Early retirement for public sector workers costs nearly £1bn a month

The government’s cave-in to trade union demands for public sector workers to retire at 60 has cost £6bn in the past seven months, according to new figures.

Last October the government announced that the three million staff already working for the civil service would be able to continue to retire at 60, rather than 65 as originally planned.

Figures from the Institute of Economic Affairs (IEA), revealed yesterday by the Sunday Telegraph, show that raising the retirement age for all workers as the government originally intended would have reduced the annual cost of public sector pensions by 15%, or more than £11bn a year.

Philip Booth, editorial director at the IEA, said: “Every month that passes when the government fails to increase the public sector retirement age costs Britain’s taxpayers nearly £1bn.”

It also emerged yesterday that Tony Blair and his Cabinet ministers, who are also eligible to retire at 60, have a pensions pot of £25m between them.

This includes an annual retirement income of £123,000 for the Prime Minister, £47,000 for trade secretary Alistair Darling and £28,000 for pensions minister John Hutton.

This week the government will unveil its White Paper on overhauling the state pensions system. It is expected to include a scheme of compulsory pension contributions for employers.

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