Doctors should work much longer, pay much more and get much less when it comes to pensions.
That’s the essence of the final report of the Independent Public Service Pension Commission (IPSPC) - chaired by Lord Hutton - which was published last week and makes recommendations to government on the way in which public sector pension schemes, including the NHS Pension Scheme, should change in the future. In the same report, Lord Hutton claims that his recommendations do not constitute a race to the bottom.
The report’s headline recommendations are:
• Linking the normal pension age (NPA) to the current state pension ages (SPA). This means that at the very least your NPA will increase to 65 and, depending on your age, to 68.
• Replacing final salary with Career Average Revalued Earnings (CARE) for future service.
• Maintaining a tiered contribution system.
• Lord Hutton assumes that the government will increase employee contributions considerably
• Not giving non-public service workers access to public service pension schemes.
• Implementing all of these changes before the end of this Parliament, i.e. by 2015
This is all a far cry from Lord Hutton’s previous utterances on the NHS Pension Scheme. Back in 2005, when he was a health minister, he wrote in his introduction to the consultation document outlining the proposed changes following a major review of the NHS Pension Scheme: ‘Pensions are a central part of the remuneration package, representing deferred pay and financial security in retirement. They are also an essential tool in the recruitment and retention of high quality and motivated staff, albeit one that has not always had the recognition it deserves.
‘But, both working patterns and longevity have changed immeasurably since the NHS Pension Scheme was launched in 1948. The scheme must change to reflect the needs of NHS staff and employers alike in the 21st century.’
Apparently, during the intervening six years those changes have become obsolete and must now be replaced with the swingeing cuts to benefits at a massively increased cost, as described above.
One thing’s for sure, Hutton’s claim in his interim report that public pensions are not ‘gold plated’ will be proven beyond doubt if his recommendations come to pass.
Tags: Pensions
the huge gains in life expectancy of the last (half-) century have been exclusively added on to the retirement years. it does not take more than one working neuron to realise that this could not continue. to expect a final salary pension for 30 years after modest contributions for 40 years requires a spectacular level of stupidity.