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UK government to introduce public-sector pension levy

It is widely rumoured that the UK government is looking at introducing a pension levy on the public sector which would see public-sector workers contributing an additional 2.5% of their salary to be able to enjoy current benefits in the future. This move would raise around £3.2 billion a year for the UK government and begin to reduce the potential £1 trillion black hole in public finances caused by pension fund liabilities of the future.

Many people have commented upon the precarious situation regarding public-sector pensions, which are effectively gold-plated and guaranteed by the taxpayer, at a time when many private-sector money purchase schemes are falling by the wayside. This will please many in the private sector and many taxpayers, but will cause significant friction yet again between the UK government and the unions. Slowly but surely we are edging towards a massive battle between authorities and the union movement in the UK which is adamant that workers need protection from tax rises and pension fund changes.

Quite how the public-sector has become so out of control is a mystery to many when you consider that Gordon Brown was seen as one of the more cautious Chancellor's of recent times. However, there is no doubt that pension fund liabilities and "waste" in the public-sector have mushroomed over the last few years and now account for a significant part of tax income received by the UK government and local authorities.

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