The National Association of Pension Funds (NAPF) responded to figures released by the Office of National Statistics showing the Government’s pensions obligations.
Mel Duffield, Head of Research at the NAPF, said: These are big figures, but it must be remembered that public sector pensions cover millions of past and current workers and, in the case of the state pension, most of the UK population. Public sector pensions need to be reformed to make them more sustainable. The current burden on the taxpayer is significant, but stripping these pensions back too much will only worsen the UKs retirement savings crisis. All workers deserve a good pension, whether public sector or private.
Retirement comes with a big price tag and we fear the burden on our society and our economy will only get worse.
The core problem is that our society is not saving enough for its old age and so we will have to work longer or save more, or both. Retirement ages are rising and new rules to automatically place all workers in a pension will help, but more needs to be done. Despite the continued shift away from defined benefit pensions, which include final salary, the lion share of obligations for employers are still sitting in those schemes. Whilst defined contribution style schemes do not generate liabilities for employers in the same way, we can expect their importance to grow from later this year.
