, 18:13 BST
Issue No. 2223
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