Do you want to see ‘an independent commission on public sector pension provosion’ in our HR manifesto wishlist?

Bonuses and benefits have been huge stories in the past year, and now we are offically in campaigning pereiod for the 2010 general election any newsworthy issue can become an election issue.

In HR we might feel we have a corporate padding from the hurly burly of party politics, despite being invaded regularly by employment law. For those in the public sector politics seems far from remote – and for good reason – publicly funded bodies affect us all as we all pay for them.

The public sector pensions are an issue partly because they have traditionally been very generous, and also because some of them are ‘unfunded’ – meaning there is no ‘pot’ of money being saved up, it is essentially a cost which is borne after retirement by the public purse – instead of paying a wage to that employee, it’s a pension. But with a large number of retirees coming up it’s a big cost burden, right when public sector is required to make bigger cuts.

Hence why the  CBI report "Getting a grip: the route to reform of public sector pensions" was released: to try to address the issue before the parties put forward their ideas. In a recent article we covered the release.

In the article, The CBI said that going forward, all public sector staff should be moved off guaranteed ‘defined benefit’ schemes, which include final salary and career average pensions. How this happens may differ between public sector employers, and schemes that are in a ‘funded’ position, such as local government, may wish to pursue a different route.

John Cridland, CBI Deputy Director-General, said: "This is a difficult and emotive area, and not one that should be rushed. Public sector workers deserve a good retirement, but they and their employers should pay their own way. The pensions black hole is over one trillion pounds and rising, and taxpayers cannot be left to make up the difference.”

For the ‘unfunded’ sectors including the NHS, teacher and civil service, the CBI recommends the Swedish model of ‘notional defined contribution’. They claim this scheme would offer a risk-free pension that is ‘more sustainable and secures transparency for employers, staff and taxpayers’.

We asked Paul McMahon, Managing Director of AXA Corporate Benefits, to provide some comment on this. He said: "AXA recently highlighted the considerable degree of concern within the UK electorate about the long term sustainability of public sector pensions and the fact 61% of the voting population feel it unfair workers in the public sector generally receive more attractive pension provision than their private sector counterparts."

He added that AXA research indicated six in 10 voters felt this to be an important election issue.

Regarding the report, he added: "We hope will provide further encouragement for all political parties to treat this issue with the priority voters plainly feel it deserves.”
 
Of course, those who have worked in the public sector for along time and have built up a substantial pension fund cannot be left in the lurch here. Paul said: "AXA recognises that reform of public sector pensions is a sensitive topic which requires consideration of a wide range of issues including the merits of different models of provision, modification in retirement ages and the protection of existing benefits accrued. That in turn demands fullest possible engagement across the political spectrum. The CBI’s request for the next government to set up an independent commission on the topic is therefore one we would support. Indeed AXA has itself previously highlighted the important role an independent commission could play in driving pensions changes."

We wait for next week when we will be able to see the party manifestos – who will include a comission on this issue as an election promise?
 

• Is this an issue you think could be important in the upcoming election – should we include ‘an independent commission on public sector pension provision’ in our HR manifesto wishlist?