Cabinet Office response to Civil Service pensions contributions consultation

16 December 2011

CAB 246-11        

Today the Cabinet Office has published its response to the consultation on increasing employee contributions to the Principal Civil Service Pensions Scheme (PCSPS) for 2012/13.

The consultation was launched in July as part the first part of Government’s plans to reform public service pensions to ensure they remain sustainable for the future.

Minister for the Cabinet Office, Francis Maude said:

The Government is committed to ensuring that civil servants have access to pensions that are amongst the best available. We announced at the 2010 Spending Review that as well as reforming civil service pensions for the long term, the Government would increase member contributions to pension schemes from April 2012.

“We have listened carefully to the concerns raised, but feel the proposal we set out in July is still the fairest approach for civil servants and does most to protect the lowest paid.  Those earning less than £15,000 a year - that’s 3.6%[1] of the Civil Service workforce – will not have to pay any extra at all. Another 39.5% of workers earning up to £21,000 will have their increase limited to 0.6 per cent.”

Key points in the Government’s response include:

• Additional contributions to take effect from April 2012.
• The contribution increases will be on a tiered basis, with individuals allocated to a contribution band according to their pensionable earnings based on their full time pay.
• Those earning under £15,000 (full-time rate) will see no increase in contributions.
• Those earning up to £21,000 (full-time rate) will not see contributions increase by more than 0.6 percentage points in 2012-13.
• No civil servant will see contributions increase by more than 2.4 percentage points in 2012-13.

Proposals for Civil Service pension contributions in 2013-14 and 2014-15 will be the subject of a separate consultation next year. Longer term reform following the Hutton Review, is the subject of ongoing discussions with the Trades Unions.

Last month the Government set out an improved offer to public service workers. The offer would mean:

• Public sector pensions will remain among the very best available – providing guaranteed, index linked benefits in retirement – something all but eliminated elsewhere
• Most will see no reduction in the pension income they receive at retirement and many low and middle income earners will in fact receive a larger pension income at retirement.
• The pension people have built up so far will be protected
• No one within ten years of retirement will have to see any change in the age they retire or in the amount of pension they will receive on retirement.

Notes to Editors

1. The Government announced in the 2010 Spending Review that public service workers would be asked to contribute more for their pensions. Each public service pension scheme is required to deliver savings equivalent to an average increase of 3.2 percentage points in employee contributions over the same period.
2. The consultation on increasing employee contributions to the Civil Service Pension Scheme 2012-13 received around 3,400 responses from individuals. A copy of the response to the consultation on increasing employee contributions to the Civil Service Pension Scheme 2012-13, Q&A and calculator can be found at www.civilservice.gov.uk
3. Details of the Government’s improved offer announced on the 2 November 2011 can be found on the Treasury website
4. The following table sets out the percentage increase to member contributions for those in the scheme from April 2012 as follows:

Civil service pensions contributions rates from April 2012 as follows: