The Existing Perils of The UK’s Pensions: Huge Public And Private Sector Gap; Dangerous Pensions Freedoms
The OECD and pensions experts nationwide are calling on the UK government to ensure the inequality between public and private sector pensions does not continue. The recommendation comes after a review of “gold plated” public sector pensions that guarantee an addition that is worth more than their 100% final pensions in contrast to troublesome private sector pensions worth 51% of the promised final salary.
According to the Organisation for Economic Co-operation and Development, UK public workers in government offices and enforcement positions are likely to receive a 6% pay rise upon retirement. According to the Organisation, civil servants will enjoy pensions higher than their private sector counterparts – who will receive a pay cut of 50% and a pension only half their final salary if they retire at 68.
The OECD stressed UK’s immense retirement gap is the largest among those in the developed nations. Hargreaves Lansdown Pensions Policy Chief said private pension tax breaks are further destroying private sector pension portfolios nationwide. He added that the government “happily pours tens and billions of pounds for generous public sector schemes.”
The OECD is also warning about using the pensions pot as most retirees who withdraw early may outlive their funds. They said the pensions freedoms had also damaged the national annuity market as product providers have begun to pull out. Further underestimation of one’s lifespan and cost of living can be a future threat to UK retirees.