Contrary to popular belief, pension costs are falling

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In his recent Scotsman article David Davison wastes not a single statistical or historical twist in his energetic but meretricious dismissal of fair pensions for public servants.

The amount paid out in pensions is not the key test of the viability of any pension scheme. What matters is whether you have the assets to cover those pensions. The Scottish Local Government Pension Scheme is 95 per cent funded, a figure that most private sector schemes would be delighted with. Payments are rising because of forced early retirements, due to 35,500 jobs gone in Scottish local government since the crash.

This basic fact is statistically manipulated by comparing it to council tax income. The council tax is a small and declining element of council funding, in part due to the council tax freeze. Of course, to compare it to total funding wouldn’t produce such a scary figure would it?

Then we have “pension payments to pensioners now exceeded contributions received. This evolution will require adaptation of the funds’ investment policy as this has arisen approximately five years ahead of the expected time frame.” Yes, so what? That again is due to the crash and job losses, but it is covered by past contributions and ­investments.

Not content with this, Mr Davison goes on to quote Mrs Thatcher’s Centre for Policy Studies. Here we start to get to the meat of the article. Scrap Fair Deal (actually in Scotland we have a different agreement) to make privatisation much easier. After all, we don’t want private companies burdened with paying proper pensions, do we? The state can pick up the bill.

Finally, we have government and unions behaving like King Canute. I’ll save the history lesson for another day, but the schemes were renegotiated in 2008 with cost sharing provisions. And now we are doing that all over again, not to fund pensions, but to pay for the deficit caused by the financial crash. Spot the real consistent theme here?

Far from King Canute, even the Hutton report shows that the cost of public pensions will fall from 2 per cent of GDP to 1.8 per cent in 2030 as a consequence of the 2007-8 reforms. In addition, other recent changes to schemes will reduce costs even more.

• Dave Watson is head of bargaining and campaigns, Unison Scotland.