Gary's News and views

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.

 

Friday 11 November 2011

THINGS HAVE TO CHANGE, EVEN PENSIONS.
I had an e-mail this week from a teacher assuring me that even if her union vote for strike action in opposition to the government's proposed pension changes, she would not be going on strike, as she had no wish to harm children. I hope that all teachers will follow her example. I completely understand the nervousness about pension reform, but strike action will hardly help.
I do not think the penny has dropped in some minds yet that things have changed. European and North American economies are in trouble; long-term structural trouble. The old expectations and patterns no longer apply. At best, our economy in the UK will grow at a snail's pace over the next 5 years and allow us to maintain current levels of spending. If things go badly, and we fall back into recession, in part due to turbulence in the euro-zone, we may have to make more drastic cuts. These are the new realities, whoever is in power. The day of reckoning has arrived.
The government is not reshaping public sector pensions just for the sheer hell of it, but because there is no alternative. We all know that people are living so much longer and that public finances are in a dire state. The coalition is trying to introduce changes that will solve the financial black hole in the fairest possible way, especially to those who are most vulnerable. Negotiations are still ongoing between ministers and union officials so the threat of strike action seems premature and ill-judged.
I welcome the recent announcement by ministers that nobody within ten years of retirement age will be affected by proposed changes. We all have our retirement plans, scribbled on the back of an envelope in my case, and we must give people as much time as possible to adjust.
Even after we conclude these long term changes, index-linked public sector pensions are still much more generous than their private sector equivalents.  No doubt there are a few captains of industry who retire on fat nest eggs, but most people in the private sector have seen their potential standard of living in retirement plummet along with the Stock Market in the past 5 years.
These tough choices should have been taken years ago and are now urgent. It is never easy making unpopular decisions but the consequences of avoiding them is simply to make things worse in the long run. Just ask the Greeks.

posted by Gary @ 10:42