Public sector pensions - Unite exposes the right-wing myths

21 April 2010

The 'deliberate repetition of myths' about public sector pensions needs to be challenged, Unite, the largest union in the country, has said in a new leaflet.

Unite has published Public Sector Pensions – Let's set the record straight to combat the media, private employer bodies, right-wing lobbyists and opposition politicians who keep on claiming that public sector pensions are out of control and need to be cut back.

As the general election campaign hots up, Unite believes this onslaught is based mostly on 'the misinterpretation of facts and the deliberate repetition of myths'.

In a bid to nail the six myths, Unite has outlined the counter-arguments

-They are 'unfunded' and benefits are paid for out of taxation

Public sector employees and employers both pay pension contributions. Benefits are all accounted and paid for, and not subsidised out of general taxation. The schemes are actually 'funded,' but the funds are not visible as they are lent to the government.

- Costs will rise from 1.7% of national income in 2010/11 to 2% in 20 years time

The main reason costs are rising is simply because the number of pensioners is rising, not because pensions are being increased.

- The government liability is £800 billion (or some say over £1,000 billion)

This is the total cost of all the pensions that are due to be paid over the next 80 years. It ignores all the contributions which have been and are being paid to finance these pensions. It is a completely artificial figure which see-saws up-and-down as interest rates rise and fall.

- Public sector pensions are gold-plated?

The average public sector pension is roughly £7,000-a-year. All public sector pensions are proportionate to pay, unlike the private sector where high earners get 'top hat' schemes. To get a good pension, you need to have a long career in public service.

- Public sector pensions have escaped the cuts affecting the private sector pensions?

Contributions have been increased and the value of benefits reduced e.g. new starters now have pensions paid at the age of 65. Agreements are in place so that future cost increases will result in further reductions for employees.

- These pensions can’t be afforded in the future – we need to act now?

The government is uniquely well-placed to provide pensions to its employees. It can provide pensions at a stable long term cost which is much lower than private sector employers can manage. The cost to the government is not expected to rise and so the schemes are sustainable and can provide good quality pensions going into the future.

Unite's assistant general secretary for the Public Sector, Gail Cartmail said: 'Unite feels very strongly that the intellectually threadbare arguments against public sector pensions need to be exposed.'

'In reality, the majority of the public sector workforce will retire on modest pensions, only achieved by decades of service and years of paying increased contributions.'