Those public pots of gold

SUPERIOR PUBLIC SECTOR PENSIONS

- By Harvey Jones

EVERYBODY knows public sector workers enjoy far superior pensions to the private sector, and new research makes the difference starkly clear.

Hargreaves Lansdown found that 58% of households with at least one public sector worker are on track for an adequate retirement income, compared with 42% of households with only private sector workers.

Public workers have the edge as many still get gold-plated defined benefit, or “final salary”, pensions. These schemes guarantee a retirement income based on years worked and earnings, often topped up with inflation protection.

Clare Stinton, head of workplace saving analysis at Hargreaves Lansdown, said public sector pensions are “streets ahead” of the private sector: “This owes much to the prevalence of final salary pension schemes in the public sector.”

These schemes have become vanishingly rare in the private sector, where the vast majority of workers now belong to “defined contribution” schemes, where performance depends on the stock market with no guarantees.