Lord John Hutton insists his public sector pension reform proposals will provide workers with “gold standard” retirement benefits which will remain out of reach for the majority of private sector employees.
In an interview with Money Marketing, the chairman of the Independent Public Services Pensions Commission says only implementing his entire reform package, which includes switching to a career average scheme, bringing retirement ages in line with the state pension age for most workers and introducing a ‘cost ceiling’ for Government spending on pensions, will ensure the system remains sustainable in the long-term.
However, the former Labour minister admits it will be “very difficult” for private sector employers to use the scheme design as a blueprint for pension provision.
He says: “I think these proposals will be sustainable for the public sector in the long-term provided the reforms are implemented as a package. These reforms will provide gold standard pensions for public servants.
“For the private sector it’s going to be very difficult. I hope there may be something in there for private sector defined benefit but I’m under no illusions about how difficult it’s going to be to see any move back into DB in the private sector.”
Hutton concedes implementing the changes by 2015 will be “challenging” but further delay is “not a good policy”. He also suggests his recommendations should be the final reforms to public service pensions.
He says: “There has been significant reform in the last 10 years, but it’s now a question of consolidation and making the final changes that are necessary if we are going to reflect rising life expectancy and build that reality into the schemes in the future. I think this is the final suite of reforms that will complete the journey.”
The full interview with Lord Hutton will be published in next week’s issue of Money Marketing.