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Pensions rise “a blatant tax”

Meldrum says pensions contribution rise is purely to plug Treasury deficit

Louise Prime

Thursday, 28 July 2011

BMA chair Dr Hamish Meldrum has said that the Government’s increase in public sector pensions contributions “is absolutely not necessary” and “a blatant tax”.

The Government will today reveal the extent of the increased contributions that public sector workers will have to make to their pensions.

Dr Meldrum told BBC Radio 4’s Today programme this morning: “This is really nothing about deficit reduction and the affordability of public sector pensions, this is just a blatant tax on pensions.
“As far as we know this money is not going back into any pensions scheme; it’s just going back to the Treasury.”

Dr Meldrum said that today’s announcement is totally separate from the proposals of the Hutton review, negotiations over which are ongoing. He said: “This is something else – this is just to raise money out of public sector workers to try and plug the hole in the Government’s overall spending deficit.”

Radio 4’s Paul Lewis, who presents Moneybox, agreed that the money raised will go straight to the Treasury, but said that overall, the Treasury puts money into public sector pensions every year. He said that from his talks with Government this morning, it was “absolutely clear, this is about deficit reduction – paying more for public sector pensions and trying to close the gap between contributions coming in and pensions going out.”

Today’s rises will put individual public sector workers’ pensions contributions right at the top of the scale, compared with the private sector, said Mr Lewis. He also predicted a further rise in contributions next year, though the Government had told him this wasn’t a certainty.

Dr Meldrum countered the common public perception that well paid public sector workers get excellent pensions very cheaply, at the taxpayer’s expense. He said: “The NHS scheme is going to generate over £10bn surplus over the next 5 years, so let’s get this straight about the affordability of public sector pensions.”

Mr Lewis agreed that although the Government claims we cannot afford for public sector pensions to go on as they stand at the moment, this may not be strictly true: “… if you look at the figures in the long term, the percentage of our national income spent on public sector pensions would actually go down over the next 50 years.

“What they’re saying is, it’s too much now and it will still be too much then. People in the public sector say, well, if we can afford it now then we can afford it then – without these changes.”

 Read more: Consultation on increases to NHS Pension Scheme contributions

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