UNISON estimates taxpayers face £15bn bill to support private sector workers who have not been able to save for retirement
UNISON has called on the government to take urgent action to protect private sector pensions, after a survey revealed a shocking number were being closed or watered down.
With two thirds of private sector workers already shut out of saving for their retirement, it says action would also protect taxpayers from a spiralling means tested benefits bill. UNISON estimates that taxpayers already face a bill of up to £15 billion for supporting the millions of private sector workers who have not not saved for their retirement – the real pensions timebomb.
UNISON general secretary Dave Prentis (above, right) said: “The real pensions timebomb is in the private sector. Already two thirds of these workers get nothing from their employers towards their pensions – this could cost the taxpayer billions in the future.
“The situation will spiral even further out of control, if more schemes are shut down and the taxpayer has to step in to cover the cost of supporting even more workers in their retirement.”
The Association of Consulting Actuaries has found that nine out of ten private sector defined benefit schemes (eg, final salary or average salary pensions) are now closed to new entrants and four out of ten are closed to future growth in line with an individual worker’s salary. It says half of these have closed in the last year alone.
The ACA also found that 25% of private sector employers are now looking to buy-out (or buy-in) all their defined benefit scheme liabilities in the next five years and it predicts this will rise to 40% within a decade. According to the ACA report, “the worsening economic climate since the summer has heightened employer concerns over rising pension costs.”
Prospect has responded to the ACA’s findings by warning that the government’s own plans would result in employers closing defined benefit schemes to hundreds of thousands more workers.
Pensions Officer Neil Walsh said: “Abolishing the national insurance rebates that employers who offer good quality, final salary schemes currently enjoy will pour petrol on the flames of pension scheme closures.
“The Government’s proposal would result in higher national insurance contributions for millions of employees, undermine employers providing decent pensions and make a bad situation much worse.
“Strengthening trade union negotiating rights over pensions would clearly have a positive effect on pension provision in the private sector. All the evidence shows that where workers are well organised and represented by trade unions their pension outcomes are significantly better than average.
“To date, the Government has shown more interest in driving down public sector pension provision than improving pension outcomes for workers in the private sector.”
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