The Government’s proposals for public sector pension reform will save “little or no money” in the long-term, research suggests.
A report by the influential Institute for Fiscal Studies says concessions made by ministers following protracted negotiations with trade unions means the costs associated with the new career average schemes will be broadly similar to the old final salary schemes.
The concessions, announced in December, include improved accrual rates and protection for the low paid and people within 10 years of their retirement age.
IFS deputy director Carl Emmerson says: “The reforms to public service pensions implemented by the last Labour Government, and this Government’s decision to switch from RPI to CPI indexation of pension benefits, will in the long run reduce the generosity and therefore the cost of these schemes to the taxpayer.
“But the consequence of the long, drawn-out negotiations over the latest reform appears to be little or no long-term saving to the taxpayer or reduction in generosity, on average, of pensions for public service workers.”
The report echoes the views of independent pensions consultant John Ralfe, who said in January that the total cost of the new pension arrangements were “pretty much identical” compared with existing provision.