IFS shoddy pensions report

31 January 2012

IFS REPORT ON PUBLIC SECTOR PENSIONS CHANGES IS A SHODDY PIECES OF WORK AND MISREPRESENTS THE LOSSES TO WORKERS SAYS GMB

GMB CEC on February 14 is likely to refer the final proposals to GMB members and negative impact of the changes may be why they may well say 'no' and instead opt for further action says union

GMB, the union for public sector workers, commented on a report from Institute of Fiscal Studies (IFS) on the savings to taxpayer from changes to public sector pension schemes. See notes to editors for GMB analysis of main points.

Brian Strutton GMB National Secretary for Public Services said "The IFS press release and the report are shoddy pieces of work by IFS.

Of course the taxpayer gains at the expense of public sector workers – that is why millions went on strike. The real question is why has the IFS chosen to misrepresent the facts in this highly political way.

Only a week ago the PM said at Davos that public sector pension reform will save 50% of the costs while the IFS report and release says the savings are zero.

What is clear is that future costs are pure guesswork but what is real is the impact on public sector workers - higher contributions, lower benefits and later retirement.

The GMB Central Executive Council (CEC) meets on February 14 to consider the outcome of the talks. The CEC is likely to refer the final proposals to GMB members. The negative impact on them may be why they may well say 'no' and instead opt for further action.

Under questioning in the media IFS backtracked on the inaccurate conclusions in the report."

Notes:

GMB assessment of points in IFS report.

1. The IFS advance press release of yesterday says clearly 'no savings' but their report issued this morning is somewhat different.

2. IFS essentially says the career average/accrual/revaluation changes versus the existing final salary 1/60th arrangement is broadly neutral. That's true and indeed was announced as such by Danny Alexander on 2 November.

3. IFS concedes the CPI change as a saving. Tens of £ billions IFS conceded in media.

4. IFS mentions the contribution increase as a saving but doesn't factor this into its conclusions.

5. IFS doesn't recognise a later retirement age as a saving.

6. So IFS says if you ignore CPI savings, contribution savings, retirement age savings and only focus on the career average/final salary comparison then there is no saving. This is not proper analysis and seems designed to give a deliberately misleading impression. Commentators are right to ask “has the IFS gone political?”

7. IFS says the lower paid actually come out with a higher pension. This repeats the assertion made before by government and only applies if you either count longer service to a retirement age of 68 (which is what government does) or you skew the assumptions about salary growth to make career average revaluation look better than final salary (which is what IFS does). A true like for like comparison will always come out worse.

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