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Huge private cost of public sector pensions

Liberal Democrat research has found that for every £1 a private sector worker contributes to their own pension, they are in effect paying 91p into a public sector worker’s retirement scheme in tax.

The research found that in 2005, total employer contributions to public sector pension schemes were £16.124bn while total employee contributions to private pension schemes was £14bn.

The LibDems say that priv-ate sector workers make up four-fifths of the workforce, meaning that around £12.8bn of public sector employer pension contributions are paid for by private sector workers.

LibDem Shadow Work and Pensions Secretary Danny Alexander says the Government is in danger of creating a two-tier system of retirement provision for public and private sector workers.

Alexander says: “In 40 years, private sector workers may well find themselves working seven years longer than public sector workers and still retiring with a pension worth considerably less. An independent commission should be established to look at both the fairness and long-term sustainability of public sector pensions.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “The Government needs to address this huge issue with a full and proper debate about the remuneration and pension provision for public and private sector workers.”

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