To secure a retirement income of £72,000 annually—typical for top government roles—a worker would have to save £10,500 each year for 46 years. However, salaries in the public sector often lag behind those in the private sector. This raises the question: should we reconsider the generosity of public pension systems? Experts express divergent opinions.

Tom McPhail, Independent Pension Expert

Absolutely, public sector pensions should be reevaluated for a number of reasons. Firstly, the financial burden is unsustainable. This year, the UK is grappling with a £130 billion budget deficit, which adds to the £2.7 trillion national debt. We’re expending over £100 billion annually just to service our debts.

The last time the UK government enjoyed a budget surplus was in 2000-2001. Since then, we’ve been accruing debts consistently. Public sector pensions, which represent about £1.5 trillion in unfunded liabilities, are a significant area that necessitates overhaul.

Secondly, there’s a pressing issue of fairness. The civil service pension is a defined benefit scheme that guarantees an inflation-linked entitlement of 2.32 percent of salary for every year served. For example, a civil servant earning £30,000 could expect nearly £700 annually after just one year’s service. This generous setup is primarily funded by an employer contribution that averages nearly 29 percent of salary, in contrast to private sector rates that generally range between 6.5 percent and 9 percent.

The UK public sector—comprising schools, healthcare, defense, and administration—is sustained by taxes collected from private enterprises. The current disparity is glaring, as private sector employees often lack such generous pension schemes; only 10 percent of private sector defined benefit plans are open to new participants, with the more prevalent model being defined contribution schemes.

The Public Accounts Committee has highlighted a significant morale issue within the civil service, contributing to recruitment and retention challenges. A practical response could be reallocating some pension resources to enhance salaries.

No

Dave Penman, General Secretary of the FDA Trade Union

Pensions represent deferred compensation; thus, it is essential to view them as part of the overall remuneration package for employees.

The civil service last underwent pension reform over a decade ago, transitioning from a final salary to a career average scheme. This included raising the pension age to align with the state pension age and increasing employee contributions.

These changes effectively reduced costs, resulting in an average civil service pension of £9,784 per year in 2023.

The civil service is currently experiencing a pay crisis, with a lack of reforms for the past 30 years, leading to stagnated or limited salary increases over the last decade. Contrary to public belief, comparable jobs in the private sector often offer significantly higher remuneration. In senior roles, private sector salaries can be two to three times greater.

Attracting talent with specialized skills has become increasingly challenging for the civil service, with evidence showing that only one qualified candidate emerged in 37 percent of senior recruitment campaigns, while 6 percent of campaigns found none.

Moreover, the churn rate exceeds 10 percent, as civil servants pursue better compensation elsewhere.

The government often discusses the need for public service reforms. A critical aspect of this is ensuring appropriate recruitment and retention of skilled individuals essential for future advancements in areas like artificial intelligence and digital capabilities—especially as many lower-paid administrative roles are phasing out.

Addressing the significant challenges facing our country requires considered solutions, not rhetoric that fails to address the realities of modern civil service pensions. Enhancements in public services are a shared goal, and it is vital to create an attractive civil service that can draw in the necessary talent. Reducing pensions could ultimately hinder this objective.