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Pensions

Not at all, my Lords. With great respect to the noble Lord, I do not think he has been listening to the point I have made. I believe that pension benefits and pay at the top of the private sector are unfair, as I said when I referred to the point made by the noble Lord, Lord Rosser. But I am now talking about the total figures as a whole, and one has to accept that many millions of people in the private sector have no pension provision at all, or very poor pension provision, which is a separate point. If we calculate the full cost of public sector provision properly, we could also give public sector servants genuine freedom of choice over their own pension provision. If we saw what the costs really were and the Government and employers had to pay a fair share of them, I believe that many employees in the public sector—I say this to the noble Lord, Lord Lea of Crondall—particularly among the low paid, of whom, I accept, there are many, would prefer to have more pay and a less expensive pension option. New entrants to the public sector could be offered three main options in a constructive and reforming way ahead. First, they could keep the current gold standard provision, the true cost of which is probably something like 30 per cent of salary, spread between employee and employer. The second option could be a new kind of silver standard DB pension scheme, similar to some of the remaining good-quality schemes. It would involve limited indexation and some sharing of risk and the cost would probably be about 20 per cent. Thirdly, there could be a bronze standard DC scheme, much more like stakeholder schemes in the private sector, where the total cost would be about 10 per cent. Those would be the choices. With any of those schemes, the pension age would need to rise gradually to make them affordable. But we cannot expect millions of people to work until the age of 67 for their basic state pension if public sector workers continue to retire at 60 until half way through the century. That is just not fair. Finally, I believe that the lead for public sector pension reform must come from the top. Members of another place may not welcome this advice from a Member of your Lordships’ House, but I believe that both public and private sector employees will give a very rude answer if members of the most generous pension scheme in Britain in the House of Commons tell them that they have to pay more towards their pension and work longer to get it, if that is what they hear from Members of Parliament. The way to show Britain that we are serious about solving this crisis is for Parliament to put its own pensions house in order.