Public sector pensions ‘just like the Madoff pyramid’
"Public sector pensions amount to a risky ‘Madoff-style pyramid’ because they are unfunded to the tune of billions of pounds, a think-tank warned last night.
U.S. fraudster Bernie Madoff was jailed for a scheme which paid investors out of money given by future investors, rather than money that had already been earned through profit.
In an article in the journal of the Association of Consulting Actuaries, the Centre for Policy Studies (CPS) described the public sector pensions framework as a pyramid scheme similar to that run by Madoff because not enough money is coming in to cover the sums due to go out.
A CPS study forecasts the gap will be £8billion by 2014-15 and will rise. Author Michael Johnson said: ‘With what is on the table, the 20 per cent of the workforce in the public sector will continue to enjoy certainty of income in retirement – that does not exist for the other 80 per cent.’"
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