Letter: Where will envy lead?

March 22, 2002

Final-salary pension schemes are being phased out in the private sector to be replaced by money-purchase schemes that provide inferior benefits. It will be only a matter of time before the final-salary schemes in the public sector become a target of envious sniping.

This prompts the question of whether the aim of the Association of University Teachers to have the Universities Superannuation Scheme restructured to have service accrue in 1/60ths in place of 1/80ths may open up the subject of public-sector terminal-salary schemes and their future. In addition, the government has indicated its intention to press on with the introduction of more performance-related pay in universities.

This was first proposed in 1968 and the Treasury is keen on it. In 1968, as part of the Prices and Income Board report, it was proposed that 3 per cent of the salary bill be diverted to merit pay. If introduced on this basis, the next year it will be 4 per cent, and so on - with the result of top slicing this merit money off the total salary bill.

Thus reduced, the global amount of money for the national scales will be less, with the result that the national scales will have lower maxima. It is on these reduced maxima that final-salary pensions will be paid. Performance-related pay has not hitherto been pensionable and, if it was, it would have to be paid in the final years of service to qualify. Performance pay in the last year of service is most unlikely.

H. C. S. Ferguson
Pollockshields, Glasgow

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