Chancellor George Osborne has confirmed that public sector employees will get up to £4 state pension back for every £1 extra National Insurance they pay as a result of the state pension reforms.
His Budget speech revealed for the first time the scale of the boost many public sector workers will receive from the Government’s state pension reforms.
Someone aged 40 when the single-tier pension is introduced who has always been contracted out will pay an extra £6,000 in NI over the rest of their working life and will in return get an extra £24,000 state pension over the course of their retirement. “That’s a fair deal. And it’s a progressive pension reform,” said Osborne.
Osborne also confirmed private sector employers with DB schemes will be allowed to pass on costs from the loss of the 3.4 per cent NI rebate to employees. Public sector employers cannot make similar adjustments.
Syndaxi Charted Financial Planners managing director Rob Reid says: “These stark figures must surely reopen debate about the state pension generosity afforded to many public sector workers.”