Wednesday, 29 June 2011

When 3% Is Actually 100%!

I was watching the news today, and heard once again it stated that Civil Service workers were to face a 3% increase in their Pension contributions. On top of the fact, that many of them are to lose their jobs, face having to work longer until they can get their Pension, and will get smaller pensions due to the switch to life time avergae rather than Final Salary, and the switch from indexing to CPI rather than RPI, this might be bad enough. But, the figure does not seem to match with the figures of 50% increases and more that the unions have been describing.

I had a look at the PCS website to try to find out the details, but it wasn't easy to see. They do point out that the Government's proposals are to increase contributions by 3% of salary. But, of course, this is far from the same thing as a 3% increase in contributions. For it to be a 3% increase in contributions, contributions would already have to be equal to 100% of salary!!! It is an increase of 3% points, not 3%.

Therefore, if currently, workers are contributing 6% of their salary to Pension, then a further 3% is indeed equal to a 50% increase in contributions. If contributions are currently 3%, then it would be a 100% increase in contributions. I think the unions ought to make sure that this information is made clear, and put out more widely to the Public, and that when the News channels misrepresent the real position they immediately correct it, or the Government will begin to win the propaganda battle.

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