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The Actuary The magazine of the Institute & Faculty of Actuaries
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Public sector pensions in spotlight again

The think tank Policy Exchange has published a report by Neil Record in which he claims that the liabilities for unfunded public sector pensions alone now exceed three-quarters of UK GDP. He estimates that servicing these costs £45bn a year and, on the government’s own figures, costs more than meeting interest on the national debt.

Calls for reform continue from various private sector commentators such as Richard Lambert of the Confederation of British Industry (CBI). No doubt any hard proposals from any party will wait until after the votes have been cast in the general election.

In a separate move, the Association of Consulting Actuaries (ACA) said that in the run-up to the general election, the public and pensions industry will be examining how serious politicians are about developing imaginative policies designed to reinvigorate quality workplace private sector pensions and that reform to MPs’ own pensions could be the model.

Chairman Keith Barton pointed out that “private employer after employer is addressing their future pension package, often due to the tough economic climate they are facing, increasingly in light of the run-up to auto-enrolment and Personal Accounts in 2012.”

In July, the ACA was scheduled to give evidence to the review body regarding MPs’ pensions and was likely to recommend a ‘middle way’ between defined benefit and defined contribution as a model for private and public sectors alike to hold down costs while also providing greater certainty of benefits than defined contribution.