Latest Public Sector News

17.08.15

Public pension contribution changes save government £3bn

By increasing employee contributions in several unfunded public sector schemes, the government said it has saved £2.9bn. 

The amount forms part of the government’s £18.6bn savings made in the last financial year through efficiency, reform and tackling fraud and error. 

The schemes where the balance between central funding and employee contributions have been ‘adjusted’ include the principal Civil Service pension scheme, NHS pension scheme, teacher’s pension scheme, NHS and teachers’ pension schemes in Scotland, Northern Ireland executive pension schemes, local government police force pension schemes, and local government firefighters’ pension schemes in England. 

It was projected that in 2014-15 the government would save £2.8bn through the changes, but it exceeded its target by £100m by increasing employee contributions by an average of 3.2% in the years up to 2015. 

As a result of the higher contributions, the schemes’ income provided by employees has made up for more of the shortfall between inflows and outflows. The government added that taxpayer money that would previously have been used to fill the gap has therefore been saved. 

It was also revealed that the government has saved £6.1bn by improving the way it buys goods and services, £5.8bn by reducing the size of the Civil Service and reforming pensions, and £1.5bn from changes in the management of government property and wasteful IT spending.

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