Government public sector pension contribution proposals are firm but fair, says CIPD

29 Jul 2011 02:13 PM

Government and unions need to move quickly beyond squabbling over inevitable changes to public sector pensions, and on to a shared agenda of promoting the valuable and substantial benefits of pensions to the public sector workforce, says to the Chartered Institute of Personnel and Development.

Arguing that Government owes improved communication of the value to contribution ratio to the taxpayer, and unions owe it to their members, Charles Cotton, Reward and Pensions Adviser at the CIPD, said:

"Government proposals to increase pension contributions for public sector workers are part of a necessary compromise to retain a great employee benefit at a fairer cost to hard pressed tax payers. These changes are firm, but fair.

It is incorrect that most public sector pensions are 'gold plated' but they are still a great staff benefit and one that is almost impossible to find now in the private sector. Because of this it is important that both the government and unions communicate and educate public sector employees that their pension is still a great benefit and well worth paying to stay in.

Government owes this to the taxpayer, as the high value of public sector pensions should be being better used as a key tool in attracting and retaining high calibre workers, and motivating them to deliver constant improvement in public services. Unions owe it to their members as overly negative responses to these changes risk driving low paid public sector workers to make the irrational choice to opt-out of pension contributions, throwing away retirement income that the same contributions simply can't buy in the private sector.

With rising life expectancy, it is increasingly hard for the public purse to fund a growing length of time spent in retirement, so these reforms are needed. Unfortunately, they come at a time when many public sector workers have seen their living costs increase.

To ensure that we don't see public sector workers opting out the government should consider spreading out the contribution rises over a longer period of time for low earners. It should also explore freezing pensionable pay increases for a certain length of time to better manage pension costs.  But the key must remain improved communications of the contribution to value ratio on the part of public sector employers and unions alike".