The Tories that is, and maybe the Lib Dems too. I met a public policy person who does a lot of work on pension reform recently and we were discussing the politics surrounding the reform process. He said that the one thing that the Tories always mention when he meets with them is public sector pension schemes. He said his impression was that if the Tories do get back in then 'reform' of public sector pensions will be high on their agenda. He reckons they would go for a straight shift to DC. But he also said the Lib Dems talk about this quite a bit too, which I find surprising as I imagine quite a few of their supporters are public sector workers.
We should prepare for the possibility of a Tory, or Tory-Lib Dem government coming in and attacking public sector workers pensions. They are likely to portray public sector pensions as expensive luxuries that come at the expense of the taxpayer, so the counter arguments need to be developed. They may suggest paying the same contribution rate currently paid into DB schemes into DC schemes instead. This would actually make them very generous DC schemes, as most employers in the private sector have used the shift to DC as an opportunity to cut their contributions right back. But if that did happen I wouldn't bank on the contribution rate staying at that level (especially as Personal Accounts will only get a 3% employer contribution).
Don't say you weren't warned.
No comments:
Post a Comment