Reports and Briefing Notes

The Future of the Public Sector Pensions

This PPI research report on the future of the public sector pension schemes:

• Identifies the policy objectives that any Government considering further reforms to the public sector pensions might aim to address
• Identifies a set of possible further reforms for the public sector pension schemes that the Government could consider
• Analyses a set of possible reforms against the identified policy objectives and identifies what the implications of such reforms might be for public sector employees, and for the overall affordability and sustainability of the schemes.

The PPI is not calling for further reforms of the public sector pension schemes.  The objective of this research is to provide an independent evidence base to help policymakers to understand the implications of alternative policies.  It should also be noted that there is a very broad range of reform options that the Government could consider.  This report sets out a small number of the possible range of reforms in order to highlight some of the main implications of different types of reforms.

This project has been funded by the Nuffield Foundation. The PPI is very grateful for their support. The views expressed in the research are however those of the authors and not necessarily those of the Foundation.
 

Chapter one describes the state of the current public sector pension scheme provision in the UK. It sets out what we mean by public sector pensions. It outlines the main public sector pension schemes and the reforms that the Labour Government introduced from 2002 up to those which came into force in 2008. It also discusses the implications of the Coalition Government’s decision to index public sector pensions to the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI).

Chapter two looks at the possible objectives and policy options for further reforms of public sector pensions.

Chapter three aims to briefly set out the possible impact of a range of policy options for the future of the public sector pensions that the Government could consider. Table 4 sets out each of the reform options and assesses them against in terms of the policy objectives that the Government may consider important.  

Chapter four examines how well public sector pension schemes provide adequate pensions to members in retirement. It considers how adequacy of pensions in retirement can be measured, the level of pension achieved under the current system and what the impact of further reforms could be.

Chapter five explores fairness in the public sector pension schemes. It considers fairness between the public and private sectors, and amongst members of the same pension scheme.

Chapter six considers the role of public sector pension schemes in recruitment and retention.

Chapter seven examines the issues surrounding the affordability and sustainability of public sector pension schemes. It considers what impact future reforms to the schemes could have on the future affordability and sustainability of the schemes.

Chapter eight looks at transparency of public sector pension schemes.

Executive Summary