Wednesday, 27 February 2013

Lies, damn lies and pension statistics

The Daily Telegraph ran a story on public service pensions yesterday that appears to be based on data provided by the Scottish Conservatives. Sadly, it is financially illiterate.
Firstly, it conflates the pension costs of cutting swathes of local government staff with normal pension costs. If overall pension costs have risen from £700m to £1.03bn and £300m of that is redundancy related - then the simple maths tells you that underlying pension costs have not risen at all. That is correct, because the standard contribution rate has actually fallen since the new scheme was introduced in 2009. Not least because pensioners have had their indexing cut from RPI to CPI. That alone will cost pensioners, but save the scheme at least 15%.
The £300m is as a direct consequence of losing 34,500 jobs in local government and other aggregate pension costs will increase because many of those are drawing pensions rather than working. This is driven by the UK ConDem cuts. In other words it is the direct consequence of Conservative policy. Money that would have been better spent on services and jobs rather than damaging the local economy.
Secondly, we have the fatuous claim that the ratio of pension costs to Council Tax income is rising. That is true of any spending because there has been a Council Tax freeze. This is the worst type of statistical manipulation for political purposes.
The facts are that the Scottish Local Government Pension Scheme was renegotiated in 2009. It included a cost sharing agreement that reacts to underlying increases in the cost of pensions. That would be working now had it not been for the intervention of the UK government through their Public Service Pensions Bill. That means we have to start all over again and renegotiate the scheme with no benefit to scheme members or the taxpayer. If the total cost of pensions is increasing, that is almost entirely down to Conservative polices.

No comments:

Post a Comment