MILLIONS OF British public sector workers will have to pay more for their pensions, work longer and receive smaller benefits after they retire, particularly those in the highest positions, according to a British government-ordered inquiry published yesterday.
Pension costs for state workers have jumped by more than a third in the past decade alone and many of today’s state employees could spend 40 per cent of their adult years retired, said the report authored by former Labour minister, Lord John Hutton.
However, he rejected criticism that existing pensions for state workers are “gold-plated”, pointing out that half receive less than £5,600 (€6,387) a year, while the average is £7,800 annually.
Pensions based on a person’s final salary should be stopped, he suggested, since they are “inherently unfair” because they disproportionately benefit the better-paid, who often get back twice the value of the contributions put in, compared to lower-level staff.
Seven main public service pension schemes exist covering five million workers. Last year, there was a £4 billion gap between contributions and payouts. The gap will increase to £10 billion by 2015. A 1 per cent increase in contributions would raise £1 billion.
Cutbacks by the Labour government, and agreed with unions, mean the cost of paying unfunded state pension schemes will fall from 1.9 per cent of GDP this year to 1.4 per cent by 2060. Six of the schemes are paid for from current spending by state bodies and have no assets behind them. The Local Government Pension Scheme has assets invested to meet future liabilities, but is in deficit.
Unions reacted angrily. Hardline leader of the National Union of Rail Maritime and Transport Workers Bob Crow said new cuts would “spark a furious backlash and will drive millions on to the streets in French-style protests to stop the great pensions robbery”.
