"Reading the news this morning, public sector workers should breathe a sigh of relief that they are to keep their final salary benefits for at least the next four years – until after the current spending review period, the tax year 2014/15. But (even muted) celebrations are on hold until George Osborne tells them how much more they’ll have to pay for these final salary benefits in the short term in the Spending Review on 20 October. Only the armed forces will be spared from this pain.
“Hutton’s lengthy report is the public sector’s Sword of Damocles, laying the foundations for long term structural reform of public sector pension schemes. The first shot of the battle for hearts and minds has been fired with Lord Hutton calling final salary benefits "fundamentally unfair". We’ll have to wait until his final report in Spring to discover the what he recommends – but reading between the lines it looks like Career Average Revalued Earnings (CARE) is the front runner to replace final salary in the public sector.
“Hutton has kick started the process of change. The only sure thing is that public sector pensions will never be the same again."
If you would like to speak to Michaela Berry, please call Sarah Evans-Toyne, Neema Patel or Anna Taylor, Broadgate Mainland, on 020 7726 6111.
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