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Public Sector Pensions and You
What Lord Hutton's final report on the future of public sector pensions will mean for you
To tackle the ever-widening gap between public sector contributions and pension payouts, the coalition government set up a commission, under Lord Hutton, to report into the future of pensions for public sector workers, and to consider the options for short and long-term reform of the public sector pension system. The report has now been published and it recommends key changes to provision as well as the length of employees' working lives. This Census Financial analysis looks at what the implications of the Hutton Report will mean for you.
Has my pension scheme been examined?
The commission has studied a range of pension schemes. They are the Principal Civil Service Pension Scheme and its equivalent in Northern Ireland, the Armed Forces Pension Scheme, the NHS Pension Scheme, the NHS Superannuation Scheme in Scotland, and the Health and Personal Social Services Northern Ireland Superannuation Scheme.
It also covers the Teachers' Pension Scheme in England and Wales, as well as the Scottish Teachers' Superannuation Scheme and the Northern Ireland Teachers' Superannuation Scheme.
Others on the list include the Local Government Pension Scheme in England and Wales, and its equivalents in Scotland and Northern Ireland, as well as the Police Pension Scheme, the Firefighters' Pension Scheme, the UK Atomic Energy Authority Pension Schemes, the Judicial Pensions Scheme, the Department for International Development's Overseas Superannuation Scheme, the Research Council's Pension Schemes, plus a number of smaller schemes.
What are the report’s key recommendations?
The most significant recommendation is that existing pensions should be changed from a final-salary basis, to a pay-out based on average pay over workers' careers. The report says it would be possible to carry this out by the end of the current Parliament, in 2015.
What else does the report suggest?
A key recommendation is to raise the age at which people are entitled to draw their pension to the same as the state pension. Plans are for the state pension age to reach 66 for both men and women by April 2020. The armed forces, police and firefighters should see their pension age rise to 60.
Who would be hardest hit?
Those hardest hit are likely to be middle and senior management rising through the ranks. The lowest paid, and those close to retirement should be affected the least.
Is this going to affect the pension I have already built up?
No, existing accrued pension is protected under the remit of Lord Hutton's commission. The final-salary link for pensions built up until any change comes into force should also be maintained.
Whether you’re in the public sector or private sector, for concise, impartial analysis and advice about of your pension situation, call the Census Financial pension team on 028 9066 8700.
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