Defending the Indefensible
The trade unions are gearing up for a campaign of strikes and industrial action over pensions - so they say.
But what's not clear is what the dispute - if there is one - will actually be about.
Since the reform proposals come from the Hutton Report - which is the work of a former and respected Labour cabinet minister, John Hutton.
One of John Hutton's recommendations is to abolish the widely discredited, but widely used -'final salary' pension schemes - which are common in the public sector.
But where do the trade unions stand - are they in favour of these final salary schemes which benefit higher paid groups - or against?
Seems to me the unions are trying to defend the indefensible - if they pick a fight over this issue - because an average salary scheme is much fairer to most union members.
Here's something I wrote for the blog site earlier this year.
"Robin Hood in Reverse"
"The final salary pension schemes operated by Scotland's councils - are a fine example of Robin Hood in reverse.
Why? Because they take from the 'poor' and give to the 'rich'.
What happens is that low paid employees - end up subsidising much higher paid groups - including many senior and middle ranking officials.
In effect, the part-time cleaner is subsidising the lifestyle - of the council chief executive.
The system works in favour of senior council staff of all kinds - including many teachers.
Let's take an example to illustrate the point - a chief executive paid £150,000 a year - now the person doesn't actually work at that salary level throughout his or her council career.
But their pension is based on this final salary - even if they've only done the job for a relatively short time - as part of their overall service which can be a maximum of 40 years.
The pension scheme rules changed in April 2009, but for the great majority of employees (i.e. those in post before April 2009) - the maximum pension is still worth half of a person's annual salary - plus three times their annual pension as a tax free lump sum.
So, a chief executive on £150,000 and a maximum service would receive - £75,000 annual pension plus £225,000 as a tax free lump sum, i.e. 3 x £75,000.
The new post-April 2009 rules provide for an even bigger pension - worth two thirds of a person's final salary - 25% of which can be converted into a tax free lump sum.
But under both sets of benefits and rules - the reality is that other lower paid council workers (and other tax payers) - are helping to subsidise the scheme - for the benefit of the better paid staff.
Why? Because the higher paid take out much more than they pay in - over their working lives.
Meanwhile - at the other end of the pay ladder - the scheme is not so generous.
Because most low paid workers remain relatively low paid - by and large they don't have a career path - or many opportunities for promotion.
For most low paid workers - their pensions reflects what they pay in to the scheme over the years - because their pay rises only very slowly and mainly through an annual 'cost of living' pay increase.
Now what would be much fairer - and more progressive - is a scheme based on average salary.
So that people get back roughly what they put in over their working lives - this could even leave a bit of room to boost pension benefits - in favour of the lower paid.
The unions like to pretend they're on the side of the low paid when it comes to pensions - but in truth they're propping up a system that favours the relatively better paid.
Does this remind anyone of how the trade unions behaved over equal pay?"
But what's not clear is what the dispute - if there is one - will actually be about.
Since the reform proposals come from the Hutton Report - which is the work of a former and respected Labour cabinet minister, John Hutton.
One of John Hutton's recommendations is to abolish the widely discredited, but widely used -'final salary' pension schemes - which are common in the public sector.
But where do the trade unions stand - are they in favour of these final salary schemes which benefit higher paid groups - or against?
Seems to me the unions are trying to defend the indefensible - if they pick a fight over this issue - because an average salary scheme is much fairer to most union members.
Here's something I wrote for the blog site earlier this year.
"Robin Hood in Reverse"
"The final salary pension schemes operated by Scotland's councils - are a fine example of Robin Hood in reverse.
Why? Because they take from the 'poor' and give to the 'rich'.
What happens is that low paid employees - end up subsidising much higher paid groups - including many senior and middle ranking officials.
In effect, the part-time cleaner is subsidising the lifestyle - of the council chief executive.
The system works in favour of senior council staff of all kinds - including many teachers.
Let's take an example to illustrate the point - a chief executive paid £150,000 a year - now the person doesn't actually work at that salary level throughout his or her council career.
But their pension is based on this final salary - even if they've only done the job for a relatively short time - as part of their overall service which can be a maximum of 40 years.
The pension scheme rules changed in April 2009, but for the great majority of employees (i.e. those in post before April 2009) - the maximum pension is still worth half of a person's annual salary - plus three times their annual pension as a tax free lump sum.
So, a chief executive on £150,000 and a maximum service would receive - £75,000 annual pension plus £225,000 as a tax free lump sum, i.e. 3 x £75,000.
The new post-April 2009 rules provide for an even bigger pension - worth two thirds of a person's final salary - 25% of which can be converted into a tax free lump sum.
But under both sets of benefits and rules - the reality is that other lower paid council workers (and other tax payers) - are helping to subsidise the scheme - for the benefit of the better paid staff.
Why? Because the higher paid take out much more than they pay in - over their working lives.
Meanwhile - at the other end of the pay ladder - the scheme is not so generous.
Because most low paid workers remain relatively low paid - by and large they don't have a career path - or many opportunities for promotion.
For most low paid workers - their pensions reflects what they pay in to the scheme over the years - because their pay rises only very slowly and mainly through an annual 'cost of living' pay increase.
Now what would be much fairer - and more progressive - is a scheme based on average salary.
So that people get back roughly what they put in over their working lives - this could even leave a bit of room to boost pension benefits - in favour of the lower paid.
The unions like to pretend they're on the side of the low paid when it comes to pensions - but in truth they're propping up a system that favours the relatively better paid.
Does this remind anyone of how the trade unions behaved over equal pay?"
