Is it time to slash public sector pensions once and for all?
NO: Dave Prentis, general secretary, UNISON
The government argues we need to make public sector workers pay more, work longer, and get less in their retirement, to keep their pensions affordable.
But they already are. The plans are just an extra tax on public sector workers to reduce the bankers' deficit - and on top of job cuts and frozen pay, it's pushing them too far.
The schemes don't need this drastic change. Reforms made four years ago are already reducing their cost as a proportion of GDP. Both the local government and the health pension schemes have billions more going in than is paid out in benefits every year, and the local government scheme has investment funds worth more than £140 billion invested in UK stocks and shares.
The real crisis is in the private sector, where two thirds of workers get nothing from their employers towards retirement. This lack of pensions in the private sector will cost taxpayers billions. But a race to the bottom - dragging public sector pensions down and letting taxpayers pick up the bill for means-tested benefits top-ups - will bump up the cost even more.
What our ageing population really needs is a decent pensions deal for all. UNISON members dedicate their lives to caring for others, they don't take strike action lightly. But eight months of talks have gone nowhere. The government has a choice: negotiate seriously, or risk the biggest industrial action in a generation. The clock is ticking.
YES: Mike Morrison, head of pensions development, Axa Wealth
When I first started in pensions, defined benefit (final salary) pension schemes were very popular with employers and employees. Since then a combination of factors, including increased longevity, regulation, legislation and difficult investment conditions, have made such schemes too cumbersome and costly for most employers to run.
But the alternative, defined contribution or money purchase schemes, are subject to the volatility of the investment markets.
There have been numerous research pieces showing the state of pensions saving in the UK: in just the last couple of weeks we have seen headlines saying only one in three workers has a pension and 13.6 million people do not have any pension savings.
Against this backdrop, to think that public sector pensions can escape without reform could be considered somewhat naïve. In comparison with the private sector, public sector schemes still remain attractive, and the move to some form of career average benefit could actually benefit some workers.
Increased contributions for those earning over a certain salary level will be an extra cost, especially in the time of a public sector pay freeze, but it is important to focus on the value of the final benefits as opposed to the cost today.
As for having to work longer: an increase in pension age is something that is a reality for all as we live longer and the cost of pension provision increases. Why should public sector workers be exempt?
The total money value of all the finished goods and services produced in an economy in one year. It includes all consumer and government consumption, government spending and borrowing, investments and exports (minus imports) and is taken as a guide to a nation’s economic health and financial well being. However, some economists feel GDP is inaccurate because it fails to measure the changes in a nation's standard of living, unpaid labour, savings and inflationary price changes (such as housing booms and stockmarket increases).