Bosses in pensions reform call

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The Institute of Directors (IoD) said the public sector retirement age should be increased as a first step to bridge what it called a pensions "apartheid" when compared to staff at private firms.

Companies had faced up to rising longevity among the population and increased regulation and scaled back pension provision, the business group said, adding that 90% of public sector employees were members of defined benefit pension schemes, compared with just 12% in the private sector.

The IoD said taxpayers were having to pay twice for public sector pensions, for the employer contributions and for an annual bail-out.

Miles Templeman, director general of the IoD, said: "In an ideal world, pensions reform would not be necessary, but an ageing population makes pensions more expensive. The recent reforms to public sector pensions were inadequate and failed to bridge the pensions apartheid.

"There is no longer any justification for a growing bail-out of generous public sector pensions and further reform is now essential. It is unfair for businesses and families struggling in the downturn to pay higher taxes to fund pensions that they cannot afford for themselves or their employees.

"The enormous deficits currently being run intensify the need to reduce long term costs to help bring the public finances back to sustainability."

TUC general secretary Brendan Barber said: "The real pensions apartheid in Britain today is between the boardroom and ordinary employees. Directors have too often hung on to their gold-plated pensions while cutting those of their workforce.

"Now they want to cut the pensions of nurses, teachers, school meal assistants and all the other hard-working staff that hold our public services together as well. Of course this report contains no estimate of the costs of providing means-tested benefits for the next 50 years for those whose employers have refused to provide a pension contribution."

A Treasury spokesman said: "Public sector pension costs are published in Budget documentation and this shows that all the Government's long-term liabilities, including pensions, are fully affordable each year now and into the future."