Public sector pensions face big hit, claims report (Manila)
Public sector pensions face big hit, claims report
SOURCE - BBC Protected content
Four million public sector workers will see a dramatic reduction in the value of their pension schemes, according to a new report.
The Pensions Policy Institute (PPI) said members will see a one-third cut in the value of their pensions, as a result of forthcoming changes.
Teachers, civil servants, NHS and local government workers will be affected.
The PPI said the average pension's value will reduce from 23% of a person's salary to 15%.
The figures reflect what the promise of a pension is worth to workers as a perk on top of their salary, not the actual level of pay-outs.
The changes were made by the government, in an attempt to save money.
Following an Act of Parliament that became law in April, members of the schemes will face increased contributions, and a later retirement age.
Their pensions will also be calculated on the basis of their average salaries over the period of their employment, rather than their final salaries.
However, anyone already retired, or retiring within the next nine years, will not be affected.
Similar reforms have also been proposed for members of the Police, the Fire Brigade and the Armed Services.
Since April Protected content , pensions benefits for public sector employees have also been up-rated in line with the Consumer Prices Index (CPI), rather than the Retail Prices Index(RPI).
This has meant a slower rate of increase in the pensions of those already retired.
The PPI study suggests that tax-payer contributions to public sector pensions will gradually reduce over the next 50 years.
Under the proposed changes, the government's contribution will rise to 1.8% of Gross Domestic Product (GDP) in Protected content , and fall to 1.1% by Protected content .
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