Robert Watts
2 for 1 at Pizza Express
TAXPAYERS have this year been forced to pay nearly £3 billion more to retired public sector workers than Gordon Brown had predicted, official figures reveal.
According to the latest estimates, the cost of public sector pensions this year has soared to £21.4 billion - £2.7 billion more than Brown calculated in 2005.
The increased cost is almost the equivalent of putting a penny on income tax and critics said it shows that the government has lost control.
The cost of providing all pensions is rising because people are living longer. Private sector pension providers are raising retirement ages and closing lucrative final salary pension schemes.
However, the government has done little more than tinker with public sector pensions, most of which are still final salary schemes which allow workers to retire at 60.
David Craig, a former government consultant, calculates that private sector workers are for the first time being forced to pay more in taxes to fund public sector pensions than they manage to save for their own retirement.
Individuals poured about £15.6 billion into personal and company pensions in 2005. In the same year private sector workers paid taxes of about £18 billion to keep retired teachers, National Health Service staff and other state workers in their old age.
Craig, the author of Squandered, a book about government waste, said: “The amount people save has collapsed under new Labour and simultaneously the cost of public sector pensioners has soared due to public sector pay rises.
“This has led to the farcical state of affairs where the humble taxpayer ends up paying more for other people’s pensions than their own.”
The Taxpayers’ Alliance has identified at least 100 civil servants with pension pots worth more than £500,000. Corin Taylor, its research director, said: “It is unfair that public sector workers don’t have to face up to greater life expectancy, which is making pensions so much more expensive for the rest of us.
“People are worried enough about how they are going to fund their retirement without hearing that a huge slug of their taxes are going to provide state workers with a pension that is beyond their own dreams.”
Last year Sir Richard Mottram, a Cabinet Office mandarin, retired on what is thought to be one of the most generous pensions enjoyed by a civil servant. His pension pot was worth £2.7m, entitling him to a lump sum of £335,000 and annual payments of an estimated £110,000.
Sir Andrew Turnbull and Sir Geoffrey Bowman, two other senior Whitehall officials during the Blair years, retired with pension pots worth £2.6m.
Meanwhile, Alan Yentob, the BBC’s creative director, and Jenny Abramsky, its director of audio and music, each have pension pots worth about £3m.
The Conservatives and the Liberal Democrats have said that they will look at ways to reduce the burden of providing public sector pensions.
The Treasury maintains that the cost of public sector pensions remains “fully affordable”.
Industry sectors news at a glance. Interactive heatmap, video and podcast
Everything the Business Traveller needs to know to make a better trip
Get ready for the winter sports season, with our resort guides and snow reports
We are backing British business, what is the confidence of the nation and what businesses are succeeding?
Growing demand for energy, oil that is harder to reach and the rise of carbon dioxide emissions. We examine the energy challenge
With rail travel in Europe on the rise, we review the benefits of travelling by train
In this special section we explore new food trends to help improve your dinner party and impress guests
Enjoy further reading from Travel to Fashion, Business to Sport, discover more
1998
£47,955
12 months for the price of 11 and a 5% discount.
Offer ends 31/11/09
Check your free Experian credit report before applying
Car Insurance
£100,000
Barnardos
UK
PwC’s Consulting practice helps businesses of all shapes and sizes work smarter and grow faster
PwC
£37,000
Department for Culture, Media and Sport
London
Currently £36,285
Department for Culture, Media and Sport
London
Moments from Battersea Park.
For sale with Winkworth
Find out about shared ownership.
See your free Experian credit report beforehand
Includes flights, accommodation with room upgrades, transfers city tours in Hong Kong and Bangkok.
PremierHolidays.co.uk
For your ultimate tailor-made ski holiday, click here
Get covered on your travels with a superb range of policies at great prices. Visit InsureandGo.com
World Class Golf, Spa and preferential Beach Club. Private estate overlooking West Coast
Villas from £275 per night inclusive of Golf
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper
News International associated websites: Globrix Property Search | Milkround
Copyright 2009 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.