Britannia Radio

SUNDAY TELEGRAPH          1.2.09
Waking up to a pension apartheid
As regular readers will know, for years I've been going on about the 
fast-growing costs of public sector pensions. I'm delighted to see 
others now joining the fray.

By Liam Halligan

It's amazing how recession focuses minds on what we can and can't 
afford.
Of all the excessive government spending that goes on, the bill for 
gold-plated, index-linked, final salary public sector pensions is 
among the most difficult to swallow.

As general pension provision crumbles, only one in ten private sector 
workers now enjoys the relative security of contributing to a final 
salary pension scheme provided by their employer. But this expensive 
privilege is bestowed on 90pc of state workers - who work fewer 
hours, with higher average pay.

Over the next few years, as the realities of our ageing society kick-
in, the four fifths of us working at private firms will see our 
occupational pensions wither even more. But state workers will be 
cossetted, leaving the rest of us to pick up the gargantuan £1,300bn 
bill.

Good for the Institute of Directors, then, which launched an 
authoritative report last week stressing that recession makes the 
UK's "pensions apartheid" even worse. As IoD director-general Miles 
Templeman observes: "It is unfair on families and businesses who are 
struggling in the downturn to pay higher taxes to fund pensions they 
cannot afford for themselves or their employees".

State expenditure on public sector pensions will grow by 40pc between 
now and 2028 - way faster than spending on the NHS, long-term care 
and other services available to all of us in old age.

Attempting to hide the bill, Whitehall is increasingly funding its 
own pension costs from council tax, which is also paid by retirees - 
millions of whom are struggling on denuded private sector pensions.

The question of public sector pension costs was beyond the "mother of 
all pension reviews" conducted by Lord Turner several years ago.
Lord Oakeshott, a Liberal Democrat peer widely admired for his 
financial expertise, recently led attempts to set up "Turner 2" - an 
official commission to examine the issue of public sector pensions.

Yet not only the Government, but also the Tories, voted down his 
proposal in the Upper House. Our political leaders want this ticking 
time bomb kept in the long grass.

But it simply must be rooted out and defused - not least by 
immediately linking outrageously early public sector retirement ages 
to ever-rising private sector norms.