The CBI, Britain’s biggest business group, will today launch an attack on over-generous public-sector pensions that it believes represent an unjustifiable drain on the public finances.
The CBI will say that the last published figures for unfunded public sector pension schemes show that they have liabilities of over £915bn, but this figure may now exceed £1 trillion, becausetheGovernment has not released full figures since March 2006.
John Cridland, CBI deputy director general, said: “Public-sector workers should have a good retirement, but we need to talk openly about how we split the bill. The debt that is being racked up is truly eye-watering and is set to get much worse.
“Taxpayers who are struggling to build their own personal pension will belumbered for decades by the cost of covering public-sector workers who retire years earlier on risk-free pensions.”
The CBI’s criticisms reflect a widespread perception that while many private-sector pension schemes have been downgraded in recent years, the public sector has not suffered in the same way. The Conservative leader, David Cameron, last month said the unfairness of the discrepancies would have to be addressed.
Most public-sector pension schemes, from the teaching sector to the Civil Service, continue to offer final salary provision, guaranteeing a certain level of income in retirement, as well as offering generous annual increases once pensions actually become payable. A fifth of all workers in the UK are thought tobeenrolled in public-sector schemes.
The number of employers in the private sector offering guaranteed pension provision has dwindled rapidly in recent years, as companies have become anxious about funding the cost of such pledges.Many companies have closed final salary plans to new staff, or even to existing employees. In their place, money purchase schemes, where staff’s final pension is dependent on the performance of the stock market, have become the norm.
Public-sector trades unions say they too have had to accept compromises onpension provision, with retirement ages increasing at many schemes, as well as the level of contributions required from staff.
“Much of the cost of public services is made up of the wages of public servants like nurses, teachers and civil servants, and a decent pension will always make up a significant part of any wages bill,” said the TUC general secretary, Brendan Barber. “If we are to have the public services that make our society civilised, then it is only right that we recognise that public servants should get a decent pension and that this comes at a price.”
Mr Barber added: “Significant changes including later retirement ages and risk-sharing have been negotiated by unions across the public sector.
This is not always the case in Britain’s gold-plated boardrooms.”Reuse content