Monday, 27 June 2011

Pension changes are necessary...

There's a lot of talk around at the moment of the proposed pensions reforms (or at least there was when I started to write this about a week ago) so I thought I'd throw my opinion in, I'm not sure it'll be the most popular opinion but here goes.  From what I see there are two distinct issues going on which seem to have been muddled in a number of the commentaries I have read (citations are lacking as they are now a while ago).

Aligning the state pensionable age of women with that of men

I am a firm believer in equality.  I don't believe in discrimination in any form, positive discrimination is patronising and at the same time any positive discrimination against one sector of society is effectively negative discrimination against the rest.  As such I believe this alignment is well over due.  

At the same time however, I recognise that it will make a lot of people worse off with very little time to adapt.  Guidance has been issued that 15 year's notice should be provided, I think this is a little extreme, however bringing it forward as the Government plans on doing will be a shock to a number of people who will have to work on average 18 months longer before they are eligible   This is one area that I therefore think it is wrong to speed up.  I reckon this is the first thing from the review produced last year that I haven't at least tentatively backed, the main reason for this from my point of view is that there are many sensible members of the population who have actively planned for retirement.   Take my parents for instance, spent many years sitting down working out how much they will have when they decide to no longer work and how their lives will be effected accordingly.  By adjusting proposals like this in such a short time period these people have effectively had the rug pulled from beneath them and that doesn't seem to be that fair. 

Changing the pensions of public sector workers

Over in the Lib Dem Voice Mark Thompson outlines the progressive case for aligning public pensions to the retirement age - however it does cloud the issue with a lack of clarity between the state pension and the public pensions earned through employment by the state.  I tend to take the figures on who has the higher average wage with a pinch of salt as they can't be equally comparable.  The private sector should open up the possibility for people to earn super normal profits and therefore themselves super normal wages, the public sector is inherently in areas where profits aren't the over riding objective, the main objectives are subjective.

The prevailing issue here for me, rather than fairness is that it must be affordable and sustainable.  At the end of the day, in this capacity the state is acting as employer not carer or charity.  It is important that no previous entitlements will have been changed, that would have been unlawful I am sure (as people would have provided their service of employment under false pretenses).  

This may sound harsh but if the Government thinks that the age necessary for a state pension is 66, or 68 or into the 70s as it will probably be when I (if I am lucky enough to reach that age) will retire, then this is when the Government normally should start paying out on their own pension policies as well.  One can easily argue that the Government should be acting as a shaper of society but it also has to be realistic on what it can afford to provide.  I don't know the whole ins and outs of the current system, however I would be very skeptical if someone told me that the current pension requirements are being met and will continue to be met from the accumulated reserves that have been put aside from years of contributions.  The only way I can see this happening is if the public sector makes vast reforms to their pensions - as the private sector have had to do over the past few years.  

One caveat I have to add to my opinions above though is that it must be recognised that not everyone is the same.  In my career, although I am young, health permitting it is one I feel that you can do for as long as you have the desire.  On the other hand, someone who grafts all day on a building site will have less capacity to continue once they reach a certain age.  Certainly most of these labour intensive careers have options for alternative roles, however there would not be enough of these to cater for everyone wishing to step back.  It is also true I believe, that people in these industries often have a lower life expectency.  As such I am happy for the Government to structure it's pension policies so that people in say the police force, the fire service etc can take their pensions earlier. 

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