I don’t know what the figures are for school teachers in the U.S. (though, I’d bet that they’re not too much different in many states), but recently calculated equivalent “pension pots” for public sector employees in the U.K. show just how big a gap there is in the retirement prospects between the public and private sector. This Telegraph story provides all the stunning details that, for private sector workers, might be difficult to read.
Unions representing the 750,000 employees involved in the strike say their members are being unfairly treated. But Treasury figures released today expose how public sector retirement funds dwarf their private sector counterparts.
The calculations show that a mid-ranking teacher on £32,000 a year will receive a final salary pension that is the equivalent of having built up a £500,000 pension pot.
This is 20 times higher than the average private sector scheme, according to figures from the Office for National Statistics. Private sector workers would have to save more than 20 per cent of their salaries for 40 years – more than £500 a month for a similarly paid person — to amass the same amount in a defined contribution pension.
A well-paid London headmaster will retire with a pension scheme worth £1.5 million, the Treasury figures show. A chief constable retiring at the standard age of 55 would have a scheme worth more than £3 million.
My guess is that California’s public retirement system (that now includes 9,111 members in the not-so-exclusive $100K Club) would put the British pensioners to shame.