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Public-sector employees will have to work longer to collect their pensions

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Public-sector staff have been told they will have to work for longer and contribute more into their pension schemes, in order to secure an appropriate retirement income.

This morning Lord Hutton, chairman of the Government’s Independent Public Service Commission, said contributions into public-sector pension schemes is unfair, the gap between employer and employee contributions is too wide and an average salary-scheme for the public sector – rather than a final-salary scheme – is necessary.

Responding to the announcement at the National Association of Pension Funds (NAPF) Conference and Exhibition this morning, the industry body’s chief executive, Joanne Segars, said: "Raising contributions is the obvious short-term way to relieve financial pressures.

"Lord Hutton has heeded our warnings about not placing too much of the burden on the low paid, recognising the risk that many may opt out of pensions altogether. Reforms should be focused on those who are set to gain the most out of the current system.

 "The report dispels some of the myths about these pensions but is realistic about the need to reshape them. The long-term solution to public-sector pensions mustn't become a race to the bottom. All workers deserve a good workplace pension, whether private or public sector.

 "We look forward to Hutton's final report. We expect it to recommend that retirement ages for public-sector workers will head upwards."

 Hutton is expected to address delegates at the conference later this afternoon.