Who has the cushiest pension of them all?

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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?

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4 Comments

1. Mark

   June 30, 2011 at 3:28 pm

   Not sure where you get your teacher pension figure from. My wife will get £9000 a year at 60 currently, but is likely to have to work to 67 for the same pension on the new scheme. Gold plated? £500000? Don’t think so!! I think you are confusing a mythical possibility with the reality on the ground.

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2. Jason Riddle

   July 1, 2011 at 9:48 am

   Mark

   The teachers pension figure mentioned in the article is the theoretical max, these figures are being used all over the media to make a point. The point Save Our Savers is trying to make is not that public sector pensions are necessarilly too good, but that the opportunity for private sector workers to achieve anything like them has been destroyed. Back in March I did some research for an article and found that the average teachers pension was £10,858.

   To quote from the article ” In fact 50% or just over 1.5 million public sector pensioners receive less than £5,600 a year and the average pension across all schemes is £7,841. This, however, hides wide variations ranging from an average of £7,510 in the NHS to £10,858 for teachers and £15,636 for policemen.”

   As ever in these arguments it is always the extremes that are brought up, some of the pensions paid to the top brass in the public sector beggar belief, but for the majority the amounts do not by any stretch of the imagination lead to a life of luxury.

   Private sector pensions have been neglected by politicians. 70% of the private sector are not currently members of a pension scheme and for those that are a typical pension pot is about £25,000 or £30,000, which might buy a retiree a fixed income of £1,500 to £2,000 a year for the rest of their life.

   For us the issue isn’t one of levelling down its one of levelling up.

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3. Sylvia Kavanagh

   August 2, 2011 at 4:17 pm

   I’m no economist or saver, I have a small pension that will only keep me in the black as long as I don’t indulge in holidays, drink or smoke or give my children exorbitant present or put petrol in my car! I cannot advise on any clever solution to help the state of our country’s finances, what’s more I am dismayed/disillusioned that all the economists and people with so much to say on how it should be done, cannot agree and come up with the answer. I would just like to get on with my life and enjoy it the best I can, instead of listening to bad news on the radio, reading boring papers. Someone out there please stop talking politics, points scoring and get us back on our feet and let us get on with enjoying our lives.

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4. mike

   August 2, 2011 at 6:45 pm

   Ref. teachers pensions – for 40 years service ( which I will never attain unless I work until about 70 years of age (because a little thing called studying for a 4 year degree has got in the way), my understanding is that I can retire on a maximum of 40/80ths of my final salary minus benefits like london allowances etc…. my situation……I have been in teaching and contributing for some 18 years so I should be able to retire on on 18/80 ths of my final salary when I leave this summer ( yep, I really have had enough of crappy kids and parents who think that the sun shines out of their precious ofsprings ar** – which means that when I turn 65 ( or whatever age is now in place for retirement) I will be awarded 7200 gbp per year BEFORE tax – this is of course looking forward 25 years into the future when a pound will probably not be worth the paper it’s printed on thanks to the mis- management of various governments ( no particular party to blame, they’re all self serving short-termist idiots!). This will of course mean that I am not entitled to any free eye/ perscriptions etc or indeed anythning else that someone who had made no provision would be currently entitled to. Now compare this to an MP or high court judge or indeed the minimum pension that everyone is entitled to at the moment, yes … go compare this to someone on benefits who is entitled to housing / rent paid etc.!!!… yes thats right… not that gold plated now is it!!!! ( sorry … rant over )

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