Magazine article Public Finance

Public Sector Pensions Bill Set to Soar in 20 Years

Magazine article Public Finance

Public Sector Pensions Bill Set to Soar in 20 Years

Article excerpt

The cost of public sector pensions is likely to grow by 40% over the next 20 years according to research published this week.

Researchers from the independent Pensions Policy Institute calculated that the public sector pensions bill will increase from 1.0% of gross domestic product to 1.4%. This 40% rise is far in excess of projected growth in the cost of long-term care, health and state pensions over the same period.

Savings generated by reforms of public sector pension schemes are likely to be 'relatively modest', the PPI said.

The research, published on October 16, also found that the average value of public sector pensions had slipped from 24% to 21% of salary following government reforms. This still exceeds the value of a typical private sector defined benefit scheme, worth 20% of salary.

PPI director Niki Cleal said that, despite the government's overhaul of public sector pensions, there were still significant differences between pensions in the public and private sectors. …

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