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Written question asked by Lord Laird (Ulster Unionist Party), in the House of Lords. It was answered by Lord Sassoon (Conservative) on Monday, 5 September 2011.

Pensions

Question
To ask Her Majesty’s Government what assessment they have made of the evidence and assumptions supporting the conclusion of the Public Service Pensions Commission that public sector pension costs will fall from 1.9 per cent of national income or gross domestic product this year to 1.4 per cent in 2060.
Answer

The Government's proposed reforms to public service pensions will ensure that expenditure on pensions is affordable to the taxpayer and that public service pensions are sustainable and fair to both taxpayers and public servants. Schemes are currently discussing proposed reforms with trades unions and other representative bodies. Chart Ex.2 of the interim report of the Independent Public Service Pensions Commission, chaired by Lord Hutton of Furness, shows forecast levels of expenditure on pensions as a proportion of GDP. As set out in Annex C of the interim report, these forecasts are sensitive to several assumptions, particularly around the rate of GDP and workforce growth. This analysis in Lord Hutton of Furness's report shows that, after the switch to the consumer prices index for the uprating of pensions, and taking into account the cap-and-share arrangements agreed between the Government and the unions in 2009, the cost of pensions could be expected to fall to around 1.4 per cent of GDP by 2060. Analysis produced by the NAO and published in their report, The Cost of Public Service Pensions, published in March 2010, shows that, without the switch to CPI indexation or the savings from cap-and-share arrangements, the cost of providing pensions would only fall to 1.8 per cent of GDP. Current levels of expenditure on pensions reflect a large increase in spending on pensions. Over the last decade, spending has increased by a third, to £32 billion. This is reflected in Lord Hutton of Furness's analysis. Chart Ex.2 of the interim report shows that, over this period, costs as a share of GDP have risen from around 1.5 per cent of GDP in 1999/00 to around 1.9 per cent in 2009/10.

Secondary information

Type
Written question
Reference
11543; 730 c12WA
Session
2010-12
Notes
Answer received between Monday 22 August and Tuesday 30 August 2011.
Subjects
Costs Workplace pensions Public sector Independent Public Service Pensions Commission
Link
View this Written question on www.publications.parliament.uk