By Maximilian Clarke
Turning the ‘golden public sector pensions’ argument on its head, the Trades Union Congress have today criticised private sector pensions as ‘unfair’ in a bid to drum up support for the impending strikes.
Critics of public sector pensions say that public sector pension provision should be made more like that in the private sector. But the TUC report A Race to the Bottom, which analyses official pensions data, shows that in the private sector:
While private sector defined benefit pensions have been in steep decline, defined contribution (DC) provision has not filled the gap as critics claim, says the TUC. Since 1999 DC pension coverage has only increased by 2.5 per cent of workers, while DB coverage has fallen by 19.1 per cent of the workforce.
Private sector workers should be angry not at public sector workers but at their employers, and successive governments, who have allowed private sector pension coverage to decline so sharply, says the TUC.
In particular the two in three private sector workers with no pension should be livid that they see none of the nearly £30 billion spent on tax relief on pensions each year, two thirds of which goes to the less than one in four taxpayers who earn enough to pay higher rates of income tax.
The report also says that millions of private sector pensioners and scheme members will be hit by the government's switch to using the lower CPI inflation measure for pensions indexation in order to save money on public sector pensions.
“The current pensions debate is all about divide and rule,” said the union’s general secretary, Brenden Barber. “Employers have been cutting private sector pensions for years, while usually hanging on to their boardroom specials.
“Pensions in the private sector are deeply unfair, and making public sector pensions more like private sector provision has nothing to do with fairness. It is just part of a long campaign by those on the small-state right to cut public services.
“A typical nurse is being asked to pay an extra £1,000 a year and work longer to get a smaller pension. None of this will help a single private sector worker get a better pension.
"Private sector workers without a pension should not direct their anger at public sector workers, but should be livid at the extraordinary costs of providing pensions' tax relief, with two-thirds of the £30 billion bill going to higher rate taxpayers.
"Millions of workers with private sector pensions are already being hit by the attack on public sector schemes as their pensions are now being uprated by the lower CPI inflation measure."
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