Myth # 6. The Private Sector props up the Public Sector

REALITY. The UK economy depends on a thriving public sector as well as private sector

What are the Facts?

It is not a one-way street, but a complex relationship. Public sector workers and employers pay for the vast majority of pensions in payment through contributions. But without an effective public sector, the private sector would be far less productive. It directly benefits from the public sector through transport and information infrastructure and an educated workforce, whose social, health and welfare needs are attended to by the public sector. Third, it is also true that all workers pay for everyone’s retirement income in one way or another. Private sector pensions are paid for through the price of goods and services, much like tax levels include the cost of public sector pension provision.

In short, the private sector could not function without the public sector and vice versa. The public sector contributes significantly to GDP and it is entirely unfair to suggest that the public sector is any way a drain on the private sector.

Public sector pension schemes also play an important economic role in other ways. For example, funded public pension funds provide billions of pounds worth of investment in the UK economy. Pensions are also an important element of the remuneration package and an essential recruitment and retention tool to attract people to deliver our vital public services. In addition, they play an important role in ensuring individuals have a reasonable income in retirement. They are an effective way of encouraging saving for retirement among a large part of the workforce, at a time of great turbulence and uncertainty.


The recent attacks on public sector pensions have used the economic crisis as excuse to attack pensions. The key issue about pensions should be ensuring every worker has access to a decent pension scheme; about levelling up not down. Public sector pension schemes are good quality and this should be applauded. The UK need good pensions for all, not lower pensions and poverty in old age for all. Society depends on public services, delivered by public servants who deserve decent pay and pensions.

Index – Media myths about civil and public services.

4 Comments CherryPie on Mar 17th 2010

4 Responses to “Exploding Public Sector Pensions Myths – Part 7”

  1. This has been an excellent series Cherie.

    • CherryPie says:

      I have the one on Privatisation to come but I will wait until after our industrial action next week. I don’t want it to get too fragmented.

  2. jameshigham says:

    When will you publish?