Academics perform a vital role but all public pensions need reform

News Letter editorial
News Letter editorial

Academics are among the most respected professionals. They are highly educated and perform a vital function in any civilisation, deepening our understanding of the world and passing on that learning to a younger generation.

Like teachers, academics are not highly paid but get other rewards: job satisfaction, prestige and some research freedom.

Once they enjoyed also good vacations, but that has changed and typically lecturers have paid leave that is little or no better than other white collar public sector workers.

We always need to be vigilant about financial cuts that could chip away at the key contribution to knowledge and culture made by lecturers. But there is a logic to the pensions cuts that have prompted Belfast university staff to stage a walkout.

It will of course have been alarming to lecturers to find that they are facing a cut to their occupational pensions. But one of the biggest drains on the public finances of the UK, and all rich nations including America, is public sector pensions.

They have until recently been very generous, because they were drawn up in an age in which people typically retired at 65, died at 70. Now people often retire before 65, live to 90+.

Once it was not unusual for a public servant to retire on a pension determined by years of service, multiplied by 80ths. Someone who joined such a job at age 21 and retired at 65 with a final salary of £35,000 would get 44/80ths based on their 44 years of service: a pension of £19,250 index-linked for inflation for life. Plus a lump sum of £50,000+.

Such pensions are mostly gone, but even so they are nowhere near as low as young professionals in the private sector face. A person buying an annuity that is inflation proofed for life at age 65 will get around 3.5% return and would need a £550,000 pension fund to get the aforementioned annual £19,250.

Many young people of today will in fact struggle to buy pensions that pay more than £5,000 a year. If they knew that, they might be less likely to support strikes by older people whose generous pensions their taxes will help sustain.