The publication this week of the Public Sector Pension Commission’s report on the cost to the taxpayer of keeping Britain’s retired state employees has sparked a flurry of activity amongst the unions.

 

The TUC’s Nigel Stanley produced a series of rebuttals to the Commission’s findings on the Touchstone blog.

 

Today, the UNISON union offered another critique of the report, claiming that private sector firms were responsible for any pensions crisis.

 

Building on our previous research in this area, Full Fact attempted to untangle another complex web of claim and counter-claim in this hotly debated area.

 

 

In a statement in response to the Public Sector Pay Commission’s report, UNISON General Secretary Dave Prentis asserted that: “The Government’s own figures show that two-thirds of employers don’t provide a contribution to a pension scheme for their workers.”

 

This, he claimed, meant the taxpayer with was burdened with a hefty additional bill:

 

“Every time a private sector employer lets down one of their workers on pensions, that worker will have to be funded by the state for the minimum income guarantee. That means £16 a week extra for every single worker where the employer has got out of providing them with a decent pension.”

 

So do these points stand up to closer scrutiny, or are they candidates for early retirement?

 

 

Full Fact contacted UNISON for further details on their claims, and they directed us to a Treasury news release last month as the source for their calculation.

 

A Department for Work and Pensions spokesperson also confirmed that the figure cited by Mr Prentis was correct.

 

However there is some dispute over how useful this figure actually is.

 

Corin Taylor, Secretary at the Public Sector Pension Commission, told Full Fact that the proportion of employees contributing to pension schemes was far more revealing than the proportion of employers.

 

“The two thirds of employers figure really is disingenuous,” he said, pointing to Department for Business, Innovation and Skills statistics showing a skewed distribution of employees by company size.

 

“There are around 1.2 million private sector employers in the UK. 800,000, or two thirds, of these employ less than 5 people. These 800,000 employers employ 1.8 million employees, only 10 per cent of the 18.5 million private sector employees. Of course, some of these small employers will offer pensions, and some of the larger employers won’t, but UNISON are really twisting the facts here,” Mr Corin argued.

 

Data supplied by the Government’s 2008 Occupational Pension Schemes Survey certainly seems to support this contention, as the chart below demonstrates:

Whereas large-scale employer schemes with over 10,000 members hold over 2 million pension accounts, firms with less than 100 employees had approximately 100,000 employees enrolled in schemes.

 

Furthermore, Full Fact encountered objections to the idea that pension shortcomings in the private sector were costing the taxpayer.

 

Whilst accepting that improvement was needed in employer contributions to private sector pension schemes, Steve Cook at the Confederation of British Industry (CBI) told Full Fact that such measures were already being taken.

 

“The Turner reforms instituted under the previous Government were specifically designed to limit public liability for private sector pensions,” he said.

 

“These sorts of claims [made by UNISON] have already been addressed,” he added.

 

Amongst the recommendations made by Lord Turner in his 2005 report was the creation of NEST (National Employment Savings Trust), to which private sector workers not enrolled in a pension scheme would be subscribed.

 

These changes – which are being introduced on a rolling basis – mean that the discrepancies between the state pension and the minimum income guarantee mentioned by UNISON  may become redundant in the coming years.

 

The concern was echoed by Corin Taylor, who said: “It looks like [UNISON] are carping on about a problem that will soon be solved. The one caveat to that is that the new Government is reviewing NEST, but, for now, auto-enrolment will come in over the next few years.”

 

Full Fact put these points to UNISON, and Head of Pensions Glyn Jenkins, responded:

 

“For the CBI to say that our estimates will be superseded by NEST is legitimate, however to suggest that NEST will eradicate the underlying problem is wrong.”

 

“NEST is a great start, but we’re not bringing it in quickly enough, and too many low-paid workers will opt out, so in itself it is not fit for purpose.

 

“We tried to calculate our figures fairly rather than using exaggerated examples which could have produced an even larger shortfall. They are models, but we could have drawn the same or worse conclusions using NEST. The CBI are being dishonest if they say otherwise; it’s a cuckoo in the NEST,” he added.

 

 

As Full Fact have repeatedly found, the issue of pensions is a complex one which can legitimately sustain many diverse opinions. The CBI and Public Sector Pay Commission are justified in questioning the use by UNISON of some of their figures.

 

By noting the number of employers contributing to pension schemes rather than employees benefiting from them, UNISON is perhaps using the statistics that are most advantageous to their wider point. Similarly, their calculations on the gap between the average state pension and the minimum income guarantee may rest on time-sensitive information.

 

But this does not necessarily undermine the force of UNISON’s observation. Indeed the CBI happily conceded to Full Fact the existence of a problem in encouraging private companies to enrol their employees in pension schemes; particularly when it comes to small and medium-sized enterprises.

 

Likewise, it is fair for UNISON to point to difficulties in projecting figures for a NEST scheme that hasn’t yet been implemented.

This therefore seems to be a debate which would benefit from greater context on both sides of the argument.