Pensions 

High value public sector pensions treble

High value public sector pensions treble

The number of public sector workers retiring with pensions of more than £100,000 a year has trebled since 2017, according to official data.

The number of public sector retirees (NHS, civil service or teachers) who receive more than £100,000 from their pension pots a year increased by 320 per cent in seven years, up from 117 people in 2010/11 to 375 in 2017/18.

According to a Freedom of Information request to the three main government pension schemes by charity Intergenerational Foundation, the number of public sector workers receiving annual pensions of more than £50,000 has more than doubled during the same period.

Those receiving pensions higher than the UK’s average annual salary of about £28,600 also increased by 47 per cent, up from 78,000 in 2010/11 to 115,000 in 2017/18.

The Intergenerational Foundation stated the figures showed a growing pensions divide between generations. 

Angus Hanton, co-founder of the Intergenerational Foundation, said: "These pensions are based on flawed assumptions made years ago about life expectancy, interest rates, contribution rates and levels of pay which successive governments have willfully ignored.

"Younger workers will not receive such generous pensions, yet they are expected to keep paying for these pensions while also having to contribute far more for their own old age. If ever there was an example of passing the intergenerational buck, this is it."

The research showed of those receiving more than £100,000 a year in pensions, three quarters (76 per cent) were members of the NHS pension scheme in 2016/17.

The number of people receiving public sector pensions, according to data from 2017/18, is as follows:

Pension scheme

Category A

£28,600 - £49,999 p/a

Category B

£50,000 - £99,999 p/a

Category C

over £100,000 p/a

NHS

47,732

20,900

287

Civil service

19,336

1,876

54

Teachers

23,224

1,573

34

Total

90,292

24,349

375

All these pension pots are unfunded schemes, meaning that there are no assets to pay these pensions and they are paid from current employee contributions and, where necessary, additional funds raised from general taxation.

According to Office for National Statistics data published in 2015, at the end of 2015 total accrued-to-date pension liabilities for unfunded defined benefit workplace pensions for public sector employees was estimated at £917bn.

Mr Hanton has called on ministers to consider withdrawing the state pension for retirees on high incomes.

He said: "The government should consider means-testing the state pension so that recipients of pensions over £50,000 are disqualified from receiving it."

In August 2018, right-wing think tank the TaxPayers’ Alliance called on the government to introduce a funded defined contribution scheme for public employees to replace their final salary plan, saying these workers retire on pensions three times larger than their private sector counterparts.

amy.austin@ft.com

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