Public Sector Pensions Report

Labour MP John Hutton has recommended an increase in the contribution made by employees to public sector pension schemes.

He recently branded Public sector final salary schemes as “inherently unfair” as a large proportion of private sector workers are no longer members of final salary schemes. The Independent Public Sector Pension Commission has produced an interim report confirming that an increase in the level employee contribution is the fairest way to deliver short term savings.

Low earners should be protected by phasing in the increases over time.

Hutton was commissioned by the government after the formation of the coalition. He was asked to prepare the report for the new government.

He said: ‘There is a case for short term changes, especially given that the commission found that current government assumptions may well underestimate the cost to the taxpayer and past increases in life expectancy have been paid for in the most part by taxpayers.' He was critical of the current system as “High Flyers could be receiving back more than twice the contributions they had made to the scheme.

The report is expected in time for the 2001 budget and would take into account a range of alternative options to amend the current situation.