There has been much publicity about public sector pension with unions making increasing noises about strike action, public unrest, etc. Is this really the case?
If we look at private pensions then people save into a fund, when they retire the fund pays out each year. But as we live longer the fund has to stretch further and so the amount of pension paid out each year will fall.
If we look at public sector it is very different. Irrespective of living longer the fund keeps paying out, so this means the fund has to increase in line with increased life expectancy.
If we take another view on this. Someone retiring at 65 years of age in the 1970s might expect to have an average of 15 years retirement. But we now live much longer, so someone retiring in the 2020s might expect to have an average of 30 years retirement.
For the public sector pension this means that the fund has to increase by 100% to cover the increase in life expectancy.
As the growth in life expectancy is continuing then it is clear that public sector pension funds would have to increase to maintain the same pension. Quite simply this is not sustainable, it is unaffordable and it must change.
The unions should stop harping on about “pension cuts”, what we need is a “pension cap” to stop the public sector pension growing to a level we simply cannot afford. And the unions should stop complaining about the bankers, whilst many agree they are overpaid the UK can do little, we need the international community to take action, otherwise banks will move to which ever country is the most friendly and UK will lose the tax revenues, and then we really will need a public sector pension cut!
