It seems that ministers are due to announce that public sector workers will, from next April, have to pay extra contributions in order to keep their ‘gold-plated’ final salary pensions.
An exclusive report in the Telegraph claims to have seen leaked figures that show for the first time how much extra public sector workers will be asked to pay as of next April. With the highest paid obviously paying the most.
According to the report the best paid 40,000 public sector workers earning well over Â£100,000 a year will pay an extra Â£3,400 a year (Â£284 a month).
A doctor could pay an extra Â£2,000, civil servants Â£2,100 and teachers Â£1752.
This increase will, by 2015, amount to an average 3.2% of gross salary.
The Telegraph says that Danny Alexander, the chief secretary to the Treasury, will sweeten the pill by arguing that the lowest paid have been sheltered from these rises in contributions when tax is taken into account. A nurse on Â£25,000 with therefore only be Â£12 a month less off, but a hospital consultant paid Â£130,000 a year will contribute an extra Â£160 a month.
This move, as part of the drive to equalise public and private sector pensions as well as limit public spending, will not be well received by the unions and the coalition is expecting a backlash.
The one real problem with all of this is of course that these pension contributions are not ring-fenced in any way. They are paid now, for use now by the Treasury. The money the workers put in is not invested for them. That means that when today’s public sector workers do retire they will rely on their successors’ taxes to pay their pension as well as the government of the day honouring the commitment. What they will have contributed will be quietly and conveniently forgotten, especially by money hungry governments, whatever their colour. If you doubt that then ask yourself why are we in this position now?
So let’s call this what it really is, a pay cut for the public sector worker.