A follow up to yesterday's blog on pensions following the publication this morning of the Westminster Public Accounts Committee report on public service pensions. I was interviewed on Radio Scotland this morning on this issue.
We should welcome the PAC's warning that the Treasury has not tested the impact of the changes underlying their cost projections on public service pensions. Changes could lead to additional spending elsewhere including demand for means tested benefits.
In 2008 we reached agreements with the Scottish and UK governments on the future funding of public service pensions. The new UK government has unilaterally slapped an unaffordable 50% increase in employee contributions at a time of pay cuts and rising inflation. We warned that this will lead to further opt-outs from pensions, placing new burdens on welfare benefits.
The PAC report also says that officials appeared to define affordability on the basis of public perception. You would have hoped, that in the Treasury at least, Lord Hutton’s report buried once and for all the myth of gold plated pensions. But the UK government clearly thought this was an opportunity to grab more cash from low paid public service workers. This is on top of cuts to pension benefits by 15% as a result of the switch of index from RPI to CPI and plans to make everyone work longer.
The contributions issue in particular is an unwelcome agenda item for the Cabinet Secretary for Finance, because this is a devolved issue. The message is the same to both governments - public service workers are being asked to pay more, work longer and get less. That’s not acceptable and will be resisted.