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Public sector pension pot ‘is non-existent’

Politicians are urged to end conspiracy of silence over pensions. Picture: Jon Savage

Politicians are urged to end conspiracy of silence over pensions. Picture: Jon Savage

  • by ANGUS HOWARTH
 

The public sector “pension pot” is a myth, as workers are paying for today’s pensioners and putting their own future in the hands of an increasingly stretched next generation, a think-tank has warned.

Reform Scotland has accused successive Westminster governments of a “conspiracy of silence” over pensions by failing to make clear how “uncertain, unfunded and unsustainable” the current system is. It will recommend a complete overhaul of the pensions system in a report tomorrow, and has called on politicians to be more open about problems in the present structure.

Chairman Ben Thomson said: “The key problem with our pension structure is that those faithfully paying national insurance and those paying into a public sector occupational pension scheme have no ownership over their pension assets.

“They are not paying into a personal pot for themselves, they are paying for today’s pensioners and are dependent on an increasingly stretched next generation to pay for them.

“Inherent in the system is huge insecurity for today’s employees and an immoral burden on the next generation.

“Politicians have been engaged in a conspiracy of silence on this issue and they must now begin to be more open about the situation in which we find ourselves. People deserve to know where their money is going and what their future prospects are.

“The current coalition government has merely moved the goalposts through its proposal to increase the pension age. Its proposals are the equivalent of treating a compound fracture with a sticking plaster.

“It’s time to grasp the nettle on pensions, and our report later this week will outline a solution to do just that.”

Reform Scotland, which is not aligned to any political party, said “hands off my pension” protests were misguided because “there is no pension pot for anyone to get their hands on”.

“Today’s national insurance contributions and employee contributions almost entirely pay for today’s pensioners. They are not going to a personal pot for the employee who’s paying them,” it said.

“The state pension already comprises 14 per cent of Scottish public sector expenditure and Scottish public sector pensions take up 8 per cent of the Scottish Government’s budget; and there’s going to be a 25 per cent increase in the number of pensioners in the next 20 years.”

SNP work and pensions spokeswoman Eilidh Whiteford said: “Scotland can afford a high-quality pensions system – we require to allocate a smaller share of our national wealth in Scotland to pay for the welfare state compared to the rest of the UK, which means that pensions are more affordable for Scotland.

“Just this month, the National Institute of Economic and Social Research showed that pensions in Scotland would be 6 per cent to 8 per cent cheaper than in the rest of the UK.”

 

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