Local government chief calls for retirement at 70
The chief executive of one of the biggest public-sector pension funds has backed Lord Turner's call for the state retirement age to be raised to 70, to help keep public pensions affordable as society ages.
Mike Taylor, chief executive of the £3.2bn (€3.5bn) London Pensions Fund Authority, addressed the National Association of Pension Funds' annual conference in Manchester this morning, telling them that rising life expectancy was the biggest threat to the sustainability of UK public sector workers' generous pensions; and hence to the taxpayer.
He said: "A phased increase in the retirement age towards 70 would, by itself, go a long way towards ensuring long term sustainability."
Taylor also suggested other changes to make public-sector schemes more affordable, such as moving from final-salary based benefits to ones calculated on career-average earnings. He also backed conditional indexation, which amounts to allowing pensions to be cut if solvency levels run into trouble.
Since public-sector pensions still generally take the form of generous defined-benefit arrangements, they have become something of a political battleground in recent years, as their counterparts in the private-sector have closed down.
Newspapers such as the Daily Mail have led the charge in highlighting this so-called 'pensions envy'.
Taylor said he was "not here to defend the status quo" and that "the need for change in public sector pensions is undeniable". But he also said that no politician would ever stand up and say "vote for me, because I will abolish pensions for doctors, nurses and teachers".
He claimed most local-government pensions are very far from being 'gold-plated', since the average pensioner receives only around £4,000 a year – about a third of the minimum wage.
– Write to: mcobley@efinancialnews.com
del.icio.us
Digg
Newsvine
reddit
StumbleUpon