Pensions bonanza for public sector workers who are predicted to see an increase worth double the current average pay rise
- Millions of pensioners will receive a 10.1 per cent rise – paid for by the tax payer
Millions of retired public sector workers will receive a pension increase worth double the average pay rise, new analysis reveals.
The taxpayer will fund this week’s 10.1 per cent gold-plated pension rise for five million pensioners, who are guaranteed a retirement income for life from the state.
It comes as workers are expected to see wages rise by just five per cent this year despite double-digit inflation, according to the Office for Budget Responsibility.
The boost is the biggest public sector pension increase in decades and the highest against pay growth for more than 30 years.
The analysis, by the Institute of Economic Affairs think-tank, reveals the gap between public sector pension and wage growth had not been as stark since 1992.
Millions of retired public sector workers will receive a pension increase worth double the average pay rise, workers are expected to see wages rise by just five per cent this year despite double-digit inflation (pictured: striking Public and Commercial Services union members in March)
Tory MP Jacob Rees-Mogg said that striking public sector workers should be offered pay rises in exchange for a smaller pension in retirement
Increasing all public sector pensions in line with inflation is estimated to cost the Treasury an extra £4billion.
This month, thousands of public sector workers are set to strike over pay, including junior doctors and teachers.
Tory MP Jacob Rees-Mogg said that striking public sector workers should be offered pay rises in exchange for a smaller pension in retirement.
He said: ‘The benefit that public sector employees get over those in the private sector is overwhelmingly in pensions. But they don’t notice this benefit.
‘It seems to me a way to deal with the current strike action is to say, wouldn’t you rather have cash now and move to a defined contribution system which will be less generous and won’t guarantee inflation and will be in line with what the private sector is getting?’
Timothy Pike, from the Pensions Policy Institute think-tank, said public sector workers misunderstand the value of their pensions.
He said: ‘Much more money goes into public sector pensions versus a typical pension.’