National Audit Office explode out-of-control gold-plated public pensions myths

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date: 11 March 2010

embargo: 00:01 hours Friday 12 March 2010

New figures published today (Friday) in the National Audit Office (NAO) report on pay-as-you-go public sector pensions show that they are affordable, sustainable and far from gold-plated, say the TUC.

Figures in the NAO report show that:

Employee contributions to these schemes have increased faster (56 per cent) than pension payments (38 per cent) since 2000.

There has only been a two per cent real terms increase in the average pension in payment since 2000 - the average teachers' pension has fallen by four per cent over that period and the average NHS pension is unchanged.

The vast majority of pensions in payment are modest. The NAO report shows that most pensions paid in both the NHS and civil service are below £110 a week, a quarter of NHS pensions are less than £40 a week and a quarter of civil service pensions are less than £60 a week.

Fewer than 0.2 per cent of teacher pensioners, 1.8 per cent of civil service pensioners and 2.5 per cent of NHS pensioners get pensions of more than £40,000.

Future projections show that the cost of pensions in payment will rise by just 0.2 per cent of GDP to peak at 1.9 per cent from 2018 and then fall again to their current level by 2059. These projections do not even include the billions of pounds that public sector workers will contribute to their pensions.

It is entirely legitimate for the Treasury to contribute to the cost of pensions in payment above the level of employer contributions. The report says, 'In pay-as-you-go schemes...Treasury payments reflect the benefit of past alternative use of pension contributions to fund government activities without additional taxation or borrowing.'

TUC General Secretary Brendan Barber said: 'Today's report shows that public sector pensions are affordable, sustainable and far from gold-plated.

'The real pension problem in the UK is in the private sector where employers are no longer providing pensions to almost two thirds of their staff, while hanging on to executive schemes in the boardroom. Taxpayers are now picking up the costs of this retreat through higher bills for means-tested benefits for pensioners.

'The populist campaigns against public sector pensions come either from employer groups who want to distract from their own pensions disappearing trick, or right-wing pressure groups who are deeply hostile to public services.

'That is why the pension reform we need is compulsory employer contributions to pensions for all staff, which will start with auto-enrolment in 2012 as the first step towards winning decent pensions for all.'


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Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: [email protected]
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: [email protected]
Elly Brenchley T: 020 7467 1337 M: 07900 910624 E: [email protected]

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