Personal & Workplace Pensions

Data reveals huge gap between private and public sector pensions

· 3 min read

New data has revealed an enormous gap between private and public sector pensions, with some in the public sector paying more than three times basic private sector pensions. The data also revealed that the top pension in the UK came from the NHS, where workers get more than £10.00 for every pound that they save.


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Many workers across the UK put money into pension schemes from their salaries, as most know the importance of planning for retirement. However, new data has revealed a huge gap between the best public sector pensions and the most basic private ones, with workers in the former group getting more than three times more per pound saved in some cases.

The top pensions from around the country were ranked by Money Mail, and the report highlighted the difference between pensions for public and private sector workers. It showed how the NHS pension scheme is the best in the country, with workers getting up to £10.00 for each pound they save. However, many private-sector workers with a basic pension scheme are getting just £3.00 per pound saved.

Making up for lower salaries

In the past, impressive pensions given to public sector workers were designed to make up for lower basic salaries, which tended to be significantly lower than in the private sector. However, this is no longer the case, as figures from the Office for National Statistics show that the average public sector employee now earns considerably more per week than someone in the private sector. This means they are now benefitting from higher salaries and far better pensions.

While pension schemes such as the NHS are undoubtedly among the most valuable in the country, it has emerged that many employees have opted out of it. In the 2015-2016 financial year, 35,759 NHS workers opted out of the scheme. In 2019-2020, this figure increased by more than 50% to 54,590. As part of the NHS pension scheme, employees pay between 5% and 14.5%, while the employer pays 20.68%.

Former Pensions Minister and consultant at LCP, Steve Webb, said that while public sector pensions could vary from one specific sector to another, the scheme generated more per £100 contribution than a new employee on a private scheme would get.

He said, “The main reason for this is the substantial employer contribution in the public sector which can often exceed 20 percent of salary, but which is often largely invisible to the scheme member. Those who opt-out of these pensions are in effect throwing away a significant part of their salary.”

The pension scheme for teachers was highlighted as the next best scheme in the country, with employees saving between 7.4% and 11.7% while the employer now has to pay 23.68%. Savers get close to £10.00 for every pound saved into a teacher’s pension, but the higher rate of contribution means that many independent schools have had to pull out of the scheme.

Those who work in the Civil Service save between 4.6% and 8.05% of their salaries toward their pensions, while employers have to pay a massive 30.3% in some cases. For those working in local government, the contribution by employees is between 5.5% and 12.5%, while the employer pays approximately 19%.

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On the other hand, basic private pension schemes ask for a minimum of 5% from employees while employers must pay just 3%. In addition, the investments made with the money offer no guarantees around income and value.

Reno Charlton
Reno Charlton
Reno Charlton has been writing since 2003. She has worked with a diverse client base around the world, across a variety of subjects and industry areas, specialising in lifestyle and health & wellbeing niches. In addition to her online work, Reno is also a published author and has written several children's books and short stories.
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