Posts Tagged ‘LGPS’
Budget Bad News for Final Salary Employers
In our recent article we wrote about the impending extra National Insurance costs that faces employers with final salary pension schemes.
This is going to disproportionately affect those employers who participate in public sector pension schemes – not all of whom are public bodies.
In his Budget yesterday George Osborne announced that these employers will start to pay more from 2016. This is a year earlier than we had anticipated. Osborne called it a ‘progressive pension reform’ although for many beleaguered employers in public sector schemes this will be a moot point.
At a time of massive cuts those employers who find themselves participating in public sector schemes as a result of outsourced arrangements may find this another bitter pill to swallow on top of funding and deficit rate increases.
Steve Clark
Lord Hutton’s 27 Recommendations
It’s been another very busy day on planet pensions! As we mentioned last week the Independent Public Services Pensions Commission under Lord Hutton has issued it’s final report.
Professional Pensions have done an excellent summary of the 27 recommendations made by the Committee. You can click through to the article here.
In short Hutton has recommended a move to a Career Average Revalued Earnings Scheme for future service across the public sector. He is strongly of the opinion that promises made under the current structure should be protected. That means older longer serving employees will still get the promises they have been given if the government protects the past service element.
So the main impact will be felt by younger employees or those with little past service. Interestingly he has also recommended that future public servants should not be given access to Defined Benefit scheme so we probably have to look forward to some form of Defined Contribution arrangement for new joiners.
Like all these things the devil is in the detail. We’ll be reviewing the contents over the next few days and no doubt there’ll be further articles on the subject.
One thing is for sure that something has to change if the public service pension promises are to remain affordable for future generations. It is a brave government that has decided to grasp this particular nettle rather than, like their predecessors, bounce the problem down the line.
These reforms must also dovetail with the changes to the Basic State Pension to ensure a uniformity of approach. It’s going to be a busy time over the next few years.
As is always the case…….watch this space!