I say, let's give our public sector workers an inflation busting pay increase. Not the 2.45% being offered or the 6% being sought but a truly generous 10%. But let's tie this in with an overhaul of their pension arrangements.

The Insurer 'Life Trust' has recently found that retirement costs the average household £413,000 and more than £700,000 where people live to age 100. Staggering figures aren't they? But think about this. If you retire at 65 with a pension of £20,000 per annum you will receive (and presumably spend) £280,000 plus inflation by the time you reach your actuarial life expectancy of 79. If you do make it to 79 and live to your revised life expectancy of age 85 you will receive another £120,000 pension plus inflation. So, with the over 80s being the fastest growing age group in the UK today, a figure of £413,000 is not unrealistic is it?

Basic State Pension is £4,717 per annum so the State will have given us £94,340 by age 85, leaving us to find a mere £318,660. So how will we all find this £318,660?

To date, we have not needed to think about this because we have been able to rely upon our employers providing a pension based on our final salary for the few years we were expected to live in retirement.

Nowadays, we are living longer (and costing our employers more) so these schemes are being closed in the Private Sector leaving us to either bury our heads in the sand and hope that things will turn out alright when we retire or to save as much as we possibly can during our working lives to give ourselves any chance of a comfortable retirement.
With the oil crisis, housing crisis, mortgage crisis, credit crunch and the general rising cost of living, how can we save for retirement and how much should we save? Some Public Sector workers contribute 7% salary for 40 years towards their final salary pensions' others contribute 12% for 30 years, believing this is sufficient to fund their pensions for life. But these contributions are only sufficient to pay their pensions for about six years in retirement. After that the taxes we all pay help to fund Public Sector pensions so that public sector workers can retire before the rest of us and enjoy a guaranteed pension based upon final salary paid for by private sector workers who no longer have the security of a final salary pension scheme.

For most people in the Private Sector, the reality is that we have no chance of saving £318,660 so if, unlike our friends in the Public Sector, our employers do not offer a final salary scheme, we will have to accept a lower standard of living in retirement, or work long beyond age 65 or (most likely) both, whilst we continue to fund Public Sector final salary pensions. Public Sector workers are having a laugh!!
So, let's give our Public Sector workers a 10% pay rise now, funded by a cut in services, conditional upon the closure of their final salary schemes, retaining accrued benefits but payable at age 68 and abolishing the indexation of these retained benefits. That will give each public sector worker more money in their pocket now, make them responsible for their own pension provision going forward and restricting the cost to the Private Sector funding Public Sector pensions.

Everybody wins!!

George Collier
Langdale Close
Tickhill