Public Sector Pensions v Private Sector Pensions - The Big Winner Is….
The public sector by a mile!
It has been revealed that public sector workers are receiving massive benefits over private sector workers with regards to national insurance contributions and pension arrangements. This figure has been calculated at some £50,000 over the span of a normal working life and is sure to cause massive resentment in the private sector.
As has been widely covered in the media, the majority of private sector final salary pension schemes have been closed due to major future funding concerns. This has resulted in many schemes referring back to money purchase pension arrangements which offer much lower pensions than their final salary equivalents.
When you add in the fact that public sector workers (state employees) are still enjoying lucrative index linked final salary schemes, funded by the tax payer to the extent of £1 trillion, it is easy to see why concerns are growing. Private sector workers are further disadvantaged by the fact they are not able to take their pension until aged 65, against 60 in the public sector. It must surely just be a matter of time before there is a legal challenge to this anomaly?
There have also been major changes in national insurance payments over the last few years, due to the complicated opt out, opt in situation. This has resulted in private sector workers paying more in national insurance than there public sector counterparts.
Recent information released by the Treasury (under the freedom of information act) has also highlighted the warnings which the Chancellor ignored prior to his tax hit on pension funds some 10 years ago. Many blame this for problems with private sector pension arrangements, and the reduction in future pensions for many.
Will the situation ever be rectified?
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