Cost of public sector pensions has fallen, say MPs

An influential Commons committee has said that the cost of public sector pensions has come down substantially in the past few years — but says more information is needed about the cost of recent changes. In its latest report , the Commons public accounts committee (PAC) found that the expected cost of public sector pensions has been substantially reduced because of changes made in 2007-08. The Treasury expects the cost of pension payments to stabilise over the next 50 years to approximately 1% of GDP, saving taxpayers an estimated £67bn. The exact range of savings, however, cannot be accurately determined because there is not enough robust analysis available. The PAC found that employees are not receiving sufficient information about the value of their pensions and that this is having an impact on their decisions to opt out of schemes. Employers need to make the financial value added to salary packages by pension schemes clear in order to improve staff retention and recruitment. The impact of changes to pensions in other areas of public spending has not been clearly identified and assessed. The increase in employees' contributions — 0.4% of pay for teachers and up to 2.5% for NHS staff — could signal an increase in public sector workers opting out of schemes and relying instead on means-tested benefits, increasing pressure on the public purse. Dai Hudd, deputy general secretary of Prospect, welcomed the PAC's findings. Hudd said that the report dispelled any myths about public sector pensions and demonstrated that pension provision is on a "sustainable footing". In the 2011 Budget, the government announced it would be implementing the Hutton commission's recommendations for long-term structural reform of public service pensions. The PAC anticipates this to be an opportunity for clear strategic direction on pensions to be developed and the mark of a period of much-needed stability in pension policy. This content is brought to you by Guardian Professional. Become a Public Leaders Network member to get our weekly update direct to your inbox.