A pension divide has been identified between public and private sector workers, with public sector schemes coming out on top.
It has been revealed today that there is currently a pension divide between private and public sector workers in the UK.
According to Money Mail, who ranked the country’s top pensions pound-for-pound, the NHS pension scheme came out on top, paying out as much as £10 for every £1 put in.
However, it shared that those saving into the most basic private sector schemes could receive as little as £3 for every £1 they save themselves, reported This Is Money.
It also identified how other job roles fared. For every £1 teachers save, it is estimated that they will receive £9.84, while those in civil service will receive £8.53 for every £1, and local government staff will be given £6.28.
Public sector schemes, such as the NHS’s, offer pension promises linked to average career salary that provide a guaranteed rate of retirement pay, that will rise with inflation.
Due to this, they are far more valuable than private sector pension schemes, which are in comparison largely defined contribution (DC), which are pots of money invested on the stock market that the employee cannot use until they retire.
Despite this however, 35,759 NHS workers opted out of their pension in the 2015/16 financial year, which rose to 54,590 in 2019/20, an increase of 53%.
This may be because employees pay in around 20% of their salary to the scheme, compared to other employees in different roles who pay in anything between five percent and 14.5%.
Elsewhere, according to MPs on the public accounts committee, more than 238,000 public sector workers have dropped out of their pension scheme.
The committee noted in a report published in June 2021 that there was a “concerning” drop in enrolment by younger and possibly hard-up public sector workers such as nurses and teachers.
The report added: “The cost of supporting this generation will fall on future taxpayers.”
This echoes data Reward Strategy recently shared, which indicated that three in 10 millennials are not saving into a pension pot.