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Barnett Waddingham comments on today's Public Sector Statement

Commenting on today’s public sector pensions statement from Danny Alexander, Graeme Muir, partner and head of Public Sector Practice at actuaries Barnett Waddingham said:

“Danny Alexander’s statement to the Commons on public sector pension reform on 20 December might sound like the big day has come 5 days early – it will for some, particularly those who don’t have a full career in the public sector.  The main issue with career average schemes – the balance of accrual rate and revaluation rate seems to have swung towards higher accrual rate at the expense of a lower revaluation rate.  This means that compared to the previous proposals, scheme members will earn more pension each year but then it won’t quite grow as quickly as previously envisaged. 

Given the key perception in this dispute about having to apparently pay more for less, we always wondered why the Government seemed to overlook the easy option of a higher accrual rate with a lower revaluation rate which would mean more for more, at least in the short term, and all affordable within the agreed cost envelope.  As actuaries to 25% of Local Authority Pension Funds, we await the proposals for the LGPS with interest – our silver sixpence is on an accrual rate beginning with a 5”

For my information please email Graeme Muir or Steph Gold