One statistic that has been largely missing from the media’s coverage of the pension debate this week has been life expectancy. Men can expect to live to 78, women to 82. That means that men can expect to live, on average, 17 years after the age of 65; women can expect to live another twenty years. The BBC reported in March that the average life span globally has doubled in the last 200 years, and that British life expectancy gains two years per decade.
According to the Guardian the average pension is £3,900 but a teacher who retries at 60 after working for forty years will have an index-linked pension of £24,000.
On average a public sector worked is being asked to contribute 3% more to their pension. This is not because of the deficit, but because pension schemes in the public sector are unfunded: like a pyramid scheme it pays up from the wide base of current workers to the small pinnacle of index-linked retirees. The problem is that the base and the pinnacle are not as proportionate as they are in a real pyramid.
The union leaders have been all over the radio and television talking about the most vulnerable being asked to pay more; but the Telegraph reports this:
Workers who earn less than £15,000 will not be asked to contribute any more. Those earning less than £18,000 will have extra contributions capped at 1.5pc.
Then there is the question of whether, as two teachers claimed on Sky News today, the workers are being asked to pay off the deficit whilst the bankers and the rich get off. The Telegraph reports the findings of Hargreaves Lansdown:
Take a public sector worker who starts on a salary of £20,000, sees their pay rise by 4.5pc a year and works for 40 years. According to Hargreaves, they will have an annual pension of £19,920 based on a career average scheme. This compares to just £7,960 a year that a private sector worker will get from a defined contribution scheme based on 10pc contributions.
Another stat that seems to have been underplayed is the reform made to the basic state pension, the triple lock. It will be upgraded in line with either inflation (CPI) earnings or by 2.5%, whichever is the largest.
The final fact comes from the economics editor at the Independent and makes the point about as plainly as it can be made:
Only…10 per cent of private-sector staff, are covered by [final salary pensions]. By contrast, about 80 per cent of public-sector workers still have traditional pensions.