Comments on Hutton Review of Public Sector pensions

by Dr. Ros Altmann

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Sir

John Hutton (29 June) is right that public sector pensions must be affordable and fair. Taxpayers have a right to demand an independent assessment of the validity of the Government’s pension cost calculations, in order to properly assess affordability. Hitherto, Government has hidden the true costs behind spurious and inconsistent assumptions which do not stand up to independent scrutiny, and payments have consistently exceeded official forecasts.

As regards fairness, of course lower earners in the public sector deserve decent pensions, but what about lower earners in the private sector? Is it fair to direct taxpayers’ scarce resources asymmetrically to just one fifth of the workforce? While the state pension remains so woefully inadequate, this problem will remain.

I hope Mr. Hutton’s Review will consider all aspects of the complex public sector pay and pensions deal. For example, it makes no sense for unfunded public sector schemes to be contracted out of the state second pension. All this does is allow public sector workers to receive their state additional pension from age 60, having never even contributed to it, when the rest of us who have paid higher national insurance all our working lives will have to wait until 68. Ending contracting out would ensure that public workers do finally pay for their state second pension and will then receive it at the same time as the rest of us.

Yours faithfully,

Dr. Ros Altmann