Britain’s public pension problems

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Britain’s public pension problems

Monday, December 8th, 2008 | Economics, Social Security |

MoneyWeek - Britain’s widening pensions gap:

“We have got to end the apartheid,” said Conservative leader David Cameron last week as he highlighted the huge gulf between public and private-sector pensions. Quite so, says The Daily Telegraph’s Paul Farrow: “the pension playing field is decidedly lopsided”. The Taxpayers’ Alliance recently revealed that 17,150 public-sector workers have already retired with pension pots worth over £1m. The list of beneficiaries includes 10,500 ex-NHS employees, 3,680 civil servants, 1,800 teachers and 815 judges. Ignoring those at the top, even the average public-sector worker will retire on an annual pension of £17,091, says Dr Ros Altmann, a former adviser to Tony Blair. To match that, given that 80% of employers have closed their final-salary schemes, a private-sector worker would have to save £427,275. In reality, says the Association of British Insurers, the average lump sum used to buy an annuity is just £24,150, enough for an annual income of well below £2,000.

Does it seem reasonable that public service employees have better pensions than most of the citizens whose taxes pay their salaries? As the article notes, public employees have more stable jobs and better benefits. With public service pensions driving cities and states to the poorhouse this is going to be an issue in the coming years.

Previously:

- Vallejo, California declares bankruptcy
- How irrational are California public pensions?
- State pension funds heading for insolvency

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