Public sector workers are unfairly coming under fire over their pension schemes, industry experts have warned.
The warning follows a report by the Public Sector Pensions Commission, which found that public sector pensions cost twice as much as previously thought and recommended radical reform.
Francesca Okosi-Arimah, the former HR director of government department Defra, and now director of support services at East Thames Housing Association, described the pension situation as a “ticking time bomb”, but called for a balanced approach.
“I do think they [pensions] need to be reformed – it’s not sustainable and we can’t afford those packages,” she told Personnel Today.
“We’ve got to be balanced on the way the debate is taking place. The majority of public servants are not paid huge salaries and the deal was you weren’t paid a huge salary, but you got in return a decent pension. That was the basis of it.
“Comparing it to the private sector isn’t strictly fair. We’ve got to think about how we manage it over a period of time and [develop] a realistic package.”
The study found public sector pensions cost 40% of salaries, but combined employer and employee contribution rates have been artificially set at around 20% of salary by the government.
However, union Prospect, which represents 34,000 public sector professionals and specialists, said the report perpetuates the myth that public sector pensions are unaffordable.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Dai Hudd, Prospect general secretary, said: “The Institute of Directors’ hypocrisy is breathtaking. Directors from the UK’s top 100 companies are set to earn a yearly average pension of £3,879 per week – more than many retired public sector workers will get in a year. Yet the people who provide the glue that holds society together are portrayed as the villains of the pensions piece.”
Brendan Barber, TUC general secretary, added: “This report is from people who simply want to reduce taxes for business and the super rich. They have nothing to say about top directors’ pensions, which have continued to go up during the recession and whose most common retirement age is 60.”
