Public sector pensions 'still a good deal'
Treasury figures show public sector staff who get a pension worth two thirds of their average salary contribute less than 10% of their pay towards it, so just what do they continue to grumble about?
New treasury analysis has found that a private sector worker would have to build up a six-figure pension pot, contributing up to a third of their salary every month, to get the same benefit as their public sector counterpart.
According to the figures, an NHS hospital porter on little over £14,000 for example, will receive more money in retirement than millions of private sector workers on much higher salaries.
Ministers want public sector workers to work beyond the age of 60, in line with those in the private sector. They say contributions should rise by 3.2 percentage points – meaning teachers will pay 9.2% and nurses 8.2%.
The new figures shake the unions' argument that the proposed reforms give members a raw deal. The Treasury claims millions of public sector staff would actually receive better pensions after the proposed changes than before.
The Daily Mail reports that Ros Altmann, director general of over-50s group Saga and a former Treasury pensions adviser, said: "Many public sector workers fail to recognise what a fantastic deal they have had over the years – and they haven't paid for it.
"Even after the reform of their pensions, they will still be extremely expensive – and taxpayers will still have to contribute to make up the gap."
Private pension plans
The treasury calculations, published yesterday, show that someone seeking a similar level of public pension from a private plan would have to contribute a much greater percentage of their salary – about a third. The Treasury source said it was only high-paid public-sector staff who would see the level of their pensions fall.
Public sector pensions will continue to be more generous than private sector ones because employers such as councils and NHS trusts – funded by taxpayers – will still contribute a large percentage. In the private sector, the contribution from employers and employees combined adds up to around 10% of salary. In the public sector, the combined contribution is more than twice this.
Tom McPhail, of financial advisers Hargreaves Lansdown, told the newspaper: "Even after the cuts, these public sector pensions would be a generous luxury for private sector workers, millions of whom don't even have a work pension.
"While understandably unpopular among public sector workers, they should remember they will still be enjoying a very good deal."