Government employees will enjoy a bumper pension while other workers’ payments are limited.

Millions of retired private sector workers will see their incomes drop by 8% in real terms next year, as public sector pensions increase.

They will be denied inflation-linked increases in their pensions, while former civil servants, doctors and teachers can have their annual pension income increased by up to 13% with generous “defined benefit” pensions. , which are funded by taxpayers.

The Bank of England predicts inflation will hit 13 percent this October, but the annual increase for private sector “defined benefit” pensions is capped at 5 percent. Pensioners face a second blow in 2024, as inflation is expected to hover around the 10 percent mark next year.

A former private sector worker who receives a defined benefit pension worth £20,000 a year will only be out of pocket by £1,600 next year. This equates to a real-terms loss of £32,000 over a 20-year retirement. But it could almost double because the cap would also put them at risk of higher inflation next year.

Steven Cameron of pensions group Aegon said the 5pc cap had been overlooked when inflation was low but would now have a big impact. He said the cap was designed to protect employers from handing pensioners unsustainably large sums if inflation were to rise.

But in the case of public sector pensions, it is taxpayers who will fund the unlimited, record increases. These expensive pension schemes promise to pay a guaranteed income that increases every year by inflation, protecting pensioners from the worst costs of a life crisis.

Those with “defined contribution” pensions, which are the majority of workers today, will be most vulnerable to rising prices because they have no watchdog to protect them. These money purchase pensions are mostly invested in the stock markets, which have experienced declines and are not guaranteed to rise in inflation.

Baroness Rose Altman, the former pensions minister, said public sector pensioners had long been a “pension elite”.

“They have a fully guaranteed pension and will have peace of mind even in the face of life’s crisis,” he said.

“This big pension was based on the idea that public sector workers would get less pay today but more pensions in the future. But average pay has risen so much that it’s at least as much, if not more, than private sector pay.” Is.

He added that former public sector workers have a more secure pension than the government pension. “The promise of a state pension triple lock was broken this year but public sector pensions are guaranteed by law to rise with inflation so that cannot happen.”

Steve Webb, a former pensions minister and now a partner at consultancy LCP, said there would be no respite for private sector pensioners as inflation is expected to remain high for a few years.

He said: “It’s tempting to think that pensioners will be immune to inflation because the state pension will be linked to rising prices but for many people that’s not the case. In fact, it will be another squeeze year where people turn up the thermostat. Declining and making tough choices.”