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Hutton: Gov't must not back down on public sector pension reform
by William Robins on Dec 14, 2011 at 10:48
The government must not make any more concessions over public sector pensions and auto-enrolment John Hutton has said.
Speaking at an Eversheds pensions conference, Labour peer Hutton, who was commissioned by the government to create a package of public sector pension reforms in 2010, said the government had watered down his recommendations.
‘Ministers have, I believe, made a generous offer to the trade unions which affords a high level of protection for those approaching retirement with good accrual rates for those saving within these schemes,’ he said.
‘It is not easy to envisage a better offer being made.’
Hutton (pictured) criticised unions attempts to derail reform through strike action and criticised both sides of the debate for making pensions an 'emotive issue' and using ‘Punch and Judy’ arguments.
He said: 'Rhetoric will never provide a sensible strategy for negotiations and strikes are not going to solve the basic problem we are facing or remove the future financial risk to these pension schemes if we simply muddle on as we are..’
‘Reform has become synonymous with devaluation and the loss of expectation. Motives are called into question. Everyone assumes the worst and therefore digs in to defend what they have, regardless of the wider consequences to society or to taxpayers.’
Hutton also warned against further delays to auto-enrolment. Recently it was announced a one year delay to reforms for firms with fewer than 50 people. Hutton said delay would damage confidence in the pensions system.
‘There is today talk of delaying the start of auto-enrolment… But there is no time like the present. Delay only postpones the moment when we begin to turn things around and would signal a loss of confidence in the whole pensions saving architecture proposed by [Adair] Turner and accepted by government…There is no other option open to us.
‘The only way out to a better place is to start saving more of our earnings for our retirement.’
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8 comments so far. Why not have your say?
Mr G Nome
Dec 14, 2011 at 11:04
Public sector pensions changes - does that affect MPs........hmm thought not!!!
report thisKevin Neil
Dec 14, 2011 at 11:15
Actually there are changes afoot.
MPs currently pay either 11.9%, 7.9%, or 5.9% of salary into a final salary defined benefit scheme with a retirement age of 65.
Responsibility for the scheme is due to pass to IPSA (the Parliamentary watchdog) from April 2012, and they will be considering the Senior Salaries Review Body report from July 2011 that recommended that retirement age be raised to 68, the scheme be moved to career average, and accrual standardised at 60ths. IPSA will also decide on how much member contributions should be raised.
report thisJohn Mackay
Dec 14, 2011 at 11:40
Until we see MPs prepared to apply the same or greater cost cutting to themselves both in pensions and fringe benefits then it is difficult to argue against the intransigence of the Unions but then when hasn't a society been run on a them and us basis
report thisCharles Rickards
Dec 14, 2011 at 11:41
Of Course the Unions should be recommending their membership accept this deal, but if they did the membership might question what they pay their subs for? Unfortunately, the Union's primary interest is their own survival, which is always weakened when levels of public sector employees decrease.
If the members of the various public sector schemes had the value of their benefits explained in a true and honest manner, they would no doubt see what the Unions are doing.
report thisRich
Dec 14, 2011 at 12:54
Charles - Very true.
I'm tired of asking clients and friends in these pensions if they:-
1) know how they work
2) what the capital value of them is
Guess what they do not have a clue.
report thisMr G Nome
Dec 14, 2011 at 13:35
Rich, if you rely on your clients providing these sort of answers for you then i'm afraid your not really a very goof adviser.
report thisRich
Dec 14, 2011 at 14:11
Thats right i'm not a "goof" adviser !
Could you explain the scheme to me as this kind of information was missed out when i studied for AF3.
report thisBob Donaldson
Dec 14, 2011 at 15:30
You know when an MP changes to the House of Lords it is surprising how honest and forthright they become. For once they talk sense. Perhaps we should abolish the House of Commons and only have the Lords. Nice one Lord Hutton.
On the other hand how many of them fall asleep during a debate. Bit like my public sector clients when you talk to them about the cost of pensions, they immediately switch off thinking that it is a God given right that we all pay for them in retirement ignoring the consequences of the debt they effectively are leaving to their children and their children and on and on.
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