There are lots of claims thrown around about public sector pensions in an attempt to evade the basic reality that well paid workers are going on strike to defend incredibly generous benefits, necessarily paid for by many people who are far less fortunate.
Unions cite figures for the average public sector pension as low as £5,000 , which sounds like a very modest amount to live on, but ignores that many of those pensions may only have been accrued with a few years in work, and be supplemented by other pensions earned in other jobs. A teacher who retires after working for 25 years with an average salary of a pretty modest £30,000 will enjoy a very healthy pension of £12,500.
Unfortunately the usually brilliant Willard Foxton has added to that fog of confusion with his article for this site. He argues about teachers' pensions as if it is the teachers paying for them, and this is some kind of tax hike, when in reality they are just being asked to pay a bit more for an incredibly generous benefit that is mostly paid for by other people. He says:
"In 2006 the Teacher Pension Scheme was costing the public money and it shouldn't be funded by other taxpayers, of course. [...] The extra money being taken off teachers isn't going to the pension pot, it's going to the Treasury."
Teachers pensions are funded by other taxpayers, to an incredible extent. New members of the teachers pension scheme pay 6.4% of salary in employee pension contributions. But their employers (i.e. taxpayers) then pay 14.1%. That isn't the end of it though.
Most public sector pensions are unfunded. That means the money from employee contributions does just go to the Treasury as Willard says. But it also means that the Treasury will have to pay the accrued pensions from taxes in the future. According to estimates by pensions expert Neil Record for the TaxPayers' Alliance, the liability for all those future payments stood at a massive £1.3 trillion in 2009-10, up from £434 billion in 2000-01.
As a result, teachers' pensions don't just get topped up with employers' (taxpayers') contributions. The final pension is worth even more and taxpayers have to make up the difference. Here is Neil Record explaining the situation:
"At the moment the Government asks employees for a contribution, on average, of 6 per cent of pay and employers for an additional 14 per cent in order to help meet the pension promises it has made, i.e. 20 per cent of total employee pay. But over 40 years a typical public sector worker needs to have 48 per cent of his salary paid into his scheme in every year of his career in order to pay for the pension payouts at the end of it. The Treasury covers this annual 28 per cent gap. Even taking into account people who take career breaks and do not stay for long in the public sector, the whole public pension system requires annual contributions of 35 per cent of pay each year to fully cover the cost of new pension promises"
The Government are trying to implement pretty modest reforms which will be fairer for taxpayers but still leave teachers with generous provision. If they are going to enjoy generous pensions it is only fair they should pay a bit more of the cost. Strikers don't deserve our sympathy when they disrupt thousands of schools, and the education of children across the country, to protest against that.