Gisela Stuart MPWorking hard for Bartley Green, Edgbaston, Harborne and Quinton

Be honest about pensions // August 12th, 2009 // Speeches, Articles and Interviews

Change is needed, argues local MP Gisela Stuart in the Summer 2009 edition of Fabian Review.

There used to be a deal: modest wages in exchange for job security and a pension where the benefits are defined and index linked.  But we have now lost sight of this, and the difference between what is happening in private sector and public sector pensions is no longer sustainable.

Defined benefit pension schemes for private companies have now become too expensive for companies to bear.  No new schemes are being created and increasing numbers of firms close schemes not just to new entrants, but to existing members as well.

But the public sector is lagging behind the private sector in facing up to this new reality.  It is unreasonable and politically unsustainable to expect these same taxpayers who are seeing great changes in their pension provision to continue to pick up the tab for maintaining what are in effect defined benefit schemes in the public sector.

A shift to funded schemes in the public sector can’t happen overnight and would need to be phased in, but it has to be done.  Anyone in their thirties has to accept that things have to change.  It is better to plan ahead and be honest with people.

We need to spell out just how much public sector pension debt has been accumulated and make the pension element an explicit part of the salary package.

Politicians and those in charge in Whitehall ought to give a lead by closing their own system to new entrants and make the kind of provisions they expect from those in the private sector.

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