A pension system that is unfair and unaffordable | Letters

Guardian readers respond to an article by Zoe Williams which argued that cutting the welfare bill should start with pensions Zoe Williams seeks to stimulate a debate about pensions and intergenerational inequality, but seems to have overlooked the issues surrounding the funding of public-sector defined-benefit (DB) pension schemes (All this talk about ‘difficult’ cuts, yet the largest part of Britain’s welfare bill is never mentioned. Why?, 21 May). Such schemes place enormous pressure on public finances; they typically require a more significant employer contribution – often more than 25% – compared with private-sector defined-contribution (DC) schemes, where employer contributions of around 3%-8% are typical. It is estimated that the total inflows from public-sector pensions (employer plus employee) are around £50bn per annum – all funded directly from the taxpayer. An additional £5bn per annum or so is then required from the Treasury to fully cover the £55bn bill for public-sector pensions in payment, which are often index-linked to RPI. Private-sector contributions also benefit from the taxpayer in the form of tax relief (so might be considered to be around 20%-45% taxpayer fun