HM Treasury announce possible public pension cost cap breach
07 September 2018
Initial findings from the public pension schemes four-yearly valuation review indicate that the cost cap has been breached. HM Treasury, who are undertaking the valuation, have announced that they will be consulting with representatives of those involved with the schemes on the next steps.
The public pension scheme cost cap is designed to limit the cost to the taxpayer of providing pensions to public sector workers. The level of the cap is set as a percentage of pensionable payroll. If a valuation shows that costs have risen or fallen by more than 2%, action must be taken.
Our National General Secretary Andy Fittes said: “We will be consulted via our Scheme Advisory Board meetings - the first of which is next month - to reach agreement on how to return costs to the target level. Pension schemes are complicated and it will take time to work through the details, but we will of course be pushing for a course of action that is in our members’ best interests.”
HM Treasury undertake valuations of the public service pension schemes every four years to ensure that the full costs of the schemes are understood by the Government. This is the first time that a full assessment of the pension schemes has been undertaken since the Government introduced reformed schemes in 2015.
There are currently more than five million active members of the public service pensions schemes, which cover the police, NHS, teachers, the armed forces, firefighters, local government workers, judiciary and civil servants.
The Treasury is publishing a draft of the valuation document to allow representative bodies like PFEW, public sector employers and government departments to comment on the initial findings – further updates are expected later in the year.
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