A cleverly designed package of reforms will still arouse the unions’ ire

The current pension system is a disaster for the occupational mobility of labor.

Many people feel trapped in civil service rolls by the implications that a career change would have on pension rights.

Many people feel forced to retire at an arbitrary age, when some may wish to leave sooner, and many may feel healthy enough to continue working at reduced hours for decades.

Many private sector employees have lost their accrued pension rights, with only partial compensation, as their former employer went bust.

Personal freedom and security demands three things:
1) All pension funds should be defined contribution, such that accrued/future pension rights are entirely unaffected by changing employer (whether public or private).
2) Pension funds should not be held by employers, but should be diversified.
3) The employee should have the right to decide when to begin drawing on the fund (with a minimum age, subject to exceptions for sickness/ disability).

Just focusing on public sector pension is a myopic view. Unable to match private sector salaries, most public agencies emphasize "excellent benefits". Thus, it's pay me now or pay me later.

Already, the public sector is considered to be attracting only those who can't make it in the private sector. No wonder, governments are seen as incompetent. After all, if you pay peanuts, you only attract monkeys.

The haves, paid off politicians, greedy financiers, haters of the middle class, will not be satisfied until the have nots, protectors of life & property, teachers of the next generation, cleaners of public toilets, all live in poverty while working and in retirement as well, too.

Already the poverty rate among older Americans could be nearly twice as high as the traditional 10 percent level, according to a revision of a formula for medical costs and other variations in the cost of living.

The National Academy of Science's new formula would put the poverty rate for Americans 65 and over at 18.6 percent, or 6.8 million people, compared with 9.7 percent, or 3.6 million people, under the present measure. The original government formula, created in 1955, doesn't take account of rising costs of medical care and other factors. The situation is already much worse than people realize. The mean, unnecessary actions described in this article would make the situation even more dire.

See "Senior Poverty Rate Soars" at http://www.timesunion.com/news/article/Senior-poverty-rate-soars-new-stu....

My brother is a serving police officer with 28 years' service. In 2 years, he can retire on an indexed pension for life. He will be aged 55. He pays into a pension scheme but this only funds the pensions of the already retired. He will rely on future serving officers doing the same to fund his pension, topped up by the taxpayer. He thinks changing the system would be outrageous and, viewed from his perspective, this is understandable. On the other hand, he reluctantly accepts that other people may have a point in being outraged by a scheme which, created decades ago, was designed to support policemen who retired aged 55 and died aged 64, whereas may live into his nineties and hence be on a pension for longer than he has served as a police officer. Take longevity to its logical conclusion and we'll all end up being police officers to support the ones who have retired. Nonetheless, he asks the question - if you dial 999 (or 911 in the USA), do you want a 65-year old policeman turning up? He has a point.... the answer has to involve deferring the start date of pensions to something more realistic and not just for new scheme members.

Pension reform is fiscally prudent from Greece to France to Britain to America. But for it to become morally just and politically acceptable, the pain must be shared. After all, public purses emptied for many reasons, like massive losses to the financial industry. And pension obligations are legal contracts and compensation for services rendered, and should be the last to suffer.

In other words, military contractors, corporate welfare recipients, bankers, bondholders, tax-evaders and other high-net worth individuals should be in the barber's chair getting their haircuts just like everybody else. The "unions' ire" will rapidly cool as long as justice is served equitably.

First they went for state pensions and earnings related pensions, then personal pensions mis-selling,then courtesy of Mr Brown they trashed private sector pensions and now they're going for the only decent pensions left, those in the public sector.

Just as US firms can't support their chronically expensive health care insurance, so private firms generally should be releaved of the burden of administering pensions, the government should step in as the spender of last resort capable of spending whatever money is needed up to the limit of mass unemployed labour and capital resources.

Increasing contributions, pushing back retirement age, cutting pension payouts simply destroy money/national demand and so perpetuate the failed dysfunctional state lamestream media economic policies of the gold/fixed currency standard of the Depressions pre-Keyensianism and the last 36 years mass unemployment.

Check out Modern Monetary Theory and the Job Guarantee for more details on how modern sovereign floating flexible monopoly currency economies really work rather than the la la pixie at the end of the garden fantasy dystopian debt deflation theo-economics, the Euro being the most idiotic/lunatic example currently.

One can understand that certain occupations are physically (or perhaps emotionally) demanding and that people cannot reasonably continue in them up to the age of 65 while still performing well.
But does that mean that such people should then be able to retire at say 55? I don't think so! Surely it can't be beyond the wit of man (or perhaps, of woman ...) to devise a "rotation" of job-types so that those who are say 50 and experienced can move to less physically-demanding occupations that can still benefit from some of the experience they have acquired.

The 1/4 of 'workers' in the public sector have been robbing blind the 3/4 who create the wealth and pay 'real' tax.

The 3/4 might be slightly better off if any new, less lavish rules are put in place to curtail public sector pensions.

Note also the subtle spin on the future 'pain' of pensions based average earning for the public sector. It is just kidology. ‘Average salary’ pensions are still egregious mathematical nonsense.

