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Pensions perk will be hard to hang on to

T S Eliot once observed that, though he had never worked in a coal or uranium mine or on a herring trawler, he knew from experience that working in a bank was a rest cure compared to teaching in a school.

Since Eliot's day, banks as well as schools have become more stressful, but I do not doubt that teachers have as strong a claim as firefighters, police officers and nurses to early retirement. All these jobs make demands that are hard to sustain for as long as 40 years. It is understandable that the unions object to raising the teachers' retirement age to 65.

But teachers, like many public-sector workers, will find it more and more difficult to defend their retirement arrangements. If you wonder why people keep going on strike on the Continent - stopping trains and shutting schools - it is for exactly this reason. Governments in France, Italy and Austria, terrified of pension liabilities they have incurred for public-sector workers, propose to raise retirement ages, increase pension contributions and bring benefits into line with the private sector.

The British position is not, from the Exchequer's point of view, as serious. But it is an old suburban joke that, for 40 years, the civil servant has the smallest car in the road and then, after retirement, has the largest.

The contrast between public and private-sector pensions is growing.

Hundreds of companies have closed pension schemes which operated as the teachers' scheme does, paying out a fixed percentage of final salary.

Instead, they are starting money-purchase schemes whereby what you get at retirement depends on what you pay in and how well it does on the stock market.

Private pension holders are taking a double hit. The falling stock market leaves them with smaller sums than they expected. Declining investment returns and greater life expectancy mean that each pound in the fund buys less in the way of annual retirement income, purchased through an annuity.

If you now envy your private-sector neighbour's holidays in posh Tuscany villas, expect the roles to be reversed when you are both in your 70s. But I would not gloat: he will have been paying for your retirement comforts through his taxes.

The value of public-sector pensions is sometimes startling. Even before the new pay deal, a typical firefighter after 30 years' service would get an inflation-protected income of pound;16,000 a year. It would cost about pound;500,000 to buy a similar annuity in the private sector for a 50-year-old man.

I was surprised the Government did not make more of this when the firefighters went on strike. I am also surprised it does not make more of pension entitlements when it is trying to improve recruitment in teaching, nursing, policing and other public-sector occupations.

I guess there are two reasons. First, neither civil servants nor politicians want to draw attention to schemes from which they themselves benefit (the MPs' scheme is, predictably, the most generous of all).

Second, to offer a fat pension as a recruitment incentive is against the spirit of the age: new Labour wants to focus on exciting new tests and targets, not on the prospect of a comfortable old age after 35 years'


The growth of early public-sector retirement, combined with increased lifespan, means that many people will spend as long drawing a pension as they do a salary. The obvious solutions are to make teaching less stressful and to value older teachers for their experience. I see few signs of anybody preparing for such a culture change.

Peter Wilby is editor of the "New Statesman"

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