Wednesday, November 30, 2011

PENSIONS

So today was the big strike day in the public sector. My initial reaction a month ago when I heard about it was flippantly to wonder if I would be on strike if I worked in the public sector, given their projected pensions are much higher than I can expect, having always worked in the private sector. It's been exactly ten years now since private sector pensions closed their final salary schemes, moving the money into stocks and shares... and we all know what has happened to stocks and shares since then. They got away with it at the time because the average earners saw their house price increase year after year and contented themselves with the fact that although they would have no pension, a simple down-sizing of their property would solve the cashflow problem of their old age... but of course that is a fantasy bubble that has since burst, and I suspect has some further bursting to do!

Of course there will be a small percentage of private sector MDs with decent pensions, just as there will be top civil servants with decent pensions too but an average worker will get a pension that will not allow him to retire ever. Add to that the issue of redundancy - when people lose their jobs they have to choose between continuing to invest in under-performing pensions or paying their mortgage. However short-sighted it may seem, many people choose to pay their mortgage! A quick poll of my freelance friends today (many editorial staff and journalists work freelance these days, having either been let go by struggling publishers, or having resigned, like me, unable to pay childcare costs from my very average salary, thus figuring working from home was the only option) reveals that next to none of my friends (all in their 40s) are currently paying into a pension at all. I wonder how many of the rich Tories in charge of the country are aware of that?

So rather than lamenting the fact that the public sector workers didn't exactly rush out in their thousands ten years ago in support when this was happening to us, I think it needs to be said that the government and country doesn't need to rethink their plans for the public sector so much as rethink pensions in their entirety. Twenty years from now we are suddenly going to hit a point when there are no jobs for us 60-somethings but we have no pensions either. It's time to break down that old us and them divide and realize all of us, public and private alike, are facing an impossible retirement.

It isn't the rights of public sector workers we should be fighting for, but the rights of all workers on average salaries, regardless of their sector. We should all be out there today pointing out to the buffoons in charge that a major rethink is needed.

(Here's an interesting quote from Macwhirter:

Here's a statistic to think about. At present annuity rates (that's what you get when your savings are converted into a pension) to buy an index linked pension of £24,000 - roughly what a teacher gets - a 60 year old would need to have saved over £600,000. It is impossible for normal people to save anything like this. The average personal pension savings “pot” at retirement is currently £30,000, which will generate about a £1100 a year, most of which is lost because the pensioner loses entitlement to means tested pension credit. And remember, a third of British workers, round 8 million, have no pension at all.)

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