Public sector pensions
Public Accounts Committee
Closed
Inquiry
As at 31 March 2020 the UK’s major public service pension schemes had over 8 million members, including active and deferred members and current pensioners – a significant part of the national pensions “landscape”. Most of the main public service pension schemes are unfunded, with pension payments paid for out …
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10
Recommendations
15
Conclusions
1
Report
1
Oral session
1
Letter
1
Event
Activity timeline 4 events
2 Sep
2021
2021
11 Jun
2021
2021
Report published
19 May
2021
2021
Oral evidence sessions 1 session
22 Apr 2021
View on parliament.uk
Affordability of public sector pensions; Supply chain financing and the operation of Covid finance facilities; Equitable Life
Cat Little · Cabinet Office
Charles Roxburgh · HM Treasury
Martin Clarke · Government Actuary’s Department (GAD)
Mike Williams · HM Treasury
Sir Tom Scholar · HM Treasury
Reports 1 report · click to expand
| Title | HC No. | Published | Items | Response |
|---|---|---|---|---|
| Sixth Report - Public Sector Pensions | HC 289 | 11 Jun 2021 | 25 | Responded |
Recommendations & Conclusions
10 results
2
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
It is becoming clear that public service pension policy is affecting the delivery of frontline...
It is becoming clear that public service pension policy is affecting the delivery of frontline services in some areas, such as education and health. In 2019–20, a substantial increase in employers’ pension contributions—which was not fully funded by HM Treasury—has …
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Government Response
The government agreed with the recommendation, stating it already provides advance notice and support, and confirmed it is consulting on the SCAPE discount rate methodology with a new rate to be set for April 2024, proposing to align future reviews with the valuation cycle.
HM Treasury
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3
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
HM Treasury has not done enough to ensure people understand the value of their pensions.
HM Treasury has not done enough to ensure people understand the value of their pensions. This Committee previously recommended, in 2011, that HM Treasury should work with employers and pension schemes to ensure that clear and relevant information is provided …
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Government Response
The government accepted the recommendation, stating it will commission departments to analyse latest participation data, work to standardise data collection, and request updates on measures to improve participation to inform efforts to promote pension value, with a target date of March 2022.
HM Treasury
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5
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
HM Treasury has had to revisit key elements of the reforms, and these issues may...
HM Treasury has had to revisit key elements of the reforms, and these issues may take decades to resolve fully. HM Treasury should have foreseen the age discrimination issue that gave rise to the 2018 McCloud judgment, and putting things …
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Government Response
The government accepted the recommendation, outlining current legislative actions for the McCloud judgment via a new Bill and detailing steps to address the cost control mechanism, including waiving 2016 valuation ceiling breaches and consulting on future changes. It also committed to providing an update in six months.
HM Treasury
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8
Conclusion
Accepted
Sixth Report - Public Sector Pensi…
HM Treasury has since been developing a remedy for those affected.14 In February 2021, HM...
HM Treasury has since been developing a remedy for those affected.14 In February 2021, HM Treasury announced that it plans to give the 3 million members affected by the McCloud judgment a choice of which scheme they would like their …
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Government Response
The government affirmed its commitment to legislate to remedy the McCloud judgment discrimination and noted that the Public Service Pensions and Judicial Offices Bill was introduced in July 2021, reiterating the ongoing actions described by the committee.
HM Treasury
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9
Conclusion
Accepted
Sixth Report - Public Sector Pensi…
Separately, HM Treasury has some concerns about the measures it has in place to control...
Separately, HM Treasury has some concerns about the measures it has in place to control rising costs. As a part of its 2011–2015 reforms, government put in place a ‘cost control mechanism’ designed to share costs fairly between employees and …
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Government Response
The government detailed actions being taken to address issues with the cost control mechanism, including publishing amending Directions for 2016 valuations, waiving ceiling breaches, delivering floor breaches, and initiating discussions with Scheme Advisory Boards to rectify these.
HM Treasury
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10
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
While the cost control mechanism was only used for the first time in 2016, HM...
While the cost control mechanism was only used for the first time in 2016, HM Treasury is concerned that it is not sufficiently protecting the taxpayer and members. The provisional results of the 2016 valuations show that costs had fallen …
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Government Response
The government is addressing the cost control mechanism flaws by waiving ceiling breaches from 2016 valuations, delivering floor breaches, and has launched a consultation on changes to be implemented before the 2020 valuations.
HM Treasury
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19
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
This Committee previously recommended, in 2011, that HM Treasury should work with employers and pension...
This Committee previously recommended, in 2011, that HM Treasury should work with employers and pension schemes to ensure that clear and relevant information is provided to employees on the value of their pensions, and that this information is regularly updated …
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Government Response
The government accepts the recommendation, agreeing to commission departments for participation data analysis, standardise data collection, and request updates on measures to promote the value of public service pensions to employees by March 2022.
HM Treasury
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20
Conclusion
Accepted
Sixth Report - Public Sector Pensi…
Furthermore, government’s response to the McCloud judgment has potential to exacerbate the problem.
Furthermore, government’s response to the McCloud judgment has potential to exacerbate the problem. Members affected by the McCloud remedy will be asked to make a complex decision about their pensions, which may include balancing between the level of pension they …
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Government Response
The government outlined the 'deferred choice underpin' introduced in the Bill, allowing members to make choices about their benefits at retirement to simplify the complex decision-making related to the McCloud judgment.
HM Treasury
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21
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
When asked about what information was available on employees that opt out of public service...
When asked about what information was available on employees that opt out of public service pension schemes, HM Treasury told us it did not collect this information.45 HM Treasury told us that individual pension schemes often provided assessments of opt-out …
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Government Response
The government accepted the recommendation, stating it will commission departments for analysis of participation data, work to standardise data collection including by member characteristics, and request updates on measures to improve participation, aiming for implementation by March 2022.
HM Treasury
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22
Recommendation
Accepted
Sixth Report - Public Sector Pensi…
Individual schemes hold information on participation rates for some groups, for example participation in the...
Individual schemes hold information on participation rates for some groups, for example participation in the NHS Pension Scheme is lower among younger employees.48 However, HM Treasury told us that there are lots of imperfections in the quality of participation data, …
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Government Response
The government accepts the recommendation, committing to commission departments for detailed participation data analysis, standardise data collection by member characteristics, and gather updates on measures to improve participation by March 2022.
HM Treasury
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Correspondence 1 letter
19 May 2021
Correspondence from Catherine Little, Director General Public Spending Head of Government Finance Function, HM Treasury, re Public Accounts Committee – Session of 22 April 2021, dated 12 May 2021
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