Jillian Thomas: Why no public sector pension sacrifices?

If Tata employees had rejected the offer, it was likely that the scheme would have entered the Pension Protection Fund (PPF), with the potential of losing the steel industry in the UK, along with accompanying mass job losses.

The PPF is funded by a levy paid by all non-public sector final salary schemes. These businesses are already struggling to finance their own pension scheme deficits, largely caused by people living longer and the impact of quantitative easing (post the banking crisis in 2008).

Falling interest rates and gilt yields are making the deficits unsustainable. Companies are now folding, putting people out of jobs.

The further burden of having to find additional monies to make good the shortfall in the Tata pension scheme, in the form of increased levies, would have seen a catastrophic impact.

But this isn’t an isolated situation. Whilst invisible to most, all of us are paying significantly towards the pension minefield on a day-by-day basis, unaware of the additional costs being levied by companies, local authorities and government.

When private companies cannot afford to sustain final salary schemes, and are required to move to defined contributions schemes, why hasn’t there been a debate on the viability of public sector pensions?

When we are short of hospital beds, struggling to provide cancer drugs or support for the elderly and manage all the other issues of life in 2017 in the UK, how can we continue to fund the public sector final salary or career average earning pension schemes?

To encourage future job creation and a more competitive business community, surely business rates should be at least maintained at the current levels, or reduced, to encourage our fitness to compete in this post-Brexit world?

In a private company, the directors would be negligent to their shareholders if they did not consider the financial implications of the continuance of a final salary type of pension scheme. Elected politicians are the UK PLC’s shareholders – where is the consideration, the debate and the decision making?

When council services are continuously reducing, when bins are emptied bi-weekly, libraries are shutting and business rates are going up, where is the first council leader or chief executive bold enough to stand up and state that the current model is bust, and they need to redesign the pensions accrual paid to employees?

Repeated governments have privatised pension provision by the back door and are slowly shifting the burden from the state to employers. The introduction of Workplace Pensions, a mandatory pension scheme to enrol all employees into a company scheme, will soon be fully phased in and then we will start to see minimum contributions increase for the employer and the employees. This coincides with the review into state pensions, due to conclude in May, and 
the minimum age at which they can be taken.

What most people do not realise is that for every year the state pension is put back an individual is losing approximately £7,500 of retirement income, money you have paid the Government to pay you income in retirement.

This means that employees must delay retirement, unable to afford to retire. The elderly may become less productive to a company, while school leavers and those leaving university will not be able to find employment, resulting in jobless numbers increasing.

For too long pensions have become a political football, with politicians getting away with unacceptable decision-making, because most of the public don’t understand this retirement vehicle and how it works. We are creating a retirement wasteland, a pension apartheid.

For the good of the whole of the UK, and the wider economy, future accrual of public sector pensions needs to be openly discussed by unions, politicians and employees. They need courage and to be willing to accept the unenviable and unacceptable dilemmas recognised by Tata employees.

Jillian Thomas is managing director of Future Life Wealth Management. She’s the outgoing president of Sheffield Chamber of Commerce.