Millions of Britons who\u2019ve scrimped and saved over decades are now seeing the value of their retirement pots crumble.<\/p>\n
Those in drawdown are particularly hard hit, suddenly unable to withdraw the same monthly amount without depleting their savings too quickly.<\/p>\n
The result? Retirement has become even more stressful and uncertain.<\/p>\n
Sharp falls in global equity markets have shaved billions off UK pension values in just days.<\/p>\n
It\u2019s a punishing setback, especially after a lifetime of doing the right thing. Yet one section of society remains untouched.<\/p>\n
Public sector workers can sleep soundly. Their pensions are protected, inflation-linked and guaranteed, regardless of what happens in the markets.<\/p>\n
While everyone else frets about falling fund values and eroding drawdown rates, theirs are paid out like clockwork. Whatever the FTSE 100 or S&P 500 does next.<\/p>\n
Public sector workers don’t have to put up with second-rate ‘defined contribution’ pensions, whose value at retirement depends on stock market performance.<\/p>\n
They\u2019re on gold-plated ‘defined benefit’ final salary schemes, which are underpinned by the taxpayer.<\/p>\n
It\u2019s a brutal irony.<\/p>\n
Private sector workers are watching their retirement dreams slip away while simultaneously footing the bill to protect those in the public sector from precisely the same fate.<\/p>\n
This is the true face of Britain\u2019s two-tier pension system. One rule for the Labour\u2019s favoured public sector, another for everyone else.<\/p>\n
The hidden cost of providing these pensions is \u00a357billion a year, according to the Institute of Economic Affairs.<\/p>\n
That\u2019s almost a third of the public sector payroll.<\/p>\n
The official liability figure stands at \u00a32.6trillion.<\/p>\n
Public sector pension schemes are \u201cunfunded\u201d. The money to pay them doesn\u2019t sit in some well-managed pot, compounding nicely. It comes straight out of current tax receipts with the honourable exception of local government pensions, which are fully funded<\/a>.<\/p>\n Other countries, such as Canada and Sweden, have moved to funded models. Labour won\u2019t even discuss it.<\/p>\n To be clear, this isn\u2019t a swipe at nurses, teachers or firefighters. A good pension has long been the trade-off for tough jobs and modest pay.<\/p>\n But public sector salaries, especially at the top, have risen fast. The pension bargain is no longer what it was. And yet the protection remains.<\/p>\n Meanwhile, the private sector gets one kicking after another. Gordon Brown\u2019s 1997 tax raid on dividends devastated private sector final salary schemes.<\/p>\n They barely exist today. Brown didn’t dare touch public sector pots, of course.<\/p>\n