Every family forks out £390 to fund state employees' pensions - News - Evening Standard
       

Every family forks out £390 to fund state employees' pensions

Every family in the country is paying an extra £390 this year to keep funding the goldplated pensions of public sector workers, it has emerged.

This comes on top of the tax money already handed over by each household to pay for State employees' retirement.

The shocking figures, buried in Treasury documents, revealed the huge bill taxpayers face to pay for the pensions of the country's 5.8million public sector workers.

Tory MPs yesterday said they highlighted the growing "pensions apartheid" in Britain.

This means that public sector workers can retire relatively young on generous sums whereas private sector workers have to retire later and get less money.

The revelations come as the business lobby group CBI today calls for "urgent reform" of public sector pensions.

Director-general Richard Lambert recently described the goldplated deals as "a wholly unsustainable burden for the taxpayer".

The official figures showed that the Government expects the costs of State workers' pensions to balloon by an extra £29billion in the current tax year.

With contributions totalling just £19billion in 2007/08, this leaves a record black hole of nearly £10billion.

This extra cost – which must be met by taxpayers – is the equivalent of every one of Britain's 25million households being given a bill for £390.

The figures were sneaked out on page 194 of the obscure Public Expenditure Statistical Analyses 2007, published last month.

Philip Hammond, Tory Work and Pensions spokesman, said: "Gordon Brown has created a pension apartheid in the UK.

"He has allowed the black hole in public sector pensions to expand at a shocking rate. It is the taxpayer who will eventually have to fill this gaping hole."

Generous final salary pensions are still enjoyed by the vast majority of those in the public sector, but the packages are dying out among private sector staff.

Mr Hammond warned that if the situation is allowed to continue, Britain faces a deeply unpleasant choice – taxes will have to rise or public services will have to be cut.

And Dr Ros Altmann, a former pensions adviser to the Treasury, said the argument that public sector workers deserve better pensions because they get paid less while working has disappeared.

Official figures show the average salary for a full-time public sector worker is now £25,102, compared with £22,873 in the private sector.

Tom McPhail, of Hargreaves Lansdown financial advisers, added: "The Government is effectively buying several million votes from public sector workers by giving them unsustainably generous pensions."

A Treasury spokesman said: "The long-term public finance report is published annually alongside the Budget.

"This clearly states public sector pensions remain fully affordable. It is misleading to claim otherwise."

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