Headlines: September 17th, 2012

Public service pension reforms will save £430b over the next 50 years and this will reduce the cost to the taxpayer by about half.

Publication of the Public Service Pensions Bill is the final stage in reforming current arrangements. The Bill is forecast to save £65 billion, of the total £430b savings, over the next fifty years.

The net cost of public service pensions is estimated by The Office for Budget Responsibility to fall from 1.5 per cent of GDP without reform, to 0.9 per cent with reform by 2061-62.

The most significant cost reduction of the reforms will come from changing the inflation link for public sector pensions, switching from the retail price index to the less generous consumer price index. This will save the Treasury £250 billion in total, or £8.6 billion a year. The cost is so significant because it affects existing pensioners as well as future retirees.

The Bill will affect pensions by moving to career average pension schemes, instead of final salary schemes. Public servants will have to work longer to receive a full pension and the pension age will be linked to their State Pension Age.

Public servants retiring in the next 10 years will not see any change when they can retire, nor any decrease in the amount of pension they receive on retirement, except for the reduction from the change from RPI to CPI.

Mark Serwotka, general secretary of the Public and Commercial Services union, said: ‘We intend to fight this bill politically, but we also believe that co-ordinated industrial action is still necessary on pensions as well as pay, and this should be held as soon as possible after the TUC demonstrations on 20 October.’