The government has published the Public Service Pensions Bill 2013, which is forecast to save £65 billion over the next fifty years and aims to reduce public sector pension scheme costs by around half.
The Independent Public Service Pensions Commission published its final report in March 2011. The government accepted its recommendations as the basis for consultation with public servants, trades unions and other member representatives.
The bill implements the agreements reached, which include:
- A move to career-average pension schemes, instead of final salary schemes.
- A link between the normal pension age and the stage pension age, except for the Armed Forces, police officers and firefighters. Those staff 10 years from the normal pension age on 1 April 2012 will not see any change in when they can retire, nor any decrease in the amount of pension they receive on retirement.
- A set employer cost cap to ensure that public sector pensions remain affordable and sustainable.
- The creation of a high barrier to changes in specific elements of these pension designs for 25 years.
- A set common legislative framework and improved government arrangements of public sector pension schemes.
The bill will also close the outdated Great Offices of State pensions for new office holders and move to a scheme equivalent to that available for ministers.
Danny Alexander, chief secretary to the treasury, said: “This bill is the final stage in delivering sustainable public sector pensions.
“It will cut the cost to taxpayers by nearly half, while ensuring that public sector workers, rightly, continue to receive pensions among the very best available.
“This is a good deal for taxpayers and a good deal for public sector workers: a settlement for a generation.”