Reeves has declared all-out war on our pensions and every single assault is squarely aimed at the private sector. If there’s a risk public sector employees may get caught too, the attack is called off.
This morning The Times reporting that public sector workers will now be protected from Reeves’ planned tax raid on employers’ pension contributions on October 30.
Instead, private sector staff will bear the brunt, even though it would leave them with less pay and less pension.
Reeves hopes to raise £15.4billion by imposing national insurance (NI) on employers’ pension contributions. Currently, employers don’t have to pay NI when contributing to staff pensions, so this is a big change.
But not every employer will be affected.
While private sector companies have to bear the cost, the Treasury will foot the bill for the public sector. Or rather, taxpayers will. To the tune of £5billion.
If it didn’t, the NHS and other government departments would have to make significant cuts to their budgets, to absorb the extra cost.
Labour won’t allow that, of course.
But it doesn’t care that private sector companies will have to make cutbacks to cover the cost.
Pensions minister turned campaigner Ros Altmann is one of many demanding Labour has a rethink. “If the public sector cannot cope with imposing NI contributions on pensions then that is a clear indication that all employers would struggle and this change should not be imposed at all.”
She warned: “Damaging private sector workers, and their employers, while forcing them to pay for even better public sector pensions, would be a serious mistake.”
It’s a mistake Labour seems willing to make.
Sir Steve Webb, a former pensions minister and now a partner at consultancy LCP, said Labour’s plan will “further increase the already large gap between public sector workplace pensions and the private sector”.
I’ve been trying to find out how big that gap is, and came up with this from the Office for National Statistics, dated 2021: “For employees with a workplace pension, the average value was £65,400 in the public sector compared with £10,300 in the private sector.”
In other words, public sector pensions are six times bigger than private ones. Yet it’s the private sector that Labour attacks every time.
Remember the pensions lifetime allowance? That imposed a brutal 55% charge on larger pension pots.
The Tories scrapped it but Labour instantly said it would revive the hated levy. Until it discovered it would also hit public sector workers like senior NHS doctors. Then it quietly dropped the policy.
Another example springs instantly to mind.
Reeves was preparing to scrap higher rate tax relief on pension contributions in the Budget, with the aim of hitting higher earners in the private sector.
When she realised it would also hit public sector workers, again, she dropped it.
I’m not having a pop at public sector pensions. Key workers like doctors, nurses, teachers and soldiers deserve a decent retirement. But it’s not fair if it’s funded by repeatedly hacking away at private sector pensions. Especially since they are inferior to begin with.
Did I mention that 80% of public employees have a gold-plated final salary pension, while just 7% of private sector workers do? That’s also down to Labour.
Or specifically, former chancellor Gordon Brown, who launched a £200billion pensions stealth tax raid in 1997 that wiped out private sector final salary schemes.
Private sector workers are seeing their pensions go from bad to worse worse, while picking up the tab for vastly superior public sector pensions. And Reeves is going to make it even worse.
