Over the past few years no subject has carried more column inches in the financial/social commentaries than the great and increasing pension divide.
Leading actuarial firms such as Hewitts, Watsons and Mercers have stressed the degree of the UK pensions apartheid.
Now the UK’s leading accounting firm, and probably the global leader too, PricewaterhouseCoopers has published a new report on the subject. According to this report, private sector workers in “defined contribution” schemes receive, typically, employer contributions of 6% of salary. For civil servants contributing just 1.5% of salary to their “final salary” pension scheme, the implied employer contribution (that is to say the taxpayer) could be as high as 35.5%.
PwC compared the financial fortunes of a public sector employee who remains in civil service employment from age 21 to retirement at age 60 with someone born in the same year but who spends the whole working life in the private sector. The result is astonishing. The public sector worker would receive a pension of £28,900 compared with £11,600 for the private sector worker.
25% of council tax payments are used to fund public sector pensions – source Ros Altman – former government pension adviser.