Posted by admin | Filed under Welfare & Pensions
On Tuesday, Richard held a Westminster Hall debate urging the government to invest in the future of our public sector pensions. Currently, there is no money put aside to fund payments to our public sector pensioners. Instead, the money comes out of general taxation.
A future fund is a way to remove the burden of paying for public sector pensions from current taxpayers so that it comes from the proceeds from an investment fund instead.
Given that our public sector pension liability has risen to £1.1 trillion, Richard argued that it would be best for the government to start putting aside money now so that in future there is a specific fund for public sector pensions.
During the debate, Richard outlined three main reasons why the Government should consider creating a future fund: “The first is that it promotes intergenerational fairness, and reinforces the Government’s view about long-term thinking for the security of our economy. Secondly, it offers an opportunity to rebalance the structure of earnings, to restore emphasis on pension provision—deferred income—rather than on immediate income and, thirdly, it enables the creation of a UK sovereign wealth fund, to stimulate investment in long-term projects.”
“Let us remind ourselves that the current level of public sector debt—the debt that we all talk about and are so worried about—is £1 trillion. The public sector pensions liability, which we do not often talk about, is £1.1 trillion. All those obligations have to be paid by future generations and, as we have so significantly ramped up this first amount of debt, should we not look for ways to reduce the unfunded part of public sector pensions for future taxpayers? A future fund would, over time, eliminate that burden from taxpayers and transfer it to the returns that would be generated from a funded pension scheme.”
To see all of Richard’s speech and to read the Minister’s response, please visit the Official Record of the House of Commons (Hansard) here