· 1 min read · News

Huge gap between value of public-sector and private-sector pensions


Employees in the public sector receive as much as 35.5% contributions toward their pensions, compared with an average of 6% in the private sector.

Economists at PricewaterhouseCoopers calculated that although private-sector employees tend to have higher salaries, an employee born in 1960, working in the private sector can expect a retirement pension worth 40% of that of a public sector employee.

And a career civil servant would have a pension worth 37% of their salary compared with just 10% of someone in a private-sector defined-contribution scheme.

John Hawksworth, head of Macroeconomics at PricewaterhouseCoopers, said: "There are implications here for both public and private-sector employers. A generous final-salary pension is a great draw to talent for a career in public service, but it also has drawbacks in limiting the flow of people between the public and private sectors.

"People with long civil service careers may be very reluctant to leave the scheme, especially as it is rare to find anything comparable in the private sector.

"This not only creates potential distortions in the labour market, but it will also impose a rising burden on the taxpayer in future years as the relatively large baby boom generation of civil servants is now beginning to retire."