Public Sector Pension Scheme Reform – What’s Not Changing?

on Saturday, 22 September 2012. Posted in General News

There has been a lot of publicity about the proposed changes to the public sector pension schemes, not to mention strikes and protests.  So having looked at the proposals, I thought it would be useful to firstly identify what is not changing.


The new pension scheme benefits are intended to come into effect from April 2015 (2014 for the Local Government Schemes) and vary from one scheme to another so it would take a fairly extensive paper to look in depth at the proposals for each scheme.

Pension benefits within the public sector in most cases are currently based on salary at retirement and service competed.  The first point to note is that there will be no change to benefits based on service completed up to 2015. So for example, members will retain the right to draw the pre 2015 benefits unreduced from age 60 if they were in a scheme with a Normal Retirement Age of age 60 (this includes those who joined the Teachers’ Pension Scheme before 2007, the NHS Pension Scheme for joiners before 2008, the Classic and Premium sections of the Principal Civil Service Pension Scheme).  Those who were in one of the uniformed Services pension schemes will still retain the right to draw pension benefits accrued to 2015 from the age they could currently draw pension benefits from.

There is further protection for members who are relatively close to retirement age.  In general, there will be no change to pension benefits for members who, at April 2012 are within 10 years of their current Normal Pension Age. So a member of the Police Pension Scheme currently aged 45 could retire at age 55 with pension benefits unchanged.

Pension scheme members who have between 10 and 13.5 years before reaching their current Normal Pension Age will benefit from a degree of protection which will be tapered.
For those going through divorce, the changes will not have any effect on the value of accrued pension benefits, and shouldn’t alter the effect of a specified percentage Pension Share on either the member’s pension or the spouse’s Pension Credit benefits.

The changes will have a significant effect on the value of loss of future pension rights in unfair dismissal cases brought to an Employment Tribunal. 

The calculation of the loss of pension rights has become much more complex and the factors currently in use cannot be used without some substantial adjustments.

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