Cost of public sector pensions has fallen in the past few years
The Commons Public Accounts Committee has announced that the cost of public sector pensions has fallen significantly over the last few years – but commented that there needs to be more information available to see by just how much it has dropped.
The report by the PAC revealed that the cost of public sector pensions has been reduced as a result of changes made in 2007-2008, the Treasury predicted that the price would begin to stabilise over the next fifty years to approximately 1% of GDP, this should save the British taxpayers an estimated £67billion. However, there is not enough accurate data to fully determine the exact amount of savings.
The study also showed that workers were not being given sufficient information concerning their pensions and the value of the funds, and they found that this was impacting significantly on their decisions over whether to join a scheme or to opt out of it. It suggests that employers should add the financial value to pension schemes clearer to workers in order to improve staff retention and recruitment statistics. An increase in employee’s contributions could lead to more and more public sector workers choosing to abandon pension schemes and putting pressure on their means-tested benefits, currently employees are adding 0.4% in contributions for teachers, and up to 2.5% for NHS staff. Do you work for the NHS? Use or NHS pension calculator to find out your entitlement.
Deputy General Secretary for Prospect, Dai Hudd, was positive about the report’s findings, highlighting the fact that the results would dismiss any myths about public sector pensions and would reassure members that their funds were on a ‘sustainable footing’. Following the 2011 Hutton review, which the government commissioned to look into public sector pensions, it has been agreed that long-term structural reforms are what is required. The PAC has pointed this out and sees this as an opportunity to take a clear strategic direction on pensions, developing and advertising them to members and those who are not yet part of a scheme. Hopefully, this will mark the beginning of a period of stability surrounding pension policies, with savings coming centrally from cost-sharing and putting a cap on contributions.
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