Public and private sector pensions compared

Source: http://www.bbc.co.uk/news/business-15925017

• The UK has a workforce of 29 million people.
• There are also 6.4 million people paying into personal pensions, which have no contribution from their employer. This is the only option for the self-employed.
• Some 23 million of these are employed in the private sector. Of these, only 3.2 million contribute to a workplace pension scheme that also includes a contribution from their employer.
• The number of people actively saving in company pension schemes in the private sector has almost halved since 1991.
• The median average salary-linked public sector pension that is currently being paid out to a pensioner, is worth £5,600 a year.
• That compares with £5,860 in the private sector, according to the National Association of Pension Funds (NAPF).
• Using a mean average, some £7,800 a year is being paid in a public sector pension compared with £7,467 for a private sector salary-linked pension.
• Some 87% of public sector employees are currently paying into a salary-linked pension scheme, compared with 12% of private sector employees.
• Many of the salary-linked pension schemes in the private sector have been shut by employers.
• Instead, 32% of the private sector workforce, including the self-employed, contribute to personal pensions and other schemes where there is no promise of a particular level of retirement income.
• So the "generosity" of these schemes depend on many variables, including the performance of investments funded by these savings and the state of the market at the time people decide to retire.
• At present, one pensions analyst calculates that a "typical" personal pension pot of £30,000 could buy an inflation-proof annual pension income (called an annuity) of £1,115 a year.