Latest news with #Nuffield Foundation
Yahoo
01-08-2025
- Business
- Yahoo
Taxpayer bill for public sector pensions jumps by record £47bn
Taxpayers were hit with a record £47bn bill to fund public sector pensions last year. Civil servants, doctors and teachers banked pots worth three times more than their private sector counterparts. HM Revenue and Customs (HMRC) data showed contributions from public sector employers hit a record high in 2024, eclipsing those made by businesses in the private sector, which stood at £46.4bn. This is despite the private sector employing 27.9m people, four times more than the public sector, which has just over six million employees. Gold-plated public sector pensions offer members a guaranteed income in retirement, making them much more generous than the workplace pensions in the private sector, which provide no such guarantee and rely on stock market returns to grow their retirement pot. Contributions by schools and hospitals are ultimately met by the taxpayer once teachers, nurses and doctors retire. The data also showed the average employee in the public sector enjoyed an average increase of £9,320 on their future pension pots – or the equivalent of a quarter of their salary – compared with £3,230 in the private sector. The figures were released against the backdrop of a summer of strikes, with a five-day doctors' walkout ending this week and nurses threatening further industrial action unless the government boosts their pay. The British Medical Association (BMA) is asking for a 29pc pay rise on top of an uplift of almost 30pc since 2022-23, according to the Nuffield Foundation. Sir Steve Webb, a former pensions minister, said: 'These figures are a reminder of the great value of public service pensions. The typical public sector worker gained pension rights worth over £9,000 last year, compared with not much more than £3,000 for the average private sector worker.' The data also show that total tax relief on pensions grew to £78.2bn in 2023-24, up from £72.1bn in the previous year. Labour has left the door open to a tax raid on pension pots as Rachel Reeves struggles to fill a yawning black hole. Torsten Bell, the pensions minister, refused to rule out a raid in the autumn Budget, suggesting that reliefs such as the 25pc tax-free lump sum currently available to retirees could be in the firing line, or salary sacrifice contributions, which enjoy National Insurance relief. However, a pensions raid could lower incomes in retirement. HMRC data showed individuals poured £14.6bn into their personal pensions in 2023-24, up from £12.9bn in the previous year. The Government has also paved the way for the state pension age to be raised and suggested millions of workers would have to sacrifice more of their pay to prevent a looming retirement crisis. Currently, workers who are auto-enrolled into a pension scheme give up 5pc of their salary in return for a minimum 3pc top-up from their employer. Retirement giants have suggested the split needs to be closer to 6pc each to avoid swathes of the population struggling financially in retirement. Public sector workers, including nurses, doctors and teachers, are currently in discussions about swapping lower pension contributions for higher pay today. The Telegraph revealed this month that Catherine Little, the permanent secretary to the Cabinet Office, has been heading discussions within Whitehall about the changes. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
01-08-2025
- Business
- Telegraph
Taxpayer bill for public sector pensions jumps by record £47bn
Taxpayers were hit with a record £47bn bill to fund public sector pensions last year. Civil servants, doctors and teachers banked pots worth three times more than their private sector counterparts. HM Revenue and Customs (HMRC) data showed contributions from public sector employers hit a record high in 2024, eclipsing those made by businesses in the private sector, which stood at £46.4bn. This is despite the private sector employing 27.9m people, four times more than the public sector, which has just over six million employees. Gold-plated public sector pensions offer members a guaranteed income in retirement, making them much more generous than the workplace pensions in the private sector, which provide no such guarantee and rely on stock market returns to grow their retirement pot. Contributions by schools and hospitals are ultimately met by the taxpayer once teachers, nurses and doctors retire. The data also showed the average employee in the public sector enjoyed an average increase of £9,320 on their future pension pots – or the equivalent of a quarter of their salary – compared with £3,230 in the private sector. The figures were released against the backdrop of a summer of strikes, with a five-day doctors' walkout ending this week and nurses threatening further industrial action unless the government boosts their pay. The British Medical Association (BMA) is asking for a 29pc pay rise on top of an uplift of almost 30pc since 2022-23, according to the Nuffield Foundation. Sir Steve Webb, a former pensions minister, said: 'These figures are a reminder of the great value of public service pensions. The typical public sector worker gained pension rights worth over £9,000 last year, compared with not much more than £3,000 for the average private sector worker.' The data also show that total tax relief on pensions grew to £78.2bn in 2023-24, up from £72.1bn in the previous year. Labour has left the door open to a tax raid on pension pots as Rachel Reeves struggles to fill a yawning black hole. Torsten Bell, the pensions minister, refused to rule out a raid in the autumn Budget, suggesting that reliefs such as the 25pc tax-free lump sum currently available to retirees could be in the firing line, or salary sacrifice contributions, which enjoy National Insurance relief. However, a pensions raid could lower incomes in retirement. HMRC data showed individuals poured £14.6bn into their personal pensions in 2023-24, up from £12.9bn in the previous year. The Government has also paved the way for the state pension age to be raised and suggested millions of workers would have to sacrifice more of their pay to prevent a looming retirement crisis. Currently, workers who are auto-enrolled into a pension scheme give up 5pc of their salary in return for a minimum 3pc top-up from their employer. Retirement giants have suggested the split needs to be closer to 6pc each to avoid swathes of the population struggling financially in retirement. Public sector workers, including nurses, doctors and teachers, are currently in discussions about swapping lower pension contributions for higher pay today. The Telegraph revealed this month that Catherine Little, the permanent secretary to the Cabinet Office, has been heading discussions within Whitehall about the changes.
