Ordinary workers paying as much into public sector pensions as their own

August 07, 2007 5:20 PM

Explosive new figures have just been released by the Liberal Democrats. They show that for every £1 a private sector worker contributes to their pension they pay 91p in tax towards a public sector worker’s pension.


The research shows that private sector workers paid about £12.8 billion a year towards public sector pensions, through taxes, while putting £14 billion aside for their own retirement schemes. The £12.8 billion figure was arrived at by taking 80 per cent (the proportion of private sector workers) of the £16.1 billion paid out in employer contributions, paid for by the taxpayer, to public sector workers.


Increasing presure is rightly being put upon the generosity of public sector pensions, at a time when the occupational pensions of most other employees are being cut back to meet the demands of an ageing society. A public sector retirement age of 60 for all existing workers together with gold plated final salary pension schemes no longer has any justification.  The final bill for unfunded public sector pension schemes will eventually be £1 trillion.


In 2005 the Government attempted to reform public sector pensions; the public sector unions threatened strikes; the Government backed down, with the result that all existing public sector employees, including those in their 20s, would still retire at 60, while all employees would continue to enjoy final salary pensions, which are fast disappearing in the private sector. A fresh attempt at reform is urgently needed. The country cannot be held to ransom over this vital issue any longer.

Explosive new figures have just been released by the Liberal Democrats. They show that for every £1 a private sector worker contributes to their pension they pay 91p in tax towards a public sector worker’s pension.


The research shows that private sector workers paid about £12.8 billion a year towards public sector pensions, through taxes, while putting £14 billion aside for their own retirement schemes. The £12.8 billion figure was arrived at by taking 80 per cent (the proportion of private sector workers) of the £16.1 billion paid out in employer contributions, paid for by the taxpayer, to public sector workers.


Increasing presure is rightly being put upon the generosity of public sector pensions, at a time when the occupational pensions of most other employees are being cut back to meet the demands of an ageing society. A public sector retirement age of 60 for all existing workers together with gold plated final salary pension schemes no longer has any justification.  The final bill for unfunded public sector pension schemes will eventually be £1 trillion.


In 2005 the Government attempted to reform public sector pensions; the public sector unions threatened strikes; the Government backed down, with the result that all existing public sector employees, including those in their 20s, would still retire at 60, while all employees would continue to enjoy final salary pensions, which are fast disappearing in the private sector. A fresh attempt at reform is urgently needed. The country cannot be held to ransom over this vital issue any longer.

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