David Prosser: That pensions perk can be defended

Digby Jones, the outgoing director-general of the Confederation of British Industry, accused local authority workers of selfishness, following Tuesday's strike over pensions.

It was a typically ill-informed accusation - while the council staff who took industrial action were undoubtedly keen to protect their own pensions, they were also striking for future generations of workers.

In fact, the case for the pension reforms proposed by the Government is far less clear cut than business leaders such as Sir Digby - who are themselves on course for handsome pension payouts - would like to pretend.

The most controversial issue at stake is the so-called rule of 85, which allows local authority workers to retire on a full pension at 60, if their age and years of service add up to the magic number. At first sight, that perk looks difficult to defend. After all, the retirement age for members of private-sector occupational pension schemes is now 65 in the vast majority of cases.

The Government is planning to raise the state retirement age, possibly to 67 or 68, to reflect increasing life expectancies. Why should council staff be treated any differently?

Well, I can think of two good reasons. The first is that if you employ staff and offer them a particular benefit, reneging on your word a few years later is guaranteed to cause a great deal of upset.

The second reason the strikers have a case is the myth of the level playing field. Sir Digby says private-sector workers are entitled to feel disgruntled when they see their public-sector counterparts retiring at an earlier age than them. But would this supposedly angry bunch - in fact, it's tough to find people who really feel like this - accept public-sector levels of pay in return for the chance to retire early?

That's why many public servants feel so angry about losing this pension perk. For years, the one consolation for many poorly paid workers has been that the reward for long service - you would need 25 years in the job to retire at age 60, for example - has been a slightly cushier retirement deal.

Not that the rule of 85 guarantees a generous pension. Far from it. The average pension paid to a local government worker is currently just £3,500 - this is a less than generous £67 a week. For women retiring from local government, that weekly average falls to a sum of just £31.

Even after claiming the basic state pension on top of their occupational pension, many former public-sector workers are still eligible for top-up benefits because their weekly income falls short of the minimum income guarantee for pensioners, currently £109.45 a week.

The truth is that there is no easy solution to this row. It's true that council tax bills will have to rise to fund public-sector pensions unless reforms are made. But you can't simply ask staff to accept a deal that equalises their retirement age down to private-sector levels unless you are also prepared to equalise pay and benefits upwards.

* The 2005/6 tax year finishes on Wednesday, so savers and investors have just four more days to use this year's individual savings account (ISA) allowance.

But while the financial services industry is currently in marketing hyper-drive, don't simply use your ISA allowance for the sake of the tax break.

Cash ISAs are worth considering for anyone with savings in a taxable bank or building society account. Interest is tax-free and there is no risk to your money. With stocks and shares ISAs, on the other hand, your savings can fall in value as well as rise - plus, the tax incentive is much less clear.

By all means, invest if you are prepared to take a long-term view - five years at least - but otherwise stick to cash.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive + incentives + uncapped comms: SThree:...

    Recruitment Genius: Telesales Executive - OTE £25,000

    £13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

    Ashdown Group: Graduate Developer (Trainee) - City, London

    £25000 per annum + benefits: Ashdown Group: A large financial services company...

    Day In a Page

    The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

    The Silk Roads that trace civilisation

    Long before the West rose to power, Asian pathways were connecting peoples and places
    House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

    The honours that shame Britain

    Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
    When it comes to street harassment, we need to talk about race

    'When it comes to street harassment, we need to talk about race'

    Why are black men living the stereotypes and why are we letting them get away with it?
    International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

    International Tap Festival comes to the UK

    Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
    War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

    Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

    Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
    Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

    'A subversive brothel keeper and Communist'

    Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
    Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

    BBC heads to the Californian coast

    The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
    Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

    Victorian fraudster who shook the Bank of England

    Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
    Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

    Car hacking scandal

    Security designed to stop thieves hot-wiring almost every modern motor has been cracked
    10 best placemats

    Take your seat: 10 best placemats

    Protect your table and dine in style with a bold new accessory
    Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

    Cook not the only one to be caught in The Oval mindwarp

    Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
    Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

    Can Benitez get the best out of Bale?

    Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
    Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

    Beijing witnesses new stage in the Jess and Kat rivalry

    The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
    Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

    Jeremy Corbyn interview: A shrewd operator desperate for power

    His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
    Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

    Isis executes Palmyra antiquities chief

    Robert Fisk on the defender of the ancient city's past who was killed for protecting its future