Commission recommends public sector pension reform - Pensions - News - Moneyfacts

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Commission recommends public sector pension reform

Commission recommends public sector pension reform

Category: Pensions

Updated: 17/12/2012
First Published: 07/07/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Public sector Compare pensions." temp_href="Find the best pension for you -Compare pensions.">pension schemes are in need of significant reform and cost far more than originally thought, an independent commission has said.

The judgement has raised the ire of the Trade Union Congress (TUC) group, which has accused the Public Sector Pensions Commission of wanting 'to reduce taxes for business and the super rich'.

In its report, the Commission said that public sector pensions are worth at least 40% of a salary on average, with significant costs being passed to the taxpayer.

A lack of transparency in costs has also been cited, with an estimated £35 billion being spent on private sector employee pensions.

"Without more transparency, the true costs are unreasonably forced on the tax payer," said the Commission.

It has been recommended that future costs should be covered by employees and employers, a move that is judged to be 'justice and good economics'.

The subject of public sector pensions is a polarising one, as they are often perceived as being far more generous than private sector pensions, which are entirely made up of employee and employer contributions, rather than top ups from the public purse.

"Increasing longevity means that pension provision has to be looked at again, and the public sector cannot continue to remain immune," commented Peter Tompkins, Fellow of the Institute of Actuaries and Chairman of the Commission.

"The question of why the majority of the workforce should be expected to pay through their taxes to support pensions that they cannot afford for themselves must be raised."

The TUC has reacted angrily to the findings, pointing to other problems with UK pensions, including two out of three private sector workers getting no support towards a pension.

The Public Sector Pensions Commission has also been accused of 'coming after' public sector pensions.

"Of course all pensions need to change from time to time, but this report is from people who simply want to reduce taxes for business and the super-rich," said Brendan Barber, TUC General Secretary.

"They have nothing to say about top directors' pensions, which have continued to go up during the recession and whose most common retirement age is 60.

"The Institute of Directors are fond of talking about pension apartheid, but their campaign to drag the public sector down to the level their members have imposed on the private sector workforce makes them very unconvincing Nelson Mandelas."

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