Hutton review calls for long-term reform of public pensions

Friday, 08 October 2010 12:00

Public sector pensions are essentially unsustainable and the system requires "long-term structural reforms", an independent commission has warned.

In an interim report, the panel led by Lord Hutton said retirement funds for workers like nurses, civil servants and council employees have failed to adjust to changes in life expectancy and that the government's current longevity assumptions may have underestimated the cost to the taxpayer.

The commission also claimed the final salary link in public pensions is "inherently unfair", as some senior figures receive far more generous payouts than lower earners with the same length of service and contribution levels.

Furthermore, while the report said public sector pensions are not "gold-plated", the benefits received do not reflect the amount paid in by employees.

Lord Hutton commented that while long-term change is needed, the government should also consider short-term measures, such as asking public sector workers to make a greater contribution to their retirement funds.

Responding to the report, the Trades Union Congress state employees already facing job cuts and salary freezes are being asked to "pay more for less generous pensions".

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