LRD guides and handbook July 2014

Workplace pensions - a guide for trade union reps

Chapter 3

Public sector scheme highlights

[ch 3: page 28]

The Public Service Pensions Act does not go into detail about how the new pension schemes will operate. The government’s “final” position on the design of each scheme was announced in December 2011, although this has been the subject of continuing discussion, with unions in some parts of the public sector more willing to accept the outcome than others. Key issues for scheme members are set out in these documents, which vary from scheme to scheme, reflecting the intense negotiations that took place. For example:

Transitional protection: Protection from the effect of the changes for members within 10 years of the normal pension age on 1 April 2012 and reducing (“tapering”) protection for a further 3.5 years (civil service, teachers, NHS) or 4 years (firefighters).

Accrual: The proportion of annual salary taken into account for each year of service varies from 1/43.1 in the civil service to 1/49 in local government, 1/54 in the NHS, 1/57 in the Teachers Pension Scheme and 1/58.7 for firefighters.

Revaluation of Career Average salaries for calculating CARE-based pensions: Revalued in line with Consumer Prices Index inflation (local government and civil service) or CPI plus 1.5% (NHS), CPI plus 1.6% (teachers), or average weekly earnings (firefighters).

Average member contributions: These are generally banded, with the higher-paid paying a bigger percentage. But on average they range from 5.6% (civil service) to 6.5% (local government), 9.6% (teachers), 9.8% (NHS) and 13.2% (firefighters).