Thursday, 24 January 2008

"Public sector to be forced to switch to DC"

God I hate it when companies that make money from pension funds argue in favour of attacking people's pension benefits. Have a look at this story on Professional Pensions.

"My personal view is the current DB structure cannot be sustained in the long term. If the private sector is going DC the public sector will have to follow. The financial imperatives are there. If it does not happen there will be an increased divide between ‘them and us’."

Notably the idea of closing the MPs' pension scheme and setting up a DC scheme is also given support. Funnily enough the line of argument in favour is sort of the mirror image of the one I used against:

"I think that would be a great thing. It would improve understanding of what a DC pension is. There is nothing like being in one to help you understand what the issues are."


Abdul-Rahim said...

Sometimes one wonders whether the state-pension will ever get sorted

Tom P said...

Well the Government is going to re-introduce the earnings link which means that the state pension will at least maintain its value. The trade-off is that the age at which you draw it will go up by a couple of years. But in all honesty I think that is pretty fair given significant changes in longevity since the original pension age was introduced.

In order to address the fact that, bluntly, poorer people die younger you could tie future rises in state pension age to improvements in longevity amongst the poorest in society.