Public sector pensions, including those in the NHS, are more generous than similar private sector schemes, according to the Institute for Fiscal Studies.
It reports that “gold plated” defined benefit schemes are not only more widespread in the public sector, but they are also typically more generous.
It concludes that being able to claim pensions earlier, longer job tenures and enjoying peak earnings sooner mean the schemes are worth more as a percentage of public sector salaries.
Thus, one-year accruals in a defined benefit scheme are worth 25.5 per cent of a public sector employee’s earnings, compared with just 18.9 per cent in the private sector.
And for women, the difference is even greater, with annual pension accruals worth 26 per cent of public sector salaries, compared with 17.6 per cent in the private sector.
Defined benefit pensions, including final salary schemes, are based on the number of years employees belong to a scheme, and their pay.
But most have now been closed in the private sector, with companies instead offering less generous defined contribution schemes, under which the individual bears all the risk of investment volatility and increased life expectancy.