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Who has the cushiest pension of them all?
Those saving for – or trying to survive on – private pensions may envy public sector workers and the pensions they’re trying to protect. Treasury figures today reveal that funding a full final salary pension for a mid-level teacher on £32,000 a year would require a pension pot of £500,000. According to ONS figures, that is 20 times the size of the average private sector defined contribution scheme.
But it is a bit rich hearing so many MPs, from the Prime Minister downwards, lecturing public sector workers and saying that their pensions expectations must be more realistic. For, despite repeated promises of reform, MPs still retain their own index-linked, final salary pension scheme.
Taxpayers contribute three times more than MPs to their pensions and an MP only has to spout hot air for 15 years to build up an annual pension of £24,000, which a private sector employee would need £700,000 to fund. If MPs should die, their spouses get a lump sum of four times their salary and an annual income of five-eighths of their pension.
Maybe public sector workers would be less indignant if our MPs led by example. The Leader of the House, Sir George Young, is due to make a statement on MPs’ pensions before the summer recess, or what you and I would call a seven-week summer holiday. Will MPs give up without a struggle? Or will they fight just as hard to defend their gold-plated pensions as the public sector workers they’re now criticising?