View more on these topics

Hutton interview: reforms ensure ‘gold standard’ pensions for public sector

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.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. My partner works in the NHS. She has only just had a review of how much she pays (upwards of course). She accepted the crap wages she used to get in return for a good pension scheme but, just like the FSA, the powers that be now want to move the goalposts.
    I appreciate a lot of you guys get angry about the pensions the public have receive, when we all have to fund our own money purchase policies, but please appreciate that not all public sector workers are on a fortune and the ones in the middle or nearer the bottom will have their planned (and promised) retirement plans thrown into chaos at a time that leaves many of them no room to make up the difference.
    Personally I don’t want to live in a country wher i t is considered ok to break agreements, and any people that do have to accept that when a promise/agreement/ contract of theirs is broken they have no right to cpmplain about it. The argument that we can’t afford it is not justifiable as an excuse.
    By the way, there are billions swilling around out there in other areas (overseas aid, defence, state benefits) that could be better used by this country.

  2. Well said Anonomous 12.09pm
    I am a IFA and much prefer Defined Benefits pensions schemes rather than the whims of the marketplace. If you are contractually obliged to pay for a product, it is not without reason to expect to know what you will get in return?
    Governments have little interest in people beyond their economic life. Whilst they can work and contribute to the economy, all well and good. When you can’t (tough luck) Hardly society in action

  3. Oh my heart bleeds, why do you think this country is in such a mess. Why should the private sector fund the gold plated pensions of the public sector. This has gone on for far too long. We in the private sector do not get higher wages, we do not have the same job security and all the other perks like 6 months sickpay. Think about it !!

  4. Well having served 4 tours of Iraq and Afghanistan, despite not agreeing with the justification given at the time or since – as a public SERVANT I do not get to choose where I go – members of the Armed Forces are dying and being severely injured yet this ex-Defence Minister suggests not being able to take a pension until 60, career averaging pension and no lump sum.To do so in the middle of a war is frankly disgraceful.

    Evacuation of UK citizens from Libya or elsewhere – is it the Police, Fire Service or private sector who come to the rescue? Floods in Cumbria? Foot and mouth? Other public sector such as Fire Service going on strike despite already having better pay and condtions than we enjoy? Bomb Disposal in the UK? All without the right to strike, collectively bargain or withdraw labour, AND we risk our lives and separate from family for 6months plus at a time. Who? The Armed Forces.

    The job requires a fitness standard, one which most of the public could not do in their 20s, never mind 55 which is the current uppermost retirement age for senior ranks, it is usually in the early 40s – the human body simply cant take the punishment of day-to-day Army life beyond that. Get another job? Im on 32k per year – I was recruited specifically with the pension as a sales pitch and I am satisfied with this including pensions AS A PACKAGE even risking my life on occasion. I have turned down civilian employment opportunities of over 100k pa and because of my skillset and experience I know I can earn this, but chose not to – because of the package AS A WHOLE. Change the package, and I am off. But there will come a tipping point when the Army wont retain the skills needed to evacuate you from hotspots, or to put your fires out when the FBU hold you to ransom, or build bridges in flooded parts of the UK. Be careful what you wish for – it may come true.

  5. Anonymous @12.31 pm

    Obviously you have no clue about morals. I pity your partner (if you have one). By the way, this country is in such a mess because successive governments did not have the balls to put new entrants to the public sector into money purchase schemes years ago, which would have been totally fair, as they would know what they were getting into.
    You had your choices to not work in the public sector when you went into employment (unless you tried and failed). You sound like a very bitter and twisted person and you will remember this exchange when someone has you over on an arrangement, because you obviously assume it is perfectly OK to renage on a promise.
    By the way, thank you Kevin Archer for obviously being a decent human being.

  6. Can someone explain why those in the public sector should have gold standard pensions?

  7. Right on Sean!

    It’s total nonesense that more than half the workforce is in the public sector, have average earnings greater than the private sector AND have benefits which the private sector (which pays for the public sector) can’t afford for its own workers.

    It’s manifestly unfair and it’s past time it was redressed.

    No economy can afford to have more than half its workers in the public sector. That should be addressed and the sooner the better!

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com