Independent Public Service Pensions Commission: Final Report - 10 March 2011
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Applying the design
Box 5.A:  Summary There are differences between the individual public service schemes in factors such as the distribution of pensionable pay, average career length and life expectancy. But, for most schemes, these differences are generally similar to, or smaller than, those seen within the schemes. The modernised schemes generally apply standard features to their members and this is accepted as an appropriate approach, as tailoring schemes for different groups creates a complex and costly system and would be likely to reduce member understanding. This would suggest that, for most schemes, variation in pension features is not the most appropriate way to deal with these differences where they are seen. The Commission is not proposing a single public service pension scheme, but over time public service pensions should move towards a common framework for scheme design as set out in this report. However, in some cases, for example, the uniformed services, there may need to be limited adaptations to this framework. For the uniformed services, expectations and life expectancy, have moved on since the Normal Pension Ages (NPAs) of 55 or less that are seen for the majority of long-serving members of the uniformed services schemes, were set. However, there is a need to recognise the unique nature of the work the uniformed services (the armed forces, police and firefighters) undertake. Therefore, in the case of the uniformed services schemes the Government should consider setting a new NPA of 60, where the NPA is currently below this level, and keep this under regular review, rather than linking their NPA to State Pension Age (SPA). The common framework should apply to the LGPS, where local needs should also be met mainly through varying pay and allowances. However, it remains appropriate for the Government to maintain the different financing arrangements for the LGPS in future, so the LGPS remains funded and the other major public service schemes remain unfunded. This would maintain a mixed approach to the funding of the public service pension schemes. As for who in future should be entitled to join these schemes, it is ultimately for the Government to decide how much long-term pensions risk it is willing to bear in order to meet its wider policy objectives. However, it is in principle undesirable for future non-public service workers to have access to public service pension schemes, given the increased long-term risk this places on the Government and taxpayers.
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