November 02, 2011 Tom Murray

It is upsetting for everyone to see public sector workers driven onto the streets in an attempt to preserve the meagre lifestyle that they have been promised after a lifetime’s devoted service on behalf of Her Majesty. The despair of the workers at the proposed delay in giving them their pensions and the significant reduction in value of those pensions can only cause distress to any decent citizen observing the situation.

I think it is clear to everyone that a solution, which would satisfy the needs of this deserving sector, would be a great boon and welcomed across the kingdom.

Thus it was with a glimmering of hope that I read in Tuesday’s Financial Times that some firms in the private sector were bucking the trend of increasing life expectancy assumptions used in their pension schemes. Ignoring current projection showing that average life expectancy is increasing at a rate of 3 months per year, almost half the firms in the 188 surveyed have maintained their existing life expectancy estimates and five firms, all member of the FTSE 100, have actually cut their longevity estimates by up to one and a half years.

Of course, this is based on strict actuarial advice and the fact that it increases the solvency of their pension schemes is just a happy by-product, but maybe it points the way towards resolving the current unrest among Her Majesty’s servants about the mooted changes to their pensions.

If we can actually lower their life expectancy, then there is no reason to have to reduce the pension levels at all. Simple approaches, such as handing over the catering for staff canteens to Bernard Matthews, making smoking breaks compulsory for all staff and allowing a double allowance in terms of the alcohol / blood limits for all HM’s loyal staff could go a long way towards ensuring that those who do make it through to retirement could keep their current retirement benefit levels.

Of course there would be some costs involved. Reinforced seats in council offices across the kingdom would be required and those who need to travel to Brussels to get instructions from HQ might be required to book two seats, but surely these costs would be trivial in comparison to the savings to be made by the rapid reduction in pension years that would no longer have to be financed by the taxpayer.

Therefore, perhaps the government and unions need to take an example from the private sector. If reducing life expectancy is the only real solution, then the sooner we start get started arranging it the better. Rome wasn’t built in a day and neither are clogged arteries.

As a private sector worker, I have no agenda of my own in advancing this proposal, not being in a position to draw down a tax-paid, index-linked pension myself. However if we want to keep paying our public sector the pension levels that they so fully deserve, we have to be generous in finding a way forward.

Tom Murray

Pensions, superannuation, Life and Pensions, Public sector pensions, HMRC, NEST, Ageing population, Actuaries, Life & Pensions, news, pension time-bomb

Tom Murray

Tom is Head of Product Strategy at Exaxe with primary responsibility of overseeing product direction. Tom has extensive experience of managing web based insurance software from conceptual design through to commercial release and beyond. Tom has been leading the development of the Exaxe Internet insurance architecture since August 1999.

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