At a glance: Pensions review
Nurses, teachers, local government staff and other public sector workers should pay more into their pension pots, a major review has suggested.
Lord Hutton has published his initial findings in a review of how to cut the rising cost of public sector pension schemes.
Here are the key points from the interim report:
- There are 12 million people - one in five of the UK population - who are active, deferred, or pensioner members of public sector schemes
- The life expectancy of a 60-year-old is 28 years, compared with 18 years in the early 1970s
- About 85% of public sector employees have some form of employer-sponsored pension compared with about 35% in the private sector
- In the 10 years from 1999-2009, the value of benefits paid from the five largest public service pension schemes increased by 32%
- To start covering the increased cost, public sector workers should pay bigger contributions into a pension scheme - although the exact amount is a decision for Parliament
- Final-salary schemes mean high-flyers get almost twice as much back in pensions than those on more modest earnings for the same amount of pension contributions
- In the long-term, pensions should be changed from final-salary, possibly to career average
- Public sector workers should work longer, as life expectancy increases
- The Dutch and Swedish systems should be considered as models
- Some changes that have already been made are drastically reducing long-term costs
- Many schemes have already put up the pension age for new recruits from 60 to 65
- The average public sector pension in payment is £7,800 a year