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The real pensions timebomb

17 June 2010

The most recent attack on public sector pensions by the coalition government ignores the fact that the vast majority of civil servants already receive very low benefits in retirement.

Excluding the very high earners, the average pension in the civil service is just £4,200 a year, and more than 100,000 former civil servants receive a pension of £2,000 a year or less – 40,000 of these receive less than £1,000 a year.

Degrading pensions even further is not only unfair, it is counterproductive because it will force more people into poverty and onto state benefits in their retirement. The cost of this will have to be met by future taxpayers – this is the real pensions timebomb.

The growing gap between public and private sector pensions is the fault of private employers retreating from decent pensions in recent years. Low-paid public sector workers should not be penalised for this.

The real divide is between private sector executives on high salaries securing large pensions with low retirement ages for themselves, and their workforces suffering repeated cuts.

Another popular myth is that public sector pensions are ‘unreformed’. In fact, civil service pensions have been altered several times in the last few decades, with the most recent change being the introduction of a career average scheme, rather than final salary, for new entrants.

It is no surprise that civil service pensions are so low, when you look at pay – low pay leads to low pensions.

Since 2007, basic pay in the civil service has increased by 6.5%, while inflation has risen by 10% – a real terms cut in living standards. And pay levels lag behind the private sector, both on a national average and when similar jobs are compared.

Average pay in the civil service is £22,850 a year, compared to £24,970 in the private sector, and there are still 35,000 civil servants being paid less than £15,000 a year; 40% of civil servants – 210,000 people – are paid £20,000 or less.

These sorts of figures rarely find their way into politicians’ speeches or coverage in some sections of the mainstream media.

PCS has updated its myth-busting guide, which looks at pay, pensions, jobs and privatisation, and we encourage members to use these facts and figures in the workplace, in their communities and when writing to newspapers or commenting on stories online.

Read the facts about civil service pay, pensions and jobs.

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