‘Pensions apartheid’ in Britain as gap between public and private sector pensions grows to become one of the widest in developed world
UK is also the only country where civil servants will receive pension worth more than 100 per cent of final salary
THE gap between public and private sector pensions has ballooned in Britain to become one of the widest in the developed world.
A report measuring a “pensions apartheid” among younger employees revealed how some pension packages were so generous that new civil servants will receive a six per cent pay rise when they retire.
The Organisation for Economic Co-operation and Development also found the UK to be the only country where civil servants will receive a pension worth more than 100 per cent of their final salary.
Private sector workers will instead get a pay cut of almost 50 per cent and a pension of just more than half of their final salary, if retiring aged 68.
The gap of 54.6 percentage points between public and private sector is more than twice the average across all OECD countries, there the difference is 20.
It has triggered experts to call for an end to the pension inequality in Britain.
Tom McPhail, head of pensions policy at Hargreaves Lansdown, a pension firm, said: “The Government has been relentlessly cutting private pension tax breaks, making it harder and harder for ordinary investors to build a decent retirement fund.
“They claim costs need to be controlled, yet they happily pour tens of billions of pounds of taxpayers’ money into fantastically generous public sector schemes; this pensions apartheid has to stop.”
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Pablo Antolin, a pensions expert at the OECD, said: “In terms of aligning public and private sector pensions, the UK has fallen behind other countries which have made steps to close the gap.
“The UK now needs to take action to solve this legacy issue. Whether this means cutting public sector benefits or improving defined contribution pensions available to private sector workers will be a political decision.”
A spokesman at the Cabinet Office said: “The Civil Service Pension Scheme remains an important part of the total remuneration package. Recent reforms deliver sustainability for the long term while ensuring that public service pensions remain fair.”