For every pound that taxpayers spend on public sector pensions, they dole out £2.50 in subsidising the pensions of the richest 1%, according to a TUC report.
Decent Pensions for All claimed that 60% of tax relief on pensions goes to higher rate taxpayers – those paying 40% – including 25% that goes to the top 1% of earners, defined as those earning more than £150,000 a year.
The TUC says this means that tax relief on pension payments made by the top 1% of earners costs the public purse “nearly £10bn a year”, compared to the £4bn a year it costs to fund the pensions of retired public sector employees such as nurses and civil servants.
A TUC spokesman said its calculations were based on Treasury figures.
The document sets out TUC opposition to cuts in public sector pensions. It said: “One of the standard arguments from those who attack public sector pensions is to ask why modest taxpayers who do not have a pension should pay for the pensions of public sector staff.
“A much better question is whether taxpayers are happy to spend £2.50 on reducing the tax bill of the top 1|% of the population for every pound going towards providing a modest pension to retired nurses, teachers and other public sector staff.”
The TUC claimed that the average public sector pension is £7,000, but most pensioners get less than £5,000.
TUC general secretary Brendan Barber added: “The real pension crisis is the growing numbers of workers in the private sector without any kind of pension, who are now paying almost £10bn a year to subsidise the richest 1% of the population.”
The TUC spokesman said it was impossible to say how much the upping of the top tax rate to 50% in April 2010 would impact pension tax relief.
He added that the organisation will publish a report on Friday highlighting company directors’ pension arrangements. He said there was evidence of a rise in lump sum cash payments by companies into directors’ pension pots.