The Government has made no savings by increasing the retirement age for public sector workers to 67, independent pensions consultant John Ralfe says.
Ralfe’s analysis suggests the savings to the tax payer from aligning the retirement ages of public sector workers with the state pension age will be offset by improved accrual rates and above-inflation annual increases in pension payments.
Ralfe says: “Danny Alexander told the House of Commons in December the things that had been agreed in negotiations with trade unions, including the new proposal for accrual rates and the increase in the pension age, would save the Government tens of billions of pounds.
“But the total cost of the new pension arrangements compared with the existing arrangements are pretty much identical.”
In its response, the Treasury says Ralfe’s analysis is “partial” and does not include savings from planned increases in employee contributions and switching the measure for pension rises from RPI to CPI.
Trade unions and the Government are close to reaching an agreement over the reforms after Treasury Chief Secretary Danny Alexander (pictured) announced further concessions in December.
The latest proposals offer more favourable rates for accruing pension benefits, better protection for workers approaching retirement and no watering down of the Government’s “fair deal” policy which protects the pension rights of employees whose roles are transferred to the private sector.