 |
 |
Pension Reform
The Pension Reform Programme
In December 2002 the Department of Work and Pensions (DWP) published a Green Paper 'Simplicity, security and choice: working and saving for retirement'. In June 2003, the Government published the outcome of its consultation exercise under the same title, but with the addition of 'Action on occupational pensions'.
Both publications proposed a package of reforms to occupational pension arrangements. These were designed to ensure that people are adequately provided for in retirement, and to encourage older workers to continue to participate in the labour market. The proposals reflected both increasing life expectancy which means pensions are now being paid for longer periods than before and the fact that many people want to work longer and to increase their retirement income.
Taking these proposals forward into public sector pensions identified that any changes made to the schemes should ensure that the schemes remain both affordable and sustainable, provide flexibility for modern public sector workforces and that schemes should remain a key element of the overall terms and conditions offered to help sustain productive recruitment and retention policies.
Scottish Ministers have devolved responsibility for the NHS, Teachers, Local Government, Police and Firefighter pension schemes in Scotland and were responsible for taking the reforms forward for these schemes in Scotland. The Scottish Government embarked on a period of discussion and consultation with the key stakeholders of each of these schemes. The outcome has resulted in each scheme being reformed with the aim that they are affordable and sustainable to both the members and the tax payer for example by the introduction of cost sharing agreements. The reforms have also ensured that the pension scheme remains a relevant and valuable part of the overall employment package offered within each of the sectors concerned.
Each of the five schemes had an individual negotiating mechanism to agree and implement the changes necessary. In the NHS for example the proposals were considered and agreed through a tripartite group made up of representatives from the Scottish Government, Employers and Staff. Once an agreement was reached by the Group it was considered and approved by the Scottish Ministers and the new terms introduced to the scheme. As each scheme underwent separate consultation this meant that schemes were reformed at different dates dependant on when the relevant agreements were reached. The following table outlines the timetable of reform for each scheme. Full details of what each scheme provides are available from the relevant scheme pages.
PENSION REFORM TIMETABLE
Scheme |
Reforms applied from |
NHS |
1 April 2008 |
STSS |
1 April 2007 |
LGPS |
1 April 2009 |
Police |
6 April 2006 |
Firefighters |
6 April 2006 |
The Future
The pension reforms completed to date have helped to make public sector pensions more affordable and sustainable. Savings have and will continue to be made as a result of the changes made by the reforms for example the introduction of higher retirement ages for new entrants, tiered contributions where higher earners pay a higher contribution and the use of cost sharing agreements whereby increases in costs arising out of areas such as greater longevity will in the future be met by the member not the employer.
Since the General Election in May 2010 the UK coalition Government have announced an independent commission to investigate the viability of public sector pensions. The terms of reference for the Independent Pension Committee were announced on 20 June. The following link provides further details:
http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=413961&SubjectId=2