If pension contributions increase more will opt out having a pension

This fear is borne out by the fact that very few civil servants presently opt out. This is shown by the below answer to a parliamentary question answered on the 8 Nov this year.

Mr Maude: The number of employees eligible to be members of the Principal Civil Service Pension Scheme but who opted out in the years between 2006 and 2010 are given in the following table, together with active membership of the scheme at the end of the relevant years, as published in the Cabinet Office: Civil Superannuation Resource Accounts. We do not hold data on the breakdown of participation rates by pay band.

Number
Opters out Active members at 31 March
2006-07 4,421 594,000
2007-08 5,576 577,000
2008-09 5,366 564,000
2009-10 4,322 574,000

You can see that the opt out rate is less than 1%.

In councils, where pension contributions are much greater the opt out rate for junior staff is over 40%! You can see that this makes economic sense for the low paid. If you have a choice in the here and now between paying £60 or more a month to a pension which you won’t be able to cash in until you are 67, 68 then there is a great temptation to keep the money and not pay the contributions.

If civil service contributions increase we predict that disproportionately the lower paid who will opt out; of course it is the low paid who will suffer most poverty in retirement – the very people who need a good pension.

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