From the TUC

Public sector pension costs are being presented in a highly selective way

15 Jun 2010, by Guest in Pensions & Investment

Looking at the papers today, Ministers are presenting the costs of public sector pensions in a highly selective way. They aren’t comparing like with like, and have not been clear that a main cause of the increased net cost of public sector pensions is their decision to freeze public sector pay.

The cost of public sector pensions they talk about is the difference each year between how much it costs to pay pensions to staff who have already retired and the contributions that current staff and employers are making – even though contributions are to pay tomorrow’s pensions not today’s.

As ministers have decided to freeze pay, contributions – a straight percentage of pay – are also frozen. As pensions rise with inflation, inevitably the gap between pensions and contributions will grow even though the cost of pay and pensions will fall as the freeze bites.

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