It seems UK taxpayers should be as, if not more, concerned about the growth in the number of private sector employees with no pension as spiralling public sector pensions, warns the Trades Union Congress (TUC).

For every pound spent by the taxpayer on paying out pensions to retired public servants such as teachers, civil servants and nurses, £2.50 is spent on subsidising the pensions of the richest one per cent of the population, shows new research by the TUC.

Decent pensions for all shows that the real pension problem in the UK is in fact the growing number of private sector employees who have no pension, with HMRC's 2007/8 figures showing the cost of providing tax relief on pensions was £37.6bn. This is in fact ten times the net cost of unfunded public sector pension schemes that are not backed by an investment fund, estimated by the Treasury to this year be £4bn.

The TUC said tax relief is heavily skewed towards those who are better off, and Treasury data shows that 60 per cent of tax relief goes to higher rate taxpayers, including 25 per cent to the top one per cent of earners on more than £150,000 a year. This equates to nearly £10bn a year.

The report states: 'One of the standard arguments from those who attack public sector pensions is to ask why modest taxpayers who do not have a pension should pay for the pensions of public sector staff.

'A much better question is whether taxpayers are happy to spend £2.50 on reducing the tax bill of the top one per cent of the population for every pound going towards providing a modest pension to retired nurses, teachers and all the other public sector staff who make a huge contribution to society.'

"The real pension crisis is the growing numbers of workers in the private sector without any kind of pension, who are now paying almost £10bn a year to subsidise the pension of the richest one per cent of the population," explained Brendan Barber, general secretary at TUC. "The employer-backed campaign against public sector pensions is right that there is an unfair division between the public and private sectors. But it is a strange idea of fairness to argue that because private sector staff have seen big cuts in their pensions, then so must the public sector."

Barber said the challenge now is to put private sector pensions onto a level playing field, and build upon the Chancellor's changes to pensions tax relief for those earning more than £150,000, to ensure tax help with pensions reaches those who need it most.

Decent pensions for all is available here.

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