It remains to be seen whether the CPI will replace the CPI over time. This has been the ONS` preferred measure of general inflation since the beginning of 2017. Here you will find a general overview of pension plans in the public sector. Other questions – If you have any further questions regarding your salary or pension, please contact your department`s human resources department. * Non-staff recruited before 2013 are members of sectoral pension schemes (e.g. HSE and teachers` schemes). Although these systems are often similar to public service systems, they have their own rules that may differ from those of the public service. Members of these non-public schemes should consult their employer or the sectoral authority for information and estimates on pensions. You should not rely on this website, which is specifically intended for public service, for such purposes. Information on public sector pension plans is available on the DPER pension websites. After all, public sector pensions, like many other public sector pensions in the UK, are “pay-as-you-go” (or unfunded). There is no pension fund.
Instead, pensions are funded by contributions from current employers and employees, supplemented by the Department of Finance where necessary. This plan is often criticized as being somewhat unfairly favoured over funded plans. But it probably makes sense given the size of the system, especially because of the administrative and other costs that would be required to set up and manage the fund. Since you invest your money in an investment fund with a stroke annuity, it is always possible that the value of your pension fund will decrease and increase in the short term. However, because of the tax advantages and their very long-term nature, pensions are generally much safer than most types of investments. Another generous element was the annual increase over the retail price index (RPI). But the new chancellor, George Osborne, announced in June 2010 that civil servants` pensions would increase each year based on the consumer price index (CPI), not the RPI. This immediately reduced the value of all benefits in the scheme – including those already earned through previous contributions – by about 15%. (A comparison of the historical RPI and CPI shows that if this rule had been in place in the past, the pension of someone who retired in 1988 would have been 15% lower in 2010. See notes 2 and 3 for more information on the differences between the CPI and the RPI.) On this website, you will find information on the pensions of staff recruited before the end of 2012.
Most civil servants` pensions are hardly exaggerated, although some “high-caving” pensions that entered before the introduction of career averages in July 2007 perform much better than most. The following table (from the Hutton Interim Report – see note 3) summarizes all public sector pension plans in 2009-2010. See also the footnotes to this website for information on the differences between public sector pension plans for men and women. Other important developments took place in the 1760s and 70s, when contributions and pensions were paid to young officers of the armed forces, etc. and again in 1847, when the Admiralty decided to deal with the fact that 200 senior captains never went back to sea, promoted them to rear admiral and put them on half pay as a kind of retirement pension. Soon after, in the 1850s, Northcote and Trevelyan recommended that “good service pensions” be extended to “the ordinary civilian branch of the civil service” (Northcote Trevelyan Report – see in particular pp. 21-22). A royal commission, which released its report shortly after Northcote and Trevelyan, then separately recommended that retirement from the public service be possible at age 60 and mandatory at age 65. At the same time, there have been developments in the private sector as railways, gas and other large companies have developed similar programs to attract and retain better staff.
5. This is a complex issue, and I would be happy to be corrected if I have misunderstood or simplified something. Please note, however, that I cannot answer questions about civil servants` pensions or individual pension entitlements, nor can I assist in the search for pensions. Instead, you should use the resources listed in Note 4 above. 2. This ONS consultation paper explains why the CPI is generally lower than the RPI. This is not the case (as has often been reported) because geometric mean and arithmetic mean are used. The real reasons are much more complex, including how clothing prices are tracked and the fact that the RPI (as opposed to CPI) includes shelter costs but excludes purchases that are more often made by low- and high-income households. The problem for the government is that many public servants view their pensions as an extremely important part of their overall compensation package.
Senior civil servants, in particular, are paid significantly less than their private sector counterparts and do not enjoy any of their benefits such as company cars and private health insurance. Your pension is really important to them. As a result, the government faced high pension costs and a workforce was determined not to have its employment contracts rewritten. Nevertheless, it forced the changes summarized above. A third obviously generous element was that civil servants did not appear to contribute to the cost of their pensions. However, this was much less generous than it seemed, as salaries were lower at the time, as if pension contributions had actually been deducted.