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Public Sector: Pensions

Answer

To assist discussions of modernisation reforms to the pension schemes for the NHS, teachers and civil service in 2005, an indicative estimate of £13 billion was calculated as the potential net saving in employer costs for these three schemes over a 50-year period from 2006. The estimates were based on approximate methodologies to indicate the savings that might result from the proposals then under discussion and were heavily rounded to allow for factors such as the possibility of a few years variation in start dates.The estimate was calculated as at 2005, using 2005-06 prices, to show the amount of employer contribution savings over a 50-year period, converted to a capitalised value. This reflected savings in the value of benefits built up over the 50-year period, not cashflow savings on benefits paid out over that period. The estimate took into account expected membership of the pension schemes and a net discount rate of 3.5 per cent. per annum in excess of prices.The subsequent packages that were actually introduced included further reforms, such as cost sharing and cost capping mechanisms, to limit employer costs. The £13 billion calculations are now obsolete and revised estimates of the capitalised savings and extensions of the estimates to other schemes on the assumptions used in 2005 could be provided only at disproportionate cost. Instead, the significant level of savings that are already being delivered by the scheme reforms were described in my answer to the hon. Member of 26 November 2008, Official Report, column 1909W.

Secondary information

Type

Written question

Reference

490 c1390-1W;490 c1386-7W; 247953

Session

2008-09

Subjects

Pensions Public sector

Link

View this Written question on www.publications.parliament.uk