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Daily View: Reactions to changes to pensions

Clare Spencer | 10:12 UK time, Friday, 11 March 2011

Commentators discuss the change to pensions.

In his blog, former Labour party employee Lord Hutton of pilfering and understands why people are angry:

"Compulsory enrolment (or even an opt out system) in pensions twenty years ago would have done me the world of good, I suspect. So I understand why public sector workers are keen to protect their pensions, and why others have little sympathy with their fears. At the risk of sounding wet and weedy, I'm going to let those who know whereof they speak lead on this one."

that Lord Hutton merely reflects the widespread view that individuals should take responsibility for their families' future:

"Hutton shares an increasingly widespread view that individuals should take more responsibility for their own and their family's future if they wish to advance beyond some guaranteed welfare minimum. British taxpayers are no longer prepared, even if they are able, to sustain a secure retirement lifestyle for 20% to 30% of the workforce, which they themselves cannot hope to enjoy. They see it as simply unfair. Redistribution should concentrate on the poor. But pensions are just a beginning. The government is demanding that every corner of the welfare state come out and face reform. Those who flunked it for 40 years can hardly complain."

that the recommendation to replace final salary pension by schemes based on career-average salaries makes sense. But he's worried about the difference between public sector workers' and private sector workers' pensions:

"[T]he proposed reforms of public pension provision would leave several anomalies unresolved. First, the discrepancy between the pension position of private and public employees would be cemented. At present, more than 80 per cent of public employees enjoy defined benefit pensions, while only about 35 per cent of private employees are members of employer-sponsored pension schemes. Worse, fewer than 10 per cent of private employees are now members of any defined benefit scheme, down from about 35 per cent in 1997. Overall, in 2008-09 there were roughly 5m public employees in defined benefit pension schemes, against fewer than 2m in the private sector. Thus, government employees will continue to gain the benefit of the pooling of investment risk that characterises defined benefit schemes supported by a financially strong employer. Meanwhile, the majority of private employees, who ultimately pay for this government guarantee, do not benefit in any such way."

The on balance the deal is fair for public and private sector workers:

"The wage gap has all but disappeared - in many cases state employees earn more money for shorter hours than their private sector counterparts. And final salary pension schemes, once the norm across Britain, mostly survive only in the public sector. It cannot be fair for some Britons to retire earlier and more comfortably than the rest.
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"So Lord Hutton is right to argue that public sector workers should retire later, make higher contributions, and have their pensions calculated on the basis of average earnings rather than final salary."

The the deal is long overdue:

"It is of little consolation to those affected to say that all of this should have been done long ago. The impact of an ageing population was known to previous governments but they were too craven to do anything about it. The Coalition needs to buck this trend. It should not allow turmoil to weaken its resolve. Labour, which failed to rise to the challenge in office, should behave responsibly (despite its disappointing pronouncements yesterday) and support these overdue reforms. As Lord Hutton said, inaction is no longer an option."

the press coverage of the pensions reform was influenced by the prime minister's new head of communications, Craig Oliver:

"Infuriated hacks seeking to cover John Hutton's pension review for this morning's editions of the papers were under a strict embargo of 8 a.m., meaning the coverage could be crafted on the airwaves by interviews this morning. A grumpy spinner said last night "It's meant to be for broadcast tomorrow and the papers the next day", something the Mail and Express promptly ignored. Seems someone is getting the hang of this string pulling malarkey."

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