Monday, 24 January 2011

Letter to the FT.

Your report on public sector pensions (Osborne faces dilemma over cap on 'fat cat' pension deals) states that the "funding gap" will increase from £4bn this year to £10bn by 2015. This gives a totally misleading picture of the changing cost of public sector pensions. As the schemes in question are not actually funded, the basis for the "funding gap" figure is completely arbitrary. If those lobbying against them got their way and they were abolished today then the "funding gap" would balloon from £4bn to about £27bn which only serves to highlight how unsuitable these figures are as a measure of the true cost of these commitments. The interim report from Lord Hutton's Commission cuts through much of the confusion surrounding estimates of these costs; his projections show that the net cost of the main schemes will fall from about 1.5% of GDP today to 1.1% of GDP by 2049-50.

Noel Lynch
Chair, London Green Party

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