Friday, 11 September 2009

Public pensions - the myth

In the ongoing saga of which party can cut most, public sector pensions have come under the attack from both the Tories and the Lib Dems.

Of course the whole terms of the debate are nonsense. The budgetary deficit has been caused by the bank bailout rather than runaway public spending - let alone alleged 'feather-bedded' public sector pensions. This argument was comprehensively dismantled by LEAP's Graham Turner* in an article earlier this year. Public spending has only increased by 1.9% in the last year.

Looking at public sector pensions, the myth that somehow public sector workers are retiring into luxury is somewhat punctured by the fact that over 100,000 retired civil servants are on pensions of less than £2,000 per year. A further 100,000 are on less than £4,000 per year - hardly munching their morning muesli with Moet are they?

TUC research published on Wednesday also shows that 2.5 times as much of public sector money is spent subsidising private sector pensions through tax relief - and that 60% of this tax relief is for higher rate earners.

So yet again, the Tories and the Lib Dems are scapegoating the poorest - without any evidence base. Unusually New Labour has not jumped on this bandwagon yet.

Today's Morning Star highlights where the fat cat pensions really are.

*Graham Turner also has a new book 'No Way to Run an Economy' out now.

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