Some of Britain’s public sector workers had threatened to go on strike during the current Olympic Games in London over demands that they have to pay more into their pensions, they work longer hours and are forced to take pensions based on an average, rather than final, salary.
But how does their retirement situation compare to those in the private sector?
A Developing Gulf
Making a fair comparison between public and private sector pensions is difficult, mainly because there are so many variables.
Almost 82 per cent of state employees are contributing to an occupational pension scheme, with a typical retirement pot amounting to B#90,100. The equivalent figures for private sector workers are 38 per cent and B#40,000. So we can already see a huge gulf in the provisions being made within the different sectors.
Pension Contributions in Private Sector Rapidly Reducing
The UK has a workforce of some 30 million people. The number of people actively saving in company pension schemes in the private sector has almost halved since 1991.
But what about the contributions made? How much would someone paying in to a private pension plan need to contribute to come close to those on a state pension?
In short, the answer is that private sector workers will need to contribute ten times as much from their monthly pay-packets if they want a retirement income equivalent to that of a public sector worker.
According to calculations by the Pension Corporation, a worker aged 35 on a private, direct contributions scheme, would need to contribute 55% of their salary to get the same retirement income as a public sector worker paying just 5.1% into their pension plan.
After thirty years of contributions at these rates, along with additional top-ups from their employers, both sets of workers could expect to retire on a pension of half their salary.
In summary then, State workers enjoy pensions almost twice the size of those of their private sector counterparts, and they also work fewer hours and earn 30 per cent more on average.
The figures, from the Office for National Statistics, highlight a familiar b pensionb s apartheidb with the public sector gaining at the expense of taxpayers.