2008: The Deal – Schachter
Public Service pension schemes are undergoing a huge amount of change at present. As you may know I advise many Consultant Doctors as well as quite a few people working within “public service”. Yesterday, the Government issued its Public Service Pensions Bill. This may seem like yet another cost cutting exercise, but I have serious concerns about it. In essence we all know that public service pensions are very good and most of us would be lucky to have one, however that does not mean that because we don’t, those that do need to be reprimanded, which is frankly what it looks like. There is a fundamental change to the way the schemes operate, switching from a final salary basis to a career average basis. This will almost certainly mean lower pensions for most members of the scheme. In addition the member contribution is also increasing signficantly, this is on the back of several “shake ups” previously.
Those within 10 years of retirement (generally aged 50+) will not be impacted by the new proposed rules. However everyone else is likely to pay more, get less and retire later. Not exactly a winning combination if you are trying to incentivise a workforce. I’m in the process of properly reading the Bill and will be outlining further thoughts in time. However, envy should have no part to play in policy making and I am concerned that this sort of goalpost moving is exactly the sort of ill conceived idea that makes normal, moderate people give up on the political classes, creating an unhealthy dynamic, which in a European context has resulted in some fairly dire consequences.
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