Public sector pensions will only be fair for the whole country when they bear a direct relation to investment returns. Cash in, cash out. Importantly, investment returns at open market rates which are accessible to all. And forget the ‘index linked con trick’.

Google what size of pension a £1 million pension pot would buy and then ask how long it would take a person to save that amount or even half of it.

Come the revolution!

@johnniejohnston

Yeah those bloody teachers, nurses and firemen, robbing us blind! It's nothing short of theft, let's divide the country up into 60 million pieces and all pay for our own personal security guard.

There is a lack of fairness, let alone a failure to be radical.ALL pensions should be linked to funds ("saving") which invest the contributions, not to unfunded promises. You should be able to retire when you like, and live off your own pension account. Britain is way behind the reforms achieved by Chile and Colombia. Otherwise pensions ( always leaving a basic safety net for the very poor, indigenous people, mentally ill, etc)will consume the lion's share of "state" ( i.e. our children's) expenditure and government borrowing.The difference between "state" pensions and private should disappear immediately and the angry, illogical diatribes of police and nurses must end.

The nonsense of unfunded benefits that runs throughout UK public finances has to stop. To get it to stop, we need to tackle the greed of today's and tomorrow's beneficiaries and the spineless politicians and civil servants who allegedly govern and administer on our behalf.
Of course, a rational and sane media that deals with facts rather than fiction would help ... thanks Economist for trying but can you work harder on your colleagues please?

The idea that someone could collect upwards of 50-75% of their highest salary for 25+ years is truly ludicrous. If you are healthy enough to live another 25 years beyond work than you have not worked enough. Transitional work and supplemental working schemes can be implemented to ease or reinforce savings. There should be a 15-year max cap. People must plan for their retirement by putting their life in order before ending their career and through that choose when they want to end their career. Kids are gone and mortgage is paid. It is time to not play the percentage game or simply try to acquire as many benefits as possible, but step back and review the situation in more absolutist terms. What do people really deserve? What range of living standards is reasonable to be supported on a tax base? Retirement is not the time for excessive lifestyles and exotic try-before-you-die experiences - you do that during your work years. Lets get sensible - lets get financially sustainable.

More whining from the civil service, and public sector workers.
The private sector has already gone through this, as have charities!

This is the right decision, time to cut the chaff and cut expense.

Public UK pensions are, in effect, funded from debt. The UK has way too much debt. It needs to cut its huge debt.

Indignity and poverty for all!

I cling to my DB but know my Private sector employer has designs to keep the money in the pot for themselves and whittle away at it.

There will come a reckoning when the numbers of people badly cared for in their old age start to vote for more extreme measure to protect there interests.

The privatised rotten finance-market-based so-called "pension system" is an utter disaster - actually, it ceased to exist in the current and ongoing financial crisis of 2007 ff. Because who saved those banks and insurance companies with billions and trillions of euros, pounds and dollars? The very states who - according to The Ideologist - allegedly cannot pay their elders a decent living at old age. Small wonder after all the resources have been siphoned off by a small and greedy class at the financial top...

But The Ideologist tries - quite successfully - to sell fairy-tales to the masses. "Defined contribution" and public sector pension "reform" mean nothing but even more poverty for ever larger masses of people, or "unfair payment", or redistribution of wealth from the have-nots to the haves. Or you can simply call it "re-feudalising our societies", be it in Thatcherite UK or in the Federal Republic of Merkel-country.

However, the economic truth is that feudal societies are economically unsuccessful and short-lived. Look at what's happening in those Arab countries...

Why do all these western democracies only look toward the wealth of the common man? I'm sure that all these austerity measures would not be necessary if they just taxed the richest 2% in britain(for that matter anywhere)5% more than they normally would. The elimination of someone's benefits is never worth letting a multi millionaire keep an extra $50,000. Moving the retirement age to 65 will not be met passively but rather in a manner similar to that of France last year. Furthermore why is the public sector the only place that always has to suffer the most in times of economic crisis? Some parts of the private sector reap huge profits every year. Taxing them would solve the deficit crisis, yet wouldn't cut too deeply into their pockets.

So, what were the schemes of the 1980s that were alluded to in the last sentence? Who instituted the current unaffordable schemes? I wish the article gave more historical information.

Why are similar battles over benefits taking place in the US, UK, and elsewhere at the same time? It really is a consequence of the interest rate curve. As rates peaked in 1981 from the inflation of the 1970s, and then headed steadily downward from 1982 to 2008, economic growth was fueled by taking on ever more government debt. As the interest rate drops, the service cost of debt can stay constant even as the debt load soars. And this is exactly what happened from 1982 to 2007 --- until we hit the zero bound after the 2008 crash. The zero bound is devastating to any pension scheme since the return on investment becomes almost zero. For private or funded schemes nearly every dollar ever to be extracted must be put in decades earlier. For government schemes that pay out of current tax revenue, ZIRP is equally devastating, since near zero rates of economic growth produce near zero tax revenue growth even though pension obligations soar due to indexation. And the problem does not go away since real cost of living inflation will always be higher than aggregate investment returns.