CIPFA sounded a cautious welcome today in response to the latest update from the Government on public sector pension changes.
Commenting on the announcement by Chief Secretary to the Treasury Danny Alexander, CIPFA pensions advisor, Nigel Keogh said:
“The progress to date on the scheme-specific talks in reaching heads of agreement is very encouraging and clearly recognises that change can be effected in a way that is fair and sustainable for all. However the Government’s decision to press ahead with significant employee contribution increases in the unfunded schemes still raises the possibility of large scale opt-outs which could result in a hugely negative effect on the public finances.”
“Mr Alexander’s comments come just days after the Chancellor’s Autumn Statement, which saw public sector pensions costs set to rise as the combined effects of falling contributions, increased retirements and higher than expected inflation take hold.”
“Furthermore, the reduction in net public sector pension costs that the 3.2% increase in contributions was supposed to achieve has already been swallowed up the by the impact that public sector job losses have had on the respective pension schemes. Fewer contributors to pension schemes will exacerbate this problem in the short-term and in the longer will mean greater recourse to state benefits in retirement”.
Commenting on the retention of the Fair Deal policy on pensions also announced by the Government today, he added:
“The Fair Deal policy has provided a stable platform upon which pensions issues in public sector outsourcing deals can be managed. Its retention will be welcomed as it offers continuity and certainty at a time when many public sector organisations will be considering greater outsourcing as a means of achieving efficiency savings.”
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CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. As the world’s only professional accountancy body to specialise in public services, CIPFA’s portfolio of qualifications are the foundation for a career in public finance. We also champion high performance in public services, translating our experience and insight into clear advice and practical services. Globally, CIPFA shows the way in public finance by standing up for sound public financial management and good governance.