Public sector workers in the UK are set to receive pensions that pay out more than £11 for every £1 contributed, while private sector employees are getting less than half that, according to Times Money.
Analysis of the country’s largest pension schemes shows that the NHS Pension Scheme returns £11.30 per £1 invested over a 20-year retirement, while the civil service scheme pays £10.08. By comparison, private sector workers typically receive £5.34 per £1 paid into their pensions.
The disparity comes as Chancellor Rachel Reeves reportedly considers limiting National Insurance tax relief on pension contributions, a move that could reduce private sector retirement pots by tens of thousands of Pounds. Former Chancellor Jeremy Hunt has also called for public sector schemes, which he describes as “unfair & unaffordable,” to be phased out.
How the Numbers Break Down
A teacher earning £30,000 contributes 7.4% of their salary to the Teachers Pension Scheme, with the employer contributing 28.68%. Over a 35-year career, this would result in an annual pension of £18,410. In contrast, a private sector worker on the same salary, contributing 8% above the statutory minimum, would amass a pot worth just under £100,000, far below what would be needed to buy an equivalent annuity.
Defined benefit public sector pensions guarantee a set income based on salary & years of service, often including inflation protection & dependants’ cover. Private sector pensions, usually defined contribution schemes, rely on investment performance & carry the risk that savings may not last a lifetime.
Growing Retirement Inequality
Experts say public sector pensions remain structurally more valuable. Alistair Cunningham from Wingate Financial Planning highlighted that employer contributions often exceed 25% of pay compared with 3–6% in private schemes. Combined with inflation protection & guaranteed benefits, total public sector rewards significantly outweigh private sector packages over the long term.
According to Hargreaves Lansdown, 58% of public sector households are on track for adequate retirement income, compared with 42% of private sector households, emphasising the widening gap.
As discussions over pension tax relief & potential reforms continue, private sector workers may face increasing challenges in achieving retirement security comparable to their public sector counterparts. The disparity between public & private pension outcomes highlights ongoing inequalities in retirement provisions across the UK.
