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The public versus private sector pensions debate has been getting increasingly bitter for the best part of five years.
One of the key reasons for working in the public sector is the pension. It always was. But in the old days, public sector workers put up with lower salaries for years first in order to reap the benefits of this great non-contributory pension later.
Nowadays, the salary differential between pubic and private sectors is not so great. Teachers are now on a decent wage. Beleaguered civil servants no longer earn a mere half to two-thirds of their private sector rivals. And yet they still have this pension. No wonder bitterness runs deep. After all, who pays for it all? People who have slogged their guts out for decades in the private sector and who have to fund their own retirement or they will be reduced to penury find their taxes go into the primordial swamp that is the government debt pool, which is then plunged ever more deeply to fund these pensions.
Now, I'm not saying for one moment that those at or approaching retirement age who have worked in the public sector should suddenly find themselves deprived of their pension rights. However, those under, say 45-50, should contribute a reasonable amount to their pensions (say around 5% of their salary deducted at source). And those monies should be ringfenced – properly accounted for and allocated.
Then we won't get to the situation where the pensioners of today are being paid for out of all our earnings because the pensionable portion of their employer's expenditure was spent on renewing Trident or building a dozen hospitals instead of mitigating future financial disaster.
Alternatively, if the state retirement age for public sector workers is raised to, say 70, then the debt crisis will shrink significantly and the burden for the rest of the country may not look insurmountable.
OK, so the pension bill becomes smaller not just because there are fewer years to fund per retiree but also because a significant proportion of public sector works would die before they ever retired, but which government ever worried about such implications within the small print?
As for the rest of us?
We'll be taxed more to deal with the debt crisis (if not this Budegt then soon). We'll have to spend more on goods and services previously provided by local and national government before they cut them to deal with the debt crisis. We'll have fewer jobs between us and less economic growth to rely on to get us out of this mess anytime soon. So, I'm sure, given those constraints, we'll all be able to spend more on funding subsistence-level retirements for ourselves, pay more to educate our kids at university and work right up to age 75 (it'll be the only way we stand a chance!).
Oh the future's bright!
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