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Tomorrow, thousands of public sector workers will strike over proposed reforms to their pensions. But just how do they compare to private sector provision?
Hargreaves Lansdown's Tom McPhail explained though public sector workers are understandably upset they will have to pay more into their pensions, retire later and receive less, payouts still compare favourably to private sector provision.
McPhail's figures, shown in the tables below, demonstrate the difference between the public sector pension schemes and average private pension benefits:
Current pension contribution rates (Source: Hutton Review and ONS)
| Pension | Member contribution | Employer Contribution | Total Contribution | Normal Retirement age |
| Civil Service | 1.5% | 18.9% | 20.4% | 60-65 |
| Teachers | 6.4% | 14.1% | 20.5% | 60-65 |
| Armed Forces | Nil | 29.4% | 29.4% | 55 |
| Judges | 1.8% | 32.15% | 34.0% | 65 |
| Average Private sector DB | 4.9% | 16.6% | 21.5% | 65 |
| Average Private sector DC | 3.0% | 6.1% | 9.1% | 55-75 |
Current service and benefit levels (Source: Hutton Review)
| Scheme | Average length of service (years) | Average (median) pension |
| LGPS | 7/8 | £3,048 |
| Armed forces | 10 | £7,987 |
| NHS | 11 | £4,087 |
| Civil service | 13 | £5,023 |
| Teachers | 23 | £10,275 |
| Judges | 16 | £52,565 |
| Fire service | 18 |
£13,192 |
|
Police |
25 |
£15,583 |
Projected outcomes at age 22 from auto-enrolment (Source: Hargreaves Lansdown)
| Earnings | Projected private pension income | State Pension | Total Pension | "Desired" target income | Shortfall | Additional funding required | Plan B: Later retirement age |
| £15,000 | £3,716 | £7,500 | £10,676 | £12,000 | £1,324 | £30 per month | 71 |
| £26,000 | £6,934 | £7,500 | £14,434 | £17,420 | £2,986 | £62 per month | 71 |
| £50,000 | £11,096 | £7,500 | £18,596 | £25,000 | £6,404 | £130 per month | 72.5 |
| £100,000 | £11,096 | £7,500 | £18,596 | £40,000 | £21,404 | £420 per month | Over 75 |
| Share | |
| Comment | Revealed: Public sector vs. private pensions |
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the comparison would be fairer if you included the state pension provision for the public sector workers and not just for private sector workers, as this would make the funding gap more realistic and greater for those set of workers.
Posted by: NJ