The TaxPayers' Alliance latest Research Note is on NHS pensions. Focusing on top pensions they find:
- 8,500 retired NHS staff have retirement benefits worth £1 million
- Total bill for these is £8.5 billion
Let's recap on how these pensions work:
- They are unfunded- there is absolutely no money invested to back them and the entire future burden will fall on taxpayers
- Pensionable age is generally 60 rather than 65 as is normal in the private sector
- Public pensions are still almost entirely final salary, rather than the money purchase plans now almost universal in the private sector (thanks to G Brown's great pension dividends grab)
- Public pensions are fully protected against future inflation, unlike almost all pensions in the private sector
The TPA's actuarial advisor Terry Arthur walks us though the calculations: 8,500 retired NHS employees in England and Wales are currently receiving an index-linked pension of at least £33,000 pa; the cost of an index-linked annuity of £1 pa for an annuitant currently aged 60 (with a 50% pension for a surviving spouse) is £26; 26 times £33,000 equals £858,000; add in the entitlement to a three-times lump sum on retirement (£99K) brings that up to £957,000; round up to £1m to take account of the fact that many of these people are actually getting more than a £33,000 pension.
It's a lorra lorra money.
PS Not all NHS pensions are equal. A GP can expect to get a 50% pension based on career average earnings after 40 years service, but few will achieve that. In contrast, senior DoH mandarins can easily put in 40 years, after which they now get a two-thirds pension.