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thomas davison

Private sector staff have to pay TEN TIMES as much as public sector to get same 'gold-plated' pension
By Dan Hyde
PUBLISHED: 13:45, 5 April 2012 | UPDATED: 15:56, 5 April 2012

Generous deal: Doctors are considering whether to strike over proposed changes to their pensions
Private sector workers must save ten times as much as someone in the public sector to get the same 'gold-plated' old age income, a report revealed today.

The figures expose an alarming gulf between public and private benefits just as unions consider more strike action over Government plans to make cuts to their pensions.

In the private sector, a 35-year-old starting a new job today on �26,000 a year would need to pay 55 per cent of their salary into a pension to get an income of �13,000 a year in retirement.

In contrast, a public sector worker pays a tiny 5.1 per cent to get the same old age income, due to increase each year in line with inflation.

The numbers, put together by analysts at Pensions Corporation, have been released just a week after teachers staged a 24-hour strike over proposed pensions reforms that would make them contribute more toward their retirements and work for longer.

Doctors are also voting on whether to strike over the reforms, opening the way for the profession's first industrial action since 1975.

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Unions complain the planned changes might see younger doctors paying more than �200,000 extra over their lifetime - and working eight years longer until age 68. A similar story plays out for other public sector workers.
Ros Altmann, director general of over-50s group Saga and former adviser to Number 10, says many state staff fail to recognise the 'fantastic deal' they have had for many years.

She says all taxpayers are funding these pensions because staff contributions are insufficient to support the growing throngs of retirees who are claiming an income in old age.

Ms Altmann says even after the proposed reforms, the general taxpayer will 'still have to contribute to make up the gap'. In last year's Autumn Statement, the Office for Budget Responsibility said public sector pensions will cost taxpayers �11.3billion over the next five years.

Unfair: Teachers are very unhappy with the pension reform proposals and the National Union of Teachers marched in London last week in protest
Public sector pensions are typically final salary schemes, where the retirement income is guaranteed at around two-thirds of a workers' last pay-packet.

Nearly all of the six million doctors, teachers, policemen and others state workers are members of this generous type of pension scheme.

However, final salary pensions are dying out fast in the private sector. Some 88 per cent of were open to new joiners a decade ago, compared with 19 per cent today, according to the National Association of Pension Funds.

Most workers starting a new job in the private sector now are pushed into less generous money purchase pensions, instead. Here, retirement income depends on how much is saved, investment performance, and prevailing interest rates at the point of retirement.

Government ministers, from Prime Minister David Cameron to Chancellor George Osborne, have stressed that public pensions are out of kilter with the rest of the UK.

Mr Osborne has called them 'unsustainable' and the Government is pushing through reforms that would stop costs to the general taxpayer ballooning. The main changes will see state staff pay increased contribution rates and face a higher retirement age. Many are currently free to pack in paid work at 60. In future, they could be forced to wait until the state pension age, which is due to hit 66 in 2020 for both men and women.

Public sector unions are unhappy with the proposals. Talks between ministers and union leaders came to an end at the beginning of March. The Treasury called the discussions 'constructive', but unions are understood to mulling over strike action again this year.

Brian Strutton, national officer of the doctors' GMB union, said: 'There remain some very difficult issues that our members will need to weigh up. In addition there are some serious matters outstanding, including future contributions and how costs will be managed.'

They should sack the lot of them, and then re-employ them on a different, more fair basis, on the same level as us private sector workers!