Britain's 800,000 local-government workers are threatening to strike over the government's plan to raise their pension age from 60 to 65. Welcome to the real world, guys.

Most UK public-sector workers have unfunded pensions - instead of lifetime contributions being invested in order to fund future benefits, the pensions are simply paid out of taxation as we go along. But at the rate things are going, say actuaries at Watson Wyatt, this scheme will be £690,000,000,000 in the red within a decade. That's twice the national debt.

But the unions have a case. They negotiated to get generous pensions at age 60 - indeed, many civil-service pensions are index-linked, which is fabulously generous (and expensive). And now the government is trying to renege (just as it has done with tax concessions on private pension funds).

But cutting the pension age isn't the answer. A better solution is simply to issue government debt to cover the pension liabilities and then invest the cash on the world's investment markets. The boost from those investments would soon reduce the burden.

Even better, securitize the debt. Promise a private consortium what we're paying in taxes now, and tell them to raise the investment needed. In other words, take the government out of it and privatize public sector pensions. Then workers get the extra benefit of those investments, the government does not need to pay so much to maintain the same level of benefits, and the capital is all managed much better because it's being managed by professional private-sector investors. Simple!