Pensions black hole to reach £7bn
LAVISH pensions for millions of state workers will cost the average private sector taxpayer about £220 a year unless there is a radical overhaul by the Government, figures revealed yesterday.
Whitehall sources warned the vast black hole in the public sector pensions system is set to double from £3.2billion to nearly £7billion between the financial years 2009-10 and 2015-16.
The increase could cost the average private sector taxpayer about £1,600 over that period.
Tory MP Gavin Barwell said: “This shows why we urgently need to look at public sector pensions to make them fair and sustainable both to the taxpayer and to people who devote their life to public service.”
The figures were released ahead of tomorrow’s publication of a report into public sector pensions prepared for the Government by former Labour minister Lord Hutton.
It follows concerns that longer life spans have made gold-plated pension schemes for about six million public sector workers plus millions more retired staff unaffordable.
A diminishing group of younger workers will have to work longer just to help fund the pension promises made to their parents
The peer is expected to call for state employees to pay thousands more into their pension pots every year and work until the age of 65.
The latest warnings of crisis in the public sector pensions system came as a Cabinet minister called for a radically streamlined state pension.
Work and Pensions Secretary Iain Duncan Smith pledged to “fundamentally simplify” the basic state system.
Pensioners could get a flat £140-a-week payment to end the injustice of women being penalised for taking career breaks to raise children.
Mr Duncan Smith warned the system was facing growing strain.
In a speech to Age UK in London, he said: “A diminishing group of younger workers will have to work longer just to help fund the pension promises made to their parents even before they invest in their own future.”