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Review will look at public sector pensions

The coalition Government has pledged to establish an independent commission to review the long-term affordability of public sector pensions.The parties have also brought forward the date to restore the earnings link for the basic state pension to April 2011 and vowed that pensions will be raised by the higher of earnings, prices or 2.5 per cent.

In the coalition agreement, the parties state: “The parties commit to establishing an independent commission to review the long-term affordability of public sector pensions, while protecting accrued rights.

“We will restore the earnings link for the basic state pension from April 2011 with a “triple guarantee” that pensions are raised by the higher of earnings, prices or 2.5 per cent, as proposed by the Liberal Democrats.”

The new Government has also outlined plans to phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.

Details should be set out in the emergency Budget.

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