Public sector pensions far more generous than private sector - Ros Altmann

    Ros is a leading authority on later life issues, including pensions,
    social care and retirement policy. Numerous major awards have recognised
    her work to demystify finance and make pensions work better for people.
    She was the UK Pensions Minister from 2015 – 16 and is a member
    of the House of Lords where she sits as Baroness Altmann of Tottenham.

  • Ros Altmann

    Ros Altmann

    Public sector pensions far more generous than private sector

    Public sector pensions far more generous than private sector

    Public sector pensions far more generous than private sector

    by Dr. Ros Altmann

    (All material on this page is subject to copyright and must not be reproduced without the author’s permission.)

    Comparison of length of time taken by MP, civil servant and private sector worker to accrue different amounts of pension (estimates only, assumptions below)

    Value of
    pension if
    bought in
    annuity market
    No. Yrs
    MP Salary
    No. Yrs
    contributions civil
    servant Salary
    No. Yrs
    private sector
    worker Salary
    £25,000 pa
    Contrib 7% salary**
    £30,000 pa £795,000 20 years 72*yrs 73*** yrs
    £25,000 pa £662,500 16.5 years 60*yrs 69*** yrs
    £20,000 pa £530,000 13.2 years 48*yrs 64*** yrs
    £15,000 pa £397,500 10 years 36yrs 56*** yrs
    £10,000 pa £265,000 6.6 years 24yrs 46 yrs
    £5,000 pa £132,500 3.3 years 12yrs 33 yrs


    * PLEASE NOTE: These figures are theoretical only, since a civil servant earning £25,000 a year final salary could not really accrue a pension of this amount in their final salary scheme


    • Both private sector and public sector workers assumed to earn £25,000 per annum
    • Private sector worker assumed to contribute 7% of salary per year to their pension
    • Investment returns of 6% a year gross
    • 3% inflation is assumed for pension conversion

    *** NOTE: It is only theoretically possible for someone to contribute 7% of salary for so many years and then still have a further 25-30 years of retirement to live on their pension!


    MPs can accrue a very good pension after only a short time in Parliament. Civil servants can accrue a very good final salary (defined benefit) pension but it takes longer for them than MPs. All public sector workers will receive much better pensions than the private sector worker on average earnings who is contributing the average amount of around 7% of salary to a defined contribution pension scheme.

    Civil servants do not contribute to their pension at all (they only contribute 3.5% of their salary but this is for their partner’s pension, not their own and if they are single when they retire the get their contributions refunded!)

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