Proposed pensions deal matches post-2007 average salary scheme – but with higher contributions

A new proposal for civil service pension reform has been sent to trade unions for consultation, following the conclusion of talks between both sides earlier this month.


By Civil Service World

28 Mar 2012

The deal brings existing final salary schemes into line with the average salary ‘nuvos’ scheme that was introduced in 2007, although the proposal includes a higher contribution rate – meaning that civil servants will pay more into their pensions each year.

The new proposal will affect all civil servants, except for people on final salary schemes who are older than 60 and people on the nuvos scheme who are older than 65. It also says that the retirement age for civil servants should increase to 68, which will soon be the state pension age.

Contribution rates increase from the current 3.5 per cent on the nuvos scheme to an average of 5.6 per cent. The contributions of individual employees will depend on their salary, with those earning up to £21,000 a year paying a 4.6 per cent rate, while those who earn over £45,000 will pay 7.35 per cent and those who earn over £150,000 will pay 9 per cent.

The proposal sets out a new accrual rate of 2.32; so the percentage of salary that the government pays into the scheme will almost matches nuvos’s 2.3 per cent.

Most trade unions will now consult their members on the plans, although the PCS has already rejected the offer. The changes are scheduled to begin in April 2015.

Meanwhile, the trade unions lost their battle in the Court of Appeal against a change of the inflation measurement used to adjust pensions from the Retail Price Index (RPI) to the Consumer Price Index (CPI).

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