However, this got me thinking about the issue of lifelong learning and mature students. I read an excellent piece from LibDem blogger, Richard Morris which prompted my thinking.  Richard picked up on the fact that the Open University students studying for an equivalent or lower level degree to one they already hold will have to pay their fees up front from next year (The TES describes the issue).  He argued that many students will now be priced out of the system which will have a significant effect on the economy.  Furthermore he made the point that while other aspects of education rightly took priority this was an important issue and made a plea for the LibDems to address it as a policy issue.

“… Where there is money, we have chosen as a party to direct it towards the youngest in society (in England and Wales), through initiatives like the pupil premium and free nursery places, where we believe tight funds can get the best results and have the most profound impact. I agree with this approach.

But I cannot pretend that the knock on effect of this sits easily with me. As Liberals we are philosophically wedded to the notion of giving every individual the opportunity to make more of their lives – and the best chance of delivering that must come through lifelong learning. A quick Google search indicates we have had very little to say on this subject since May last year – which is surprising….”

I absolutely agree with him.  Moreover, I think this is a terribly important policy area with patterns of work becoming more disjointed over peoples’ lifetimes.

With the rise of the contract worker and many more people finding themselves working for a large company for a period of time then choosing – or being forced – to change direction, the need for workers in the 21st century to be adaptable is very high.  Patterns of work are changing and the days of the paternalistic large organisation are gone.  Large companies don’t do social welfare anymore – just look at pensions. Nor do they provide a culture to train and nurture a worker throughout life any more.

Companies will in the future employ a small group of uber managers and a core of key workers.  Other tasks will be performed by outsourcing, staff on short term contracts or professional contractors.  Workers therefore need to develop themselves and build new skills and knowledge to match a changing economy and changing technology – and each of us is responsible for our own development.

All this means that in building a modern, adaptable, knowledge economy, a coherent policy for adult learning is as important as education for the young.  Some of the young will need it too if they struggle to get careers off the ground in their early 20s in the current environment!

This is a key issue for developing Scotland’s economy and society in the future along with initiatives like Investors in People to encourage companies to invest in their staff for business success and to equip their employees for the modern world.

It was a good system – if you worked for a large organisation.  By the end of the 1960s 53% of the workforce was in an occupational pension scheme.

However, in 1961 life expectancy for men was 68 years and just under 72 years for women.   Today life expectancy in the UK is 77.9 for men and 82 for women – and growing every year.

With retirement at 65, pension schemes could expect to provide retirement incomes for about 5 years, now with retirement ages at 60 schemes can expect to provide incomes for closer to 20 years!!

The fact that we are living longer is making pensions more and more expensive.  There are other factors that make them too expensive such as salary growth and changing assumptions on long term inflation and investment growth, but increasing life expectancy is  the root of the problem.

Private sector Final Salary pension schemes in the UK are therefore dead!  They have been for the last 5 – 10 years.  Companies can no longer afford them or bear benefits that are not only guaranteed but also an open ended commitment.  They are no longer commercially tenable and are a risk to the business.  That is why they are dead.

The simple fact is we will probably all have to spend a little less, save a little more and work a little longer to fund our retirements in future.

However, Final Salary pensions continue in the public sector – unfunded by investment and paid for by general taxation.   Yes, their projected costs are currently set to fall with CPI replacing RPI indexation and with workers making contributions.  They are still hugely expensive.

Pensions are in fact deferred pay.  Because of the pensions position, it often now pays far more to work for the public sector than for the private sector – which is different to the common perception.  This means the wider population are being asked to fund pensions which are far more generous than anything available to them.  This means funding something akin to our entire defence spending budget.    And no economy is going to last for very long where it becomes significantly more attractive to work for the public sector than for the private sector!

Of course the state can afford to pay whatever it wants for public sector pensions if the political will is there.  However, the true costs of final salary schemes are unsustainable to fund – as the private sector has discovered.  Employers can no longer underwrite these unquantifiable, open-ended commitments.  Neither can the state or future tax payers – change is unavoidable.

What to do?

It seems to me that the real issue here is that our occupational pension infra-structure is broken – for both private and public sectors.

You see it is worse!  New legislation aimed at widening pension provision just means a levelling down right across the private sector of what pensions are now provided!

The government is introducing something known as “auto enrolment” so that everyone in a job will have a modest occupational pension.  This will help a little with people who have no pension at all.  However, it is very modest provision.

With jobs for life gone and guaranteed final salary schemes for life also gone, companies don’t do social welfare anymore like they used to in the post war period.  Unfortunately, many employers have been replacing old generous schemes with much less generous ‘money-purchase’ schemes with no guarantees for the employee.  The new auto enrolment provisions, while welcome for some, is just accelerating this levelling down affect.

I’m told both the USA and Australia have been much more effective than the British at replacing old unsustainable pension schemes with new money purchase provision.

That is why I think the public sector unions have a real opportunity here.  They need to be constructive.  Accept the old pensions are unsustainable and come up with some good alternatives.  If they are sustainable and something that provides decent pensions takes its place then market forces in the labour market could lead the way to improvements in the private sector as well.

The public sector could lead the way to a new pensions protocol which is desparately needed.  Because we all need to save more for our retirements and we all need something that is much more sustainable than we have had in the past!