It has recently been reported that there is a huge deficit in the funding of Public Sector pensions.
The Deficit amounts to approximately 1 Trillion pounds and Business experts from the confederation of British industry are now calling for immediate action as the situation continues to get worse
But what does this mean for you?
As things stand it will be left to the tax payer to meet the shortfall, which will result in a contribution of approximately 10 Billion pounds per year. This means that workers will be required to pay an additional 330 per year in tax. For many this will cause a significant amount of concern
Why has this happened?
Research indicates that in recent years the number of Public Sector workers has increased. What's more, Public Sector salary increases have meant that the average Public Sector salary has now surpassed the average Private Sector Salary.
Some Public Sector employers are still offering Gold-plated Final Salary Pension schemes without holding the necessary funds in reserve to meet these obligations. This fact coupled with the increased number of Public Sector workers and an increase in the average Public Sector Salary seems to have resulted in this deficit.
What will be done about it?
The Prime Minister has indicated that he may review the provision of pensions in the Public Sector, but any such review may only affect future Public Sector Pension policy leaving many concerned and in the dark
What can you do?
As the saying goes, knowledge is power. Find out where you stand on your pension and take action. Taking action now rather than later could make all the difference to your retirement income