Here is a useful corrective to a lot of the guff that's been published on public sector pensions:
On page 23 of this week's 200-page Hutton report there is a projection of how much public sector pensions will cost as a percentage of GDP in future years. I've reproduced it below. Even taking into account different assumptions for life expectancy and workforce growth, the cost of public sector pensions has peaked, and between now and 2060 will fall year in, year out.So why cut further? The Guardian posits a complicated argument about fairness with the private sector. Me, I think that Lord Hutton and his Tory chums just want to put the boot in to public sector workers.
Even in the worst-case cost scenario, where we all live longer and workers survive Osborne's axe, in 2060 public sector pensions will cost around 1.5% of the GDP, compared with 1.9% today.The truth is that public sector pensions have, over the past decade, been trimmed back again and again, so the potential future burden has already reduced. Many schemes have increased the age at which members can take their pension. Higher contribution rates from 2012, likely to average 3%, have already been announced and will save around £2.8bn from the public purse. The biggest cut (or fiddle, many would argue) has been the switch from using RPI to CPI for cost-of-living increases once the worker has retired.