The Association of Consulting Actuaries (ACA) has revealed in a new survey that over 5 million public sector employees enjoy pensions which are ‘far better than people in the private sector.’
The ACA 2011 Pensions trends survey found a gulf between the two pension options. The gap is only expected to increase as the economic climate becomes tougher in the New Year.
The report highlighted that nine out of 10 private sector defined benefit schemes are now closed to new entrants and four out of 10 have closed to future accrual.
Defined benefit schemes give members a guaranteed pension based on their final salary or their average pay over the length of their career.
The survey of 468 employers running over 560 pension schemes found that there are 23 million workers in the private sector in the UK, and six million in the public sector.
Despite three quarters of employers stating that they intend to auto-enrol all employees to their existing workplace pension scheme, the report suggests that employers are not fully prepared for auto-enrolment as only a quarter have budgeted for the move, which starts in stages from October 2012.
On top of this, a fifth of employers are looking to decrease their pension spend. Over the last three years 21% of employers reported that the number of people opting out from workplace pensions has increased.
ACA Chairman, Stuart Southall said; “Auto-enrolment, beginning in late 2012, should widen private sector pension coverage, particularly where no pensions are offered at present, but the fact that recently the Government had to delay its introduction for smaller employers, because of the deteriorating economic climate, is discouraging.”
‘The Government needs to be bold in helping private sector employers so they can consider new ways to boost pension savings over the mid to longer-term so public sector pensions are not ‘far better.’
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