Public sector workers save twice as much for retirement

Workers in the public sector are saving more than twice as much for retirement as employees in the private sector, according to Government figures.

Public sector staff saved an average of £8,418 into workplace pensions in 2016 – up 8 per cent on their typical saving of £7,811 in 2012.

But those in the private sector saved £4,098 last year, some 38 per cent less than in 2012 when their average was £6,627.

The Department for Work and Pensions figures underline the wildly different prospects facing public sector and private sector staff.

experts warned that millions of people working for private businesses need to increase contributions to their pensions to maintain their living standards in retirement.

Alistair McQueen, of pension firm Aviva, said: ‘Around 16million private sector workers could be headed for disappointment in retirement if they do not increase their savings rates.’

The gap has been exacerbated by the arrival of auto- enrolment in pension schemes in 2012. This raised the number of savers, but many newcomers were putting aside the bare minimum, dragging down the private sector average. It is also thought firms offered less generous schemes after the start of auto- enrolment.

Mr McQueen said: ‘ Millions of workers have been brought into saving through this policy, but the minimum contributions of 2 per cent have led to many employers levelling down their contributions. Private sector employer contributions have been diluted by auto- enrolment … they have not been for 5million workers in the public sector.’

Lee Hollingworth of consultants Hymans robertson said increased contributions scheduled for 2018 and 2019 ‘will make some inroads, but there is still a long way to go for private sector pension saving to reach levels of the public sector’.

‘Headed for disappointment’