Pensions inequity must be tackled fairly
ONE of the deluded mantras of the 1980s was "greed is good". And one of its sub-mantras was "pensions are sexy". Now that we have re-learned that greed is anything but good, we also know pensions are one of the biggest boudoir passion killers of our troubled times.
There are many synonyms for the word "pension" these days. Try "carnage", "heart-breaking" or "graft-until-you-drop", or the much simpler one: "poverty".
But enough of this irrepressible weekend optimism. Today, our personal finance editor brings us the disappointing news that all is not well among many public-sector pension schemes.
We already know that some 80pc of the so-called defined benefit pensions in the private sector are seriously underfunded. Tough rules on funding such schemes will, in many cases, lead to reduced benefits to people who had been banking on a solid pension in their sunset years.
By June 30, these defined-benefit schemes will have to come up with new finance plans. Up to 200,000 private-sector workers can brace themselves for some bad news.
However, we now find that these same tough but perhaps necessary practices may not apply in the public sector. Up to 156 such public funds are not properly funded, but the fine print of the rules means they do not have to meet exacting standards supervised by the Pensions Board.
A pension of up to half-pay and a tax-free lump sum of 1.5 years' finishing salary beckons for those with the necessary years of service in the public sector. People with 40 years' public service could pass on the lump sum and take a pension worth two-thirds of pay.
It appears the tough pension-funding rules do not apply to the public sector, because the taxpayer will be picking up the tab. It also transpires that some of the troubled public-sector pension plans have been quietly 'nationalised' by ministerial order to remove any ambiguity as to where they fall in the public/private divide.
Let us not replicate those 1980s' mean-minded values, compounded by recession misery, by attacking the relatively generous public service pensions' regime. But there are obvious issues of fairness here in the treatment of both private and public workers, which we cannot ignore. We all need to look urgently at this medium-term pensions crisis in the round and see how we can be fairest and most generous in these difficult circumstances.