Taxpayer-funded pensions: 'Gaping chasm between public and private'

JUST a week after Chancellor George Osborne signalled an assault on public sector pensions, the size of the retirement pots enjoyed by the city's top executives can be revealed.

Our story today shows how seven of the council's most senior officials have built up funds worth more than 6.4 million between them.

Three are about to take early retirement with six-figure lump sum payments and annual pensions starting at 55,000 and rising – in the case of chief executive Tom Aitchison – to more than 72,000.

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The relative riches they will enjoy will leave many green with envy – not just in the private sector, but also among their less well-paid colleagues in the council.

Of course, they are doing nothing wrong in taking what was offered to them when they accepted their current posts. And each would argue that they have earned the reward of a comfortable retirement.

But it is a reminder that the Chancellor is right to say that the amount of taxpayers' money that goes into public sector pensions must be cut.

In the private sector, two in three employers pay nothing into staff retirement funds, and those that do give an average 10 per cent of pay. The average public employee, on the other hand, receives contributions worth 18 per cent of pay.

In total, unfunded public pensions cost us 25 billion a year.

Yet a report by the Policy Exchange think tank last week suggested public sector employees now work an average of nine years less than their private sector counterparts but are paid 30 per cent more.

There is no longer simply a gap between public and private sector workers, there is a gaping chasm. The need for action is clear.

Some outrageous deals have been agreed at public expense in recent years. Henry McLeish had clearly not earned the 34,000-a-year pension he received on standing down as First Minister after just 12 months.

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And East Lothian Council should never have agreed to pay its then chief executive John Lindsay 149,000 redundancy, just months before he was due a 50,000 annual pension and 155,000 lump sum.

There is no comparison between these two shameful cases and the three Edinburgh officials who are about to step down after long and dutiful years of service.

But in these times of austerity the Government simply must get to grips with the public/private divide and tackle the problem of unaffordable taxpayer-funded pensions.