Wednesday, February 11, 2009

Tax for nothing

I have no problem with the idea that public sector workers should pay more for their pensions. I'm a private sector worker and my private pension invested in the stock market was gutted when the market collapsed yet their pensions are still secure. Personally I have no idea what kind of a pension I will have when I retire but I'm in the fortunate position of having many years for my pension to recover. Many private sector workers like me would love to have a safe predictable pension like the public sector one so when the government proposed a pension levy to pay for the pension I thought it was a good idea, though obviously a painful one. I realise that for people in the public sector it sucks and really hurts to suddenly loose 7% of their income come March 1st but at the end of the day people with public sector pensions will probably be better off than many people with private pensions so it's short term pain for long term benefit.

However today I found out today that there is so much confusion around the new public sector pension levy that people with jobs linked to the public sector but with no pensions are still being charged the levy. Basically they are being taxed on an income they don't have. Odds are when the dust settles in a few months and when the government clarifies the levy those workers wont have to pay but its disgraceful that with 3 weeks to go before the levy comes into effect and with pay roll deadlines looming no one seems to know for certain how the levy works or who it applies to so workers are being told they are not entitled to a public sector pension but will have to pay the levy.

The levy should be shelved until the legislation around it is locked down and financial departments are given a couple of months to get their systems and procedures ready for it and workers are given time to prepare for the drop in their take home pay.

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