U.K.'s public sector pension problem
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TEXT OF INTERVIEW
STEVE CHIOTAKIS: A U.K. government report out today says a couple of things could very well go up soon. Contributions to retirement and the overall retirement age. Marketplace's Stephen Beard is with us live from London with the latest there. Hi Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: We know that a lot of governments are facing huge fiscal challenges right now. What's so special about the public sector pension problem in Britain?
BEARD: There is a particular problem here because unlike in the U.S., most public sector pensions in Britain are unfunded, they're paid out of tax revenue. So today's public sector retirees, mostly, have their pensions paid by today's taxpayers. As people live longer, this represents an ever-increasing burden on the public purse. It's reckoned that if this system is not reformed, the cost of paying public sector retirees will double to $15 billion a year by 2015 and increase exponentially into the future.
CHIOTAKIS: So what changes are pensioners in the U.K. facing?
BEARD: Today's interim report recommends that the retirement age for public sector workers should be raised from 60 to 65. Only fair, says the report, since that would bring it into line with the private sector. Why should private sector workers work until 65 so they can fund the early retirement of public sector workers. It also says that public sector workers must make a bigger contribution to their own pensions. There's going to be trouble over this, though, Steve. No doubt about it. Public sector unions today were warning of a huge wave of French-style anti-austerity strikes.
CHIOTAKIS: Marketplace's Stephen Beard in London. Stephen, thank you.
BEARD: OK Steve.