The Government is being urged to address growing public resentment over gold-plated public sector pensions.
Aegon Scottish Equitable head of pensions development Rachel Vahey says public sector provision is the “last taboo” facing the Government although they warn that any review will meet with a lot of resistance from public sector workers.
Last week, the LibDems released research claiming to show that for every £1 a private sector worker contributes to their own pension, they pay 91p in tax towards a public sector worker’s pension.
LibDem work and pensions spokesman Danny Alexander warned that this could create a two-tier system of retirement provision between the public and private sectors.
Syndaxi Financial Planning managing director Robert Reid says the issue will have to be addressed imminently by the Government to avoid creating mass resentment among the public.
He believes MPs should take the lead and switch from their final-salary scheme to a defined-contribution arrangement.
Reid says: “The argument has always been that public sector workers are paid less than in the private sector. I am not sure that is always true any more. MPs should lead from the front or it will start to jar with people after a while.
“At some point, the worm will turn and I think it will be sooner rather than later. I would say it is about time for a bit of civil unrest on the matter.”
Vahey says the Government was able to raise the state pension age with relatively little complaint but any efforts to reform public sector pensions will meet with a lot of resistance. She says: “It is the last taboo. Any efforts to change the public sector pension scheme will be met with a lot of resistance. It is a real no-win situation for the Government. It has managed to increase the state pension age with little more than a murmur from the public but I suspect that changing public pension schemes will not be so easy.”