Typical public sector workers will soon be able to spend around 30 years enjoying an "unsustainable" taxpayer-funded retirement, a report warned yesterday.
Lord Hutton, the former cabinet minister reviewing public sector pensions, is drawing up plans that mean government workers delaying their retirement by at least five years.
Most public sector workers are currently able to retire at 60, or earlier. This is now likely to rise to 65 by 2020.
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Teachers, NHS staff and Whitehall mandarins could live for about 30 years after retirement yet are providing only a fraction of the costs of their pensions.
As life expectancy rises, the retirement age has remained the same for more than 50 years.
The cost of the taxpayer-funded pensions has risen by more than a third – with the costs met by the Government. In future, retirement ages will be linked to life expectancy, so many workers will be uncertain when they can retire.
A shake-up to make the pensions more affordable will also lead to middle-class public servants contributing more towards their retirement from next year.
They could see their pension contributions rise by more than two per cent of their salaries under plans to be unveiled in the Government’s comprehensive spending review later this month.
Unions have reacted angrily to the proposals and are threatening a series of public sector strikes.
Lord Hutton, the former Labour pensions secretary, published his interim report yesterday. It lays bare the crisis facing public finances because of the unaffordable pensions offered to millions of public sector workers.
October 9, 2010
