Written question asked by David Laws (Liberal Democrat) on Thursday, 14 June 2007, in the House of Commons. It was due for an answer on Monday, 18 June 2007. It was answered by Stephen Timms (Labour) on Monday, 25 June 2007 on behalf of the Treasury.

Pensions: Public Sector

Question: To ask the Chancellor of the Exchequer what assessment he has made to the extent to which public sector pension reform since 2005 meets the criteria of (a) affordability, (b) fairness relative to the private sector and (c) fairness within the public sector; and if he will make a statement.

Answer: The Government view public service pensions as a key part of the remuneration package of public servants, aimed at attracting and rewarding the skills and professionalism required to maintain a high quality public sector work force. Like other employers, the Government have to manage the increasing pension costs associated with rising longevity. Public service pension schemes have been reformed or are undergoing reform in order to make them affordable and sustainable in future. Following the Public Services Forum agreement in 2005, the reforms being introduced in the three major unfunded public service pension schemes—the NHS, teachers and the civil service schemes include increases in the normal pension age for new entrants and mechanisms that ensure that any future increases in cost will be shared fairly between employers and employees. In addition, there also will be an upper limit on the cost to the taxpayer, should costs increase.Similar reforms have also been agreed in other public service schemes including the local government pensions scheme.Expenditure on public service pension schemes as published in the latest Long Term Public Finance report (2006) is projected to be affordable and sustainable.

Secondary information