Government assurances that changes to public sector pensions will protect low-paid public sector workers earning less than £15,000 a year are wrong.
Government assurances that changes to public sector pensions will protect low-paid public sector workers earning less than £15,000 a year are wrong, reveals Nigel Stanley
New TUC research shows more than 750,000 workers – 90 per cent of them women – will face higher contributions from next April.
This is because the government will measures workers’ income not by looking at their gross pay, but their full time equivalent earnings. In other words someone working half-time with a £14,000 slary is treated as earning £28,000.
Official figures (see Table 1) show 806,000 public sector part-time workers earn less than £15,000 but have full-time equivalent earnings greater than this threshold. Of these 732,000 or nine in ten (90.8 per cent) are women.
For many, this will mean as much as a 50 per cent increase in the amount they pay for their pension.
The government has said public sector workers earning less than £15,000 will not have to pay any more for their pensions this year and those on less than £18,000 will see a maximum contribution increase of 1.5 per cent of their pay.
Only one in six public service workers (15.8 per cent) – around a million – have full-time equivalent earnings of less than £15,000 and thus escape the higher contributions.
Women make up almost two-thirds (65 per cent) of the public sector workforce and just under 40 per cent of working women have jobs in the public sector (compared to 15 per cent for men). This means any cut to public sector pensions will hit women disproportionately hard.
These extra contributions for low-paid staff come at a time when public sector pay is in the middle of a two year pay freeze and inflation – particularly for the goods and services low income households consume – is higher than it has been for many years.
The extra contributions are not going into pensions. In the local government scheme – the one big public sector scheme with its own investments – the government has simply taken off its grant to local councils what they expect to be raised locally through the higher contributions.
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• Cameron’s talk won’t solve the pensions crisis – Barbara Bates, October 5th 2011
• Hutton should read his pensions report again before leaping to Cameron’s rescue – Michael Burke, September 16th 2011
• Don’t buy the right-wing spin: Public sector pension costs set to fall – Daniel Elton, September 15th 2011
• Danny Alexander repeats the ‘big lie’ that pension reform needed to stop spiralling costs – Daniel Elton, July 28th 2011