The Government’s controversial public sector pension reforms will reduce the average value of pension benefits for members by more than a third, according to research from independent think-tank the Pensions Policy Institute.
In the 2011 Budget, chancellor George Osborne confirmed the coalition would press ahead with the public sector pension reform ideas proposed by Lord John Hutton’s independent commission.
These include linking members’ pensions to their average career salary rather than their final salary, increasing the normal pension age in line with the state pension age and raising member contributions.
The PPI says the combined reforms will reduce the average value of a member’s pension benefit from 23 per cent of salary to 15 per cent of salary.
PPI director Niki Cleal says: “The PPI’s analysis suggests that the combined impact of the coalition Government’s proposed reforms is to reduce the average value of the pension benefit for all members of the NHS, teachers, local government and civil service pension schemes from 23 per cent of a member’s salary before the coalition Government’s reforms, to 15 per cent of a member’s salary after the reforms, a reduction in the average value of the pension benefit for members of these four schemes of more than a third.”
Rowley Turton director Scott Gallacher says: “There has to be a balance between costs and risk, and public sector workers still get a much better deal than their private sector equivalents.”