9 May 2012

The public sector pensions higher than the average wage

Almost 80,000 retired public sector workers are receiving pensions of £25,900 a year or above – more than the average yearly salary – according to new research.

 Almost 80,000 retired public sector workers are receiving pensions of £25,900 a year or above - more than the average yearly salary - according to new research (Getty)

The figure comes from the Intergenerational Foundation, which believes the older generation is benefiting at the expense of younger people.

The foundation says taxpayers’ total liability for public sector pensions is equivalent to £45,000 for every household. It uses the expression “pension apartheid” to compare the pensions available to public and private sector workers.

While 88 per cent of public sector workers are in relatively generous final salary schemes, this applies to only 10 per cent of private sector employees.

Public/private

The research suggests that the typical private sector worker retires on a pension of £3,700 a year, compared to £7,000 in the public sector.

Among retired public sector wokers, 78,000 receive more than £25,900 a year, with 12,263 on more than £50,000 (three quarters of them doctors).

The vast majority of people on public sector pensions – 3.2 million in total, according to the Office for National Statistics – receive much smaller pensions than £25,900.

Ed Howker, co-founder of the Intergenerational Foundation and author of Jilted Generation, said: “This paper shows that the pension prospects of public and private sectors workers are out of whack, and that future taxpayers face the difficult prospect of paying large public sector pension bills of a size and scale which is much larger that they are likely to receive themselves.”

The foundation argues that while young people are enduring high unemployment and tuition fees, and are finding it difficult to afford a mortgage, they are expected to fund public sector pensions.

It is calling for the phasing out of public sector final salary schemes and a cap on government spending on pensions.

Doctors

The British Medical Association, which represents doctors, is fighting government plans to reform NHS pensions which would mean doctors contributing more and working longer.

A spokesman told Channel 4 News that under the plans, newly qualified doctors would contribute £200,000 more to their pension pots over their working lives than doctors retiring now, which was unfair to younger generations.

He said doctors’ pension contributions were already among the highest in the public sector.

Generation game: who's better off? The Channel 4 News FactCheck team looks at how three generations have fared financially - from the baby boomers to today's school leavers.