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Do you think the government’s public sector pension policy is unsuitable?

The Institute for Fiscal Studies (IFS) has concluded that the Government’s revision of its public sector pension policy is unsuitable and that it will not save money as expected.

The think-tank arrived at this conclusion by analysing the proposed reforms which 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.

“In general, lower earners in the public sector will actually get a more generous pension” they have said, as they will be eligible to retire at 65 with a higher annual pension than under the current scheme, because of the shift from the “final salary scheme” to the “career average scheme.” Conversely, higher earners are likely to lose out.

They also suggested that the recently negotiated pension reforms will make little or no difference to the long-term costs of public service pensions.

The Trade Unions Congress general secretary Brendan Barber called the study narrow as it examined just one of three major changes to the scheme, claiming that the package would actually force public sector workers to “pay more, work longer and get a pension that will not keep up with the proper measure of the cost of living.”

However, the government believes that the pension policy is fair and would save taxpayers billions of pounds.

The report was published a day after two education trade unions formally approved of the government’s offer. The other two groups, Association of School and College Leaders and The Association of Teachers and Lecturers have also decided to support the government. However, the National Association of Head Teachers has requested for clarification regarding contribution rates before voicing their opinion.

Negotiations between the government and unions are ongoing, but have already led to strikes by members of 29 unions including teachers, hospital employees, paramedics, council staff and other civil servants.
The government said the intention of the reforms was to improve fairness and control the cost of these schemes, which are estimated to cost the taxpayer £32bn a year and provide pensions far superior to those earned by most people in the private sector.

• Would you be happy with the proposed pension deal?
• What would you change about it if you could?