TUC: Private sector pensions are no model for public sector

As workers prepared for a nationwide walk-out, Mr Barber, general secretary of the TUC, described defined contribution schemes in the private sector as “deeply unfair” and said that trying to make public sector pensions more like those in the private sector was part of a right wing conspiracy to cut public services.

Mr Barber said: “Private sector workers without a pension should not direct their anger at public sector workers, but should be livid at the extraordinary costs of providing pension tax relief, with two-thirds of the £30bn bill going to higher rate taxpayers.”

His comments came on the back of a 14-page report issued by the TUC, A Race to the Bottom, which argued that “unfair” private sector pension are not a good model for the public sector.

The report claimed that two out of three private sector workers get no employer support for their pensions and to make public sector pensions like those in the private sector would therefore mean taking pensions away from two out of three public sector staff and giving senior managers bigger pensions.

It also said private sector workers should be angry about the higher rate of tax relief on pension contributions that wealthier people are entitled to, calling this a “subsidy” for the rich and claiming that the total cost of pension tax relief cost the state more than paying every public sector pension.

The report said: “The challenge is not to level down the public sector to private sector provision in a race to the bottom, but to give private sector staff better access to proper pensions.”

The report did not consider the effects of auto-enrolment, which will make workplace pensions provision compulsory for all employers.

It also failed to address the astronomical public sector pensions deficit and the fact that these schemes are unfunded, paid for by private sector workers through tax and unsustainable because of rising longevity.

Nick Lincoln, director for Hertfordshire-based Values To Vision Financial Planning, said by issuing the report, the TUC was trying to deflect attention away from the problems with public sector pensions to the private sector.

He said: “The reason we need to reform is that public sector pensions are unfair to everybody. They are a disgrace and the sooner they are wiped off the face of the earth the better.

“Mr Barber should bear in mind that the “rich” private sector workers who, he claims, are getting big tax subsidies on their pensions are the ones who are paying for these public sector pensions through high taxes.”