Pension Reform Uk
“Britain is facing the threat of mass walkouts by (millions of) public sector workers after the biggest unions announced strike ballots over pensions” (BBC News September 2011). Teachers and university lecturers are also planning to strike.
Critically assess why substantial reforms are being planned for public sector pensions and the effects on the personal finances of those affected by such reforms.
The difference between many tax and benefit changes the government proposes and the reforms of publics pensions is that pension reforms will take many years to come into effect completely. This essay will be examining the reasons behind the recent reforms of the public sector pensions and the effect it will have the on the personal finances of current and future pensioners, as it is inevitable that the reforms will affect the personal finances of anyone within the public sector as it will ultimately affect their retirement incomes in the future.
The pension reform is expected to be introduced in 2012. The government has said that the overall aim of the reform is to get more people to save for their retirement. The general consensus from the change is that workers are being made to pay more, work for longer and receive less when they retire. This consensus is understandable because ultimately that is exactly what is happening, however whether or not it is bad thing is under question. In summary the changes will make the retirement age rise to equal the state retirement age of 65, and then when the state retirement age increases to 68, the public sector retirement age is to rise in line with it. The state retirement age is planned to increase from 65 to 66 by 2020 and then to 67 by 2036 and 68 by 2046(Jackson Jeffery, Pension Reforms 2012).
In regards to paying more, the government has said that employees within the public sector get an increase on average of 3.2% over the next 3 years (2012-2015). For some employees this could work out at a contribution of
Critically assess why substantial reforms are being planned for public sector pensions and the effects on the personal finances of those affected by such reforms.
The difference between many tax and benefit changes the government proposes and the reforms of publics pensions is that pension reforms will take many years to come into effect completely. This essay will be examining the reasons behind the recent reforms of the public sector pensions and the effect it will have the on the personal finances of current and future pensioners, as it is inevitable that the reforms will affect the personal finances of anyone within the public sector as it will ultimately affect their retirement incomes in the future.
The pension reform is expected to be introduced in 2012. The government has said that the overall aim of the reform is to get more people to save for their retirement. The general consensus from the change is that workers are being made to pay more, work for longer and receive less when they retire. This consensus is understandable because ultimately that is exactly what is happening, however whether or not it is bad thing is under question. In summary the changes will make the retirement age rise to equal the state retirement age of 65, and then when the state retirement age increases to 68, the public sector retirement age is to rise in line with it. The state retirement age is planned to increase from 65 to 66 by 2020 and then to 67 by 2036 and 68 by 2046(Jackson Jeffery, Pension Reforms 2012).
In regards to paying more, the government has said that employees within the public sector get an increase on average of 3.2% over the next 3 years (2012-2015). For some employees this could work out at a contribution of
References: Employee Outlook, CIPD, 2012. . [ONLINE] Available at: http://www.cipd.co.uk/binaries/Employee%20Outlook%20Focus%20on%20pay%20and%20pensions%205607.pdf. [Accessed 21 May 2012]. Hinrichs, K, 2012. Labour Market Flexibility and Pension Reforms: Flexible Today, Secure Tomorrow? (Reconciling Work & Welfare/Eur). Edition. Palgrave Macmillan. Independent Public Service Pensions Commission: Final Report 10 March 2011 Jackson Jeffery, Pension Reforms 2012, Available at: http://www.jjfsltd.com/adobes/Pensions%20Reform%20QandA%20%2031.5.11%20FINAL.pdf. [Accessed 21 May 2012]. Nicholas Barr, 2009. Pension Reform: A Short Guide. Edition. Oxford University Press, USA. Public Service Pensions (PSP) - HM Treasury . 2012. Public Service Pensions (PSP) - HM Treasury . [ONLINE] Available at: http://www.hm-treasury.gov.uk/tax_pensions_index.htm. [Accessed 25 May 2012]. Reforming Public Sector Pensions, July 2010, Public Sector Pensions Commission, Institute of Directors State Pension Reform - Commons Library Standard Note - UK Parliament . 2012. State Pension Reform - Commons Library Standard Note - UK Parliament . [ONLINE] Available at: http://www.parliament.uk/briefing-papers/SN05787. [Accessed 26 May 2012].