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Leaders want probe into public sector pensions.

Byline: Andrew Mernin

BUSINESS chiefs have called for an independent commission into public sector pensions after complaining about their "ballooning" cost to taxpayers.

The CBI said a pounds 1 trillion "tab" had been run up, showing the need to examine the costs, financial rules and levels of taxpayer subsidy.

Most of the schemes will place a "massive and growing" burden on future taxpayers, yet it was difficult to build a clear picture of the liabilities, said the report. Private firms had made "difficult and painful" reforms to their pension schemes such as increasing employee contributions or made more cost-effective arrangements.

Employers paid more than pounds 33bn into private schemes last year, up from pounds 7.7bn a decade ago, but they still faced a deficit because of the stock market turmoil, said the CBI.

In contrast, a growing number of workers were eligible for a public sector pension and most can retire at 60 or earlier as well as benefiting from full inflation proofing, according to the business group.

Deputy director-general John Cridland said: "Public sector workers should have a good retirement, but we need to talk openly about how we split the bill. The debt that is being racked up is truly eye-watering and is set to get much worse.

"Taxpayers who are struggling to build their own personal pension will be lumbered for decades by the cost of covering public sector workers who retire years earlier on risk-free pensions.

"The private sector has had to face up to what its pension commitments will cost, and has made huge efforts to put its own house in order. All we ask is that government does the same for its five million employees.

"We don't know enough about the problems that these pensions are storing up. An independent commission would shine a light on the real cost of public sector pensions, and could help lighten the load for taxpayers."

The CBI said the public sector retirement age should be increased and employee contributions should rise.

We don't know enough about the problems that these pensions are storing up
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Publication:The Journal (Newcastle, England)
Date:Dec 15, 2008
Words:347
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