Pensions for public sector workers cost the rest of us billions

IT IS time to address the pensions bombshell that is going to cripple future generations — and, no, it’s not the triple lock. Public sector provisions are costing us billions of pounds a year but barely get a mention in the debate about fairness.

- Sam Lister

Gold-plated public sector pensions are typically double those in the private sector

Gold-plated pensions for civil servants, doctors, teachers and so on mean we have a staggering £2.4trillion in liabilities. Around £50billion is paid out each year but there is no special pot where contributions have been held to cover the cost.

Every year there is a shortfall between the amount that has been put in and taken out. Recently, that has been about £2bn but it went as high as £9.9bn in the 2010s.

Eight out of 10 public sector workers are on old-fashioned schemes that give them a set proportion of their salary in retirement, and it is usually protected against inflation. It is guaranteed for life and there is no risk of it losing its value.

Private sector workers can only dream of such a good deal.

Just 7% of those working in business or industry have secured that type of lucrative arrangement. A public sector worker's pension will be typically double that of a private sector employee. The schemes were traditionally more generous to make up for lower pay but now they earn on average just £13 a week less.