“Michael Johnson of the Centre for Policy Studies is a formidable figure with a distinguished track record in grasping the major issues facing the UK’s pension sector. He has highlighted the extent of unsustainable public sector scheme funding”, writes David Davison who shares his thoughts on the UK’s pension sector in The Scotsman (Thursday 4 April 2013).
To view the full article, visit The Scotsman website.
“King Canute, the tenth-century monarch of England and much of Scandinavia, is forever remembered for sitting in his throne on a beach, supposedly trying in vain to stem the tidal waves he had commanded not to wet his feet or robes. The image of the uncontrollable water inching towards Canute is one that comes to mind when I see government and trade unions response to the current state of UK public sector pension provision. Both sides are exhibiting an alarming degree of delusion and denial over what is, by any standards, a growing crisis.
In February it was revealed that the amount Scottish taxpayers are paying into local government pensions has increased by nearly half since 2007. The figure has gone from nearly £700 million to £1.03 billion in the 2011-12 financial year. That amount is equivalent to 54 per cent of the £1.9bn collected in council tax in that year. Local authorities are now spending nearly as much on pensions as on policing and a significant amount more – hundreds of millions of pounds more – compared to the funds being allocated to roads, bin collections or sport.
The UK’s largest local government pension scheme, Strathclyde Pension Fund, announced earlier this year that it had, for the first time, reached a point where pension payments to pensioners now exceeded contributions received. This evolution will require adaptation of the funds’ investment policy as this has arisen approximately five years ahead of the expected time frame.
No-one disputes the need to provide for public sector workers in their retirement but what is alarming is the rapid growth of this financial burden. The figures show that the amount being paid out in pensions has almost doubled to £955m over the past four years, a significant impact on the public sector’s ability to maintain key services like health, schools and policing…”
To view the full article, visit The Scotsman website.
For more on this see Micheal Johnson’s report: A Toxic Tangle
Date Added: Thursday 4th April 2013
