Dec 16 2019

Introduction

The senior civil servants who lead Whitehall government departments can look forward to some of the most generous retirement packages in the public sector, with a £24.5 million pension pot between them in 2018-19. This is a 22.8 per cent increase from 2017-18, when the pot was just below £20 million.

Compared to the private sector, where more than four fifths of the workforce is employed, civil servants can look forward to a particularly comfortable retirement, with some schemes allowing the mandarin class to take their pension as early as 55.

Many of the top civil servants currently have pension pots well in excess of the lifetime allowance, a situation also reflected in departments’ 2017-18 accounts. Though this has increased in line with inflation this year to £1.06 million, it was slashed repeatedly by then chancellor George Osborne, disadvantaging millions who prioritised personal fiscal prudence over reliance on other taxpayers. Taking income and lump sums in excess of the lifetime allowance incurs a 25 per cent and 55 per cent charge respectively. Whilst those in the private sector have had to bear the brunt of these changes, many public sector workers have been unaffected.

Regular promotion, salary rises and job security should be recompense enough for a career in the civil service. To obtain decent affordable pensions, all new civil servants should join on the basis of a defined contribution pension, and be funded, rather than unfunded. Unfunded pension schemes do not have assets set aside to cover the costs of employee benefits, and instead rely on future taxation.

Private sector taxpayers on less generous schemes should not be left subsiding unfunded generosity afforded to their public sector counterparts.

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Key findings

The 23 individuals who run UK government departments had an average pension pot of £1,065,522 in 2018-19. 13 of these had pension pots worth more than £1 million.
The mandarin with the largest pension pot was Simon McDonald, head of the Foreign and Commonwealth Office. His pension pot is currently valued at £2,055,000.
The average pension upon retirement will be £57,717 per annum. This is 94 per cent more than the average gross UK salary in 2018 (£29,817).
15 of the departmental heads will receive a lump sum upon retirement. The average value of this is £148,167.
The top mandarins with the largest annual pensions are Simon McDonald, Clare Moriarty, and Mark Sedwill, the heads of the Foreign Office, Department for Exiting the European Union and Cabinet Secretary respectively. They will have a pension of at least £85,000 to £90,000 a year.