Even without any changes recommended in the Hutton report, public sector pensions have been reduced in value by 25 per cent by a mix of negotiated change and the government’s arbitrary switch to the CPI measure of inflation
So says the General Secretary of the Trades Union Congress Brendan Barber on the public sector pensions review published yesterday revealed the former Labour Minister’s recommendations for reforms, including the withdrawal of final salary schemes in favour of those based on career average earnings.
Commenting on Lord Hutton’s final report Mr Barber suggested that existing changes to public sector pension schemes undertaken by the previous Labour Government, as well as forthcoming plans to link pensions to the Consumer Price Index measure of inflation rather than the Retail Price Index, have already reduced their value by a quarter.
The Independent Public Service Pensions Commission’s Interim Report from October 2010 states:
“[The] change in the indexation measure may have reduced the value of benefits to scheme members by around 15 per cent on average. When this change is combined with other reforms to date across the major schemes the value to current members of reformed schemes with CPI indexation is, on average, around 25 per cent less than the pre-reform schemes with RPI indexation”.