Latest Public Sector News

01.02.12

No long-term savings for pension reform

Public sector pension reforms won’t make long-term savings, analysis from the Institute of Fiscal Studies (IFS) suggests.

While savings will be made in the short-term, its report says reform to the structure of public sector pensions will make little difference in the long term.

The reforms include a switch from final salary schemes to pensions based on career average earnings, an increase in contributions by members, a retirement age pegged to the state pension age, and switching the way pensions are increased each year from RPI to the lower CPI.

Carl Emmerson, deputy director of the IFS and co-author of the paper, said: “The reforms to public service pensions implemented by the last Labour government, and this Government’s decision to switch from RPI to CPI indexation of pension benefits, will in the long run reduce the generosity and therefore the cost of these schemes to the taxpayer.

“But the consequence of the long drawn-out negotiations over the latest [structural] reform appears to be little or no long-term saving to the taxpayer or reduction in generosity, on average, of pensions for public service workers.”

To view the report, visit http://www.ifs.org.uk/publications/5999

Tell us what you think – have your say below, or email us directly at opinion@publicsectorexecutive.com

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