Low earners to escape public sector pension rise - Pensions - News - Moneyfacts


Low earners to escape public sector pension rise

Low earners to escape public sector pension rise

Category: Pensions

Updated: 22/11/2011
First Published: 19/07/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Treasury has confirmed low earning public sector workers will not suffer a rise in their pension contributions.

Chief Secretary to the Treasury Danny Alexander has revealed a number of concessions to the original public sector pension proposals have been agreed following talks with the Trade Union Congress (TUC).

The proposals as they now stand include a pledge not to increase member contributions for those earning under £15,000 in order to protect low earners.

Those earning up to £21,000 will see no more than a 1.5% increase in total before tax relief by 2014/15.

Originally this threshold had been set at £18,000.

The new level of £21,000, however, means 750,000 workers will avoid paying extra contributions and another one million should pay no more than 1.5% extra.

For the highest earners the total increase will be capped at 6% before tax relief by 2014/15.

The talks with the trade unions over the controversial reforms are set to continue into the autumn.

Under the plans, the pension age for public servants will be matched to the state pension age, which is set to increase to 66.

In this latest statement the Government says it 'continues strongly to believe that this is the right approach to managing the rising and uncertain risks of longevity'.

"The Government and the TUC have held a series of constructive meetings to discuss public service pension reform and have now agreed that to further inform the discussions on Lord Hutton's recommendations, there should be scheme level discussions alongside the central process already established," said Alexander.

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