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Pensions under attack

On Thursday the 30th June 2011, the British government will face the biggest outbreak of industrial action since it came to power as civil servants join teachers and lecturers in a major strike over pension reforms.

The Tory-led coalition wants to alter the pension age, change the way that pensions are calculated and increase worker's contributions

Over 750,000 public sector workers will stage a 24 hour walk out after members of the public and commercial services union voted by 61 per cent in favour of strikes. The National Union of Teachers and the Association of Teachers and Lecturers plan to join forces in an attempt to maximise disruption and highlight, what they feel, is an unfair attack on their pensions and futures.

The public sector pension reform plan:

1. Pay more

The government is asking public sector workers to pay more in to their pensions by contributing an extra 3% of their salary and plan a smaller increase in pensions by linking them to a lower measure of inflation.

2. Work for longer

The age of retirement is set to rise to 66 by 2020:

  • Women's State Pension age will increase to 65 between April 2016 and November 2018.

  • From December 2018 the State Pension age for both men and women will start to increase to reach 66 by April 2020.

  • Those most affected will include women born on or between 6 April 1953 and 5 April 1960 and men born on or between 6 December 1953 and 5 April 1960.

3. Receive less

Pension pay outs will now be based on average salary instead of final salaries across a whole career.

This major government review has called for sweeping reforms to public sector pensions and so, for many state employees, the forthcoming strikes are not simply strategies to protest; with the new plans pointing towards less pay, more work and smaller pensions, the demonstrations are attempts to force the government to engage with working people and the communities affected by their seemingly unjust decisions.

For 12 million current and retired nurses, doctors, teachers, police officers and soldiers (one in five of the population), the public sector pension was much more than a retirement nest egg; for many, it was an intrinsic part of the deal between society and the public servant. Many chose to go into their professions and accept a determined salary in order to do something of social worth, believing that their pension / deferred salary (the income to be received in retirement) would ensure their comfort in later life. However, with the proposed reductions, their circumstances have been drastically altered and their pensions set to be much smaller when they retire.

The imminent strikes have therefore been said to reflect the escalating levels of anger, worry and fear felt by those employed under the public services.

If you have been affected by the recent reforms to the state pension system and would like professional advice relating to your personal financial situation, we can help. Our financial advisors can offer you recommendations, guidance and make sure that you have all the information you need in order to make the right decisions for your future.

All you have to do is type your question into the online portal on our homepage and one of our highly qualified advisors will respond to you within 60 minutes, for free and with no obligation.

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