The government has made a generous set of concessions to the public sector as it attempts to finalise the reforms of their pensions.
The new deal includes protection for those within ten years of retirement and higher accrual rates for workers.
It means that nobody in the public sector who is within ten years of their normal retirement age on 1st April 2012 will experience a decrease in their pension or have to work for longer to enjoy the same pension income.
This means that around one million people in the public sector will see their expected pension benefits protected.
Public sector members will still see their pension benefits moved to the less generous career average basis, although with higher accrual rates than previously proposed. It has been argued that the career average basis is better for those with lower pay.
The higher accrual rates will be introduced along with higher cost ceilings on the amount of government contributions.
Despite these generous concessions, the government still looks set to be on an unavoidable collision cost with the unions. Strike action at the end of the month continues to be very likely.
The unions remain upset with proposals to increase personal contributions and increase the scheme retirement age.
The public sector pension debate is unlikely to go away any time soon. Striking a fair balance between benefits for public sector members and costs for the taxpayer was never going to be easy.
Those who are counting on public sector pension benefits to provide their income in retirement should keep a close eye on developments and seek professional independent financial advice to understand the impact of any changes on their retirement plans.
Photo credit: Flickr/chrisjohnbeckett
