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The Actuary The magazine of the Institute & Faculty of Actuaries
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Public sector unhappy with recommended pension changes

Trade union leaders have warned about strikes following recommended changes to UK pensions for state employees. Lord Hutton, the former Labour cabinet minister, has called for an increase to the pension age by five years (or more for those with state pension ages higher than 65) and a switch from final salary pension schemes to ones based on average lifetime earnings. George Osborne, the chancellor, will confirm the exact details of the decisions the government takes.

On the one hand, there will be losers in the public sector suffering from the later retirement age, and higher flyers in the NHS and councils (with large increases in salaries later in life) may get lower pensions following this change. However, things could have been a lot worse for the public sector when considering the collapse of final salary pensions schemes in the private sector.

Lord Hutton did reject the idea of a cap on pensionable earnings, pointing out that the higher paid also paid higher contributions on those higher earnings.