EU rules would double cost of British pensions
“Reckless” new EU rules could double the cost to British companies of providing “gold-plated” final salary schemes, new figures show.
Public sector pensions are inflation proofed, guaranteed and largely final salary (although that is slowly changing to average salary I think?).
And it\’s certainly possible to work out the cost of them by looking at what government has to spend to provide them.
However, when we\’re looking at the difference between public sector pay and private sector pay that isn\’t the way to do the comparison. How much pay now does a private sector employee have to give up to get the deferred pay of a final salary pension as against how much does a public sector employee have to? That\’s the correct way to measure the two sets of pay.
And if providing final salary pensions has just become vastly more expensive as a result of EU rules then obviously that pay gap has widened.
Therefore, the correct result of these EU pensions changes should be that public sector pay, the current pay, should be cut to reflect the increased value of those pension promises, that deferred pay.