THE BLOG
14/09/2011 19:39 BST | Updated 14/11/2011 05:12 GMT

Don't let Union Fat Cats Block Necessary Pension Reforms

Changes to pensions to make them more affordable are unavoidable. Threats from trade union bosses, made from the comfort of their well-feathered nests, should be challenged because the facts are there for reasonable people to see and debate.

The official national debt is expected to reach nearly £1.4 trillion in 2015-16. But it's only part of the real national debt. If you want to really understand our total public sector liabilities you also need to include items like PFI deals and bills for nuclear decommissioning.

But by far the biggest liabilities that are kept off balance sheet are pensions. This includes the deficit in the funded Local Government Scheme, state pensions and unfunded public sector pensions. The problem is set to get worse: people are living longer; the number of public sector employees has ballooned over the last decade; borrowing is still increasing, despite the Government's much discussed but barely enacted austerity agenda. When combined they mean that public sector pensions have to be reformed if they are to be affordable in the future.

Public sector unions disagree, of course. They have met during the last three days at the Trades Union Congress Conference in London to discuss, among other things, strikes to protest against pension reforms. The rhetoric is provocative, with Paul Kenny of the GMB said: "Let's make it clear - we will give them, any politician, the biggest campaign of civil disobedience that their tiny little minds can ever imagine." Strong stuff.

Let's look at some facts. Say a council middle manager finishes his career on £60,000 a year. The accrual rate is in the Local Government Pension Scheme is 1/60th of final pay, multiplied by the number of years on the scheme. So if he has been on the scheme for 30 years, then he would be entitled to £30,000 annually. Or a low paid council worker finishing on a 30 year career on a salary of £25,000 would get £12,500 annually.

In the NHS, a scheme which makes part of unfunded pension liabilities, if you finished a 30 year career on £40,000, you would get £15,000 annually and a lump sum of £45,000. A teacher with the same career span finishing on a salary £50,000 will get a pension of £25,000 a year.

When unions say that the average public sector pension is around £5,000, they include those who only worked for a short time in the public sector, meaning a small pension, which skews the average horribly. Public sector pensions are generous when scheme members stay on them for their entire career, which is why they are so keen to maintain the status quo, and why unions are planning to cause such disruption later in the year.

Today, the TaxPayers' Alliance has released the Trade Union Rich List, which details the salaries of union bosses fighting necessary spending reductions and pension reforms. It's a cosy club to be a part of, and disassociates them from the working classes that they love to say they represent. What working class person could expect to receive £310,000 in severance pay if they left their job? It's what Derek Simpson got from Unite, and underlines the sheer hypocrisy of their rhetoric.

Changes to pensions to make them more affordable are unavoidable. Threats from trade union bosses, made from the comfort of their well-feathered nests, should be challenged because the facts are there for reasonable people to see and debate. Restoring the UK to fiscal health was never going to be easy but these obstacles must be overcome.