Public sector pension changes to save UK taxpayers £430billion
14 September 2012
Posted by: SAIT Technical
By Christopher Hope and James Kirkup (The Telegraph)
The Public Service Pensions Bill, published on Thursday, is forecast to save £65billion of that figure, ministers said.
The Bill ends final salary schemes for hundreds of thousands of civil servants and will force them to work for longer to receive a full pension.
The pension reforms were at the heart of strikes last Autumn, and were thought to have been settled after prolonged peace talks earlier this year.
The Government hopes the reforms will reduce public service pensions costs by around half, while ensuring that they remain amongst the very best available.
The £430billion estimate was based on new calculations by the Office for Budget Responsibility, the Government's independent analyst of the public finances.
Most of the saving – around £250billion – will come from changing the annual uprating of many public sector pensions from the RPI to the CPI inflation measure.
At an average of £8.6 billion a year, the saving is equal to around two pence on the basic rate of income tax.
The OBR said that the net cost of public sector pensions is set to fall steadily over the next 50 years, largely as a result of the changes made under this Government.
Chief Secretary to the Treasury, Danny Alexander, said: "This Bill is the final stage in delivering sustainable public service pensions.
"It will cut the cost to taxpayers by nearly half, whilst ensuring that public sector workers, rightly, continue to receive pensions amongst the very best available.
"This is a good deal for taxpayers and a good deal for public service workers: a settlement for a generation.”
However, last night Mark Serwotka, leader of the Public and Commercial Services union, threatened fresh strike action over the plans.
He 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.
"This should be held as soon as possible after the TUC demonstrations on Oct 20.”
The Bill also ends the generous "Great Offices of State” pensions which are handed out to future Speakers of the Commons, the Lord Chancellor and Prime Minister.
Unions on Wednesday called for an independent commission into the state pension age amid anger over plans to make people work until they are 68 before receiving their retirement money.
Delegates at the TUC conference spoke out against the idea that working longer is inevitable, warning that many employees would not physically be able to last that long in their job.
Chris Murphy of the construction union Ucatt said people in the building trade such as bricklayers do not work late in their lives because of problems with their health