Pension contribution increases will add to “volatile cocktail”

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date: 6 October 2010

embargo: For immediate release

Previewing Lord Hutton's review of public service pensions, due to be released at 8am tomorrow (Thursday), TUC General Secretary Brendan Barber said:

'Public servants are already facing job cuts, a pay freeze and intensified workloads as staff are not replaced. Cuts in their pension provision and increased contributions that lead to a cut in take home pay, at a time when inflation is biting, will add to the volatile cocktail of issues they face.

'The value of public sector pensions has already been hit hard by linking them to the CPI inflation measure, rather than the RPI measure. The Treasury's own figures show that this is likely to reduce pensions by seven per cent over the next six years.'

Key facts on public sector pensions, taken from the National Audit Office (NA0) report on pay-as-you-go pensions:

  • Employee contributions to these schemes have increased faster (56 per cent) than pension payments (38 per cent) since 2000.
  • There has only been a two per cent real terms increase in the average pension in payment since 2000 - the average teachers' pension has fallen by four per cent over that period and the average NHS pension is unchanged.
  • The vast majority of pensions in payment are modest. The NAO report shows that most pensions paid in both the NHS and civil service are below £110 a week, a quarter of NHS pensions are less than £40 a week and a quarter of civil service pensions are less than £60 a week.
  • Fewer than 0.2 per cent of teacher pensioners, 1.8 per cent of civil service pensioners and 2.5 per cent of NHS pensioners get pensions of more than £40,000.
  • Future projections show that the cost of pensions in payment will rise by just 0.2 per cent of GDP to peak at 1.9 per cent from 2018 and then fall again to their current level by 2059. These projections do not even include the billions of pounds that public sector workers will contribute to their pensions.

NOTES TO EDITORS:

- The TUC has published a media briefing that explains some of the background to the Hutton Review, which is available at www.tuc.org.uk/extras/huttonreviewbriefing.pdf

-The TUC submission to Hutton is available at www.tuc.org.uk/extras/responsetohutton.pdf

- The TUC campaign pamphlet Decent Pensions for All is available at www.tuc.org.uk/extras/decentpensionsforall.pdf

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

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