2006 Series
WHOSE PENSION ARE YOU PAYING?
Over the last few years, more than 85,000 private sector workers have lost their final salary pension promises. Public sector workers, meanwhile, continue to enjoy taxpayer-backed pensions, the costs of which are now spiralling out of control.
Friday 27th January 7.35pm
Saturday 28th January 4.35am
Over the last few years, more than 85,000 private sector workers have lost their final salary pension promises. Public sector workers, meanwhile, continue to enjoy taxpayer-backed pensions, the costs of which are now spiralling out of control.
Friday 27th January 7.35pm
Saturday 28th January 4.35am
Liam Halligan, Economics Correspondent for Channel 4 News, highlights the financial and political risks of the UK's growing pension divide. As the nation lives longer, he explains, final salary schemes are collapsing.
But, as the biggest employer in the land, it's the government coming under the most financial pressure.
Ninety per cent of the UK's six million state workers are cushioned by generous final salary schemes. Such schemes are index-linked, and retirement ages have remained fixed for decades.
Under pressure from trade unions, Halligan investigates the way ministers have refused to control these pension costs but, as he demonstrates, the bill faced by the rest of us is now becoming horrendous.
The public sector pension deficit – conveniently kept off the government’s books – is equivalent to £30,000 for every British household. As this programme shows, such pensions already swallow the equivalent of a quarter of all income tax.
Halligan also reveals, for the first time, the truly astonishing percentage of council tax now being spent on public sector pensions.
Cutting through the spin and confusion so often clouding pensions issues, the experts featured in this thoroughly-researched programme paint a bleak picture of the UK’s finances unless public sector pensions are reformed.
Professor Tony Travers from the London School of Economics says the government is loading pension costs on to local councils "who they can then blame for being inefficient and wasteful of money, rather than take the hit on national taxes." As he points out, "this is an unfair – as everyone has to pay council tax, not least all but the very poorest pensioners."
Moritz Kraemer from Standard & Poors, the world’s largest ratings agency, says that the government indecision in this area is "lamentable". Unless public sector pension costs are reined in, he says, the British government "within a decade" could have a credit rating "more like what we see in countries like Egypt and the Ukraine".
We now have a "once in a generation" chance to reform our pension system. On cue, ministers are preparing their response to the Turner Review. But, as Halligan shows, public sector pension costs are beyond Turner's remit.
But as life expectancies rise, and private sector schemes continue to collapse, Britain's growing pension divide can only get worse.
But, as the biggest employer in the land, it's the government coming under the most financial pressure.
Ninety per cent of the UK's six million state workers are cushioned by generous final salary schemes. Such schemes are index-linked, and retirement ages have remained fixed for decades.
Under pressure from trade unions, Halligan investigates the way ministers have refused to control these pension costs but, as he demonstrates, the bill faced by the rest of us is now becoming horrendous.
The public sector pension deficit – conveniently kept off the government’s books – is equivalent to £30,000 for every British household. As this programme shows, such pensions already swallow the equivalent of a quarter of all income tax.
Halligan also reveals, for the first time, the truly astonishing percentage of council tax now being spent on public sector pensions.
Cutting through the spin and confusion so often clouding pensions issues, the experts featured in this thoroughly-researched programme paint a bleak picture of the UK’s finances unless public sector pensions are reformed.
Professor Tony Travers from the London School of Economics says the government is loading pension costs on to local councils "who they can then blame for being inefficient and wasteful of money, rather than take the hit on national taxes." As he points out, "this is an unfair – as everyone has to pay council tax, not least all but the very poorest pensioners."
Moritz Kraemer from Standard & Poors, the world’s largest ratings agency, says that the government indecision in this area is "lamentable". Unless public sector pension costs are reined in, he says, the British government "within a decade" could have a credit rating "more like what we see in countries like Egypt and the Ukraine".
We now have a "once in a generation" chance to reform our pension system. On cue, ministers are preparing their response to the Turner Review. But, as Halligan shows, public sector pension costs are beyond Turner's remit.
But as life expectancies rise, and private sector schemes continue to collapse, Britain's growing pension divide can only get worse.
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