Public sector pensions

4 June 2009
Changes to Defined Benefit pension schemes run by BP and Barclays have hit the headlines this week. They're widely acknowledged to be setting the trend for further announcements in the coming weeks by other blue chip employers faced with similarly daunting pension liabilities.

One side-effect of these announcements is likely to be renewed media interest in the sustainability of DB pensions in the public sector. As one City editor writes today, "this week's actions by Barclays and BP emphasise the need for the next government – in the interests of fairness – to confront the huge taxpayer cost of public sector pensions."

If I had a pound for every time the press used the term "gold-plated" in relation to public sector pensions, I could probably retire tomorrow.

Tragically, I've been unable to negotiate such an arrangement. Twelve years of working for various government departments in the 1980s and '90s, however, mean I am a deferred member of the civil service pension scheme. This means that in 2024, taxpayers (including millions of public sector workers) will have to pay me a lump sum of about £12,000, and then about £4,000 a year until my death (which, on these figures, is more likely to be caused by hypothermia than choking on fois gras). These may or may not be typical numbers, but certainly very few people will be taking Goodwinian sums from public sector pension schemes.

So, in anticipation of the wave of opprobrium about to descend on my fellow public sector pension scheme members, I'd urge you to consider this thought provoking analysis. And to bear in mind that a critical proportion of the electorate are either active or deferred members of public sector schemes.

AF