Independent Public Service Pensions Commission: Final Report - 10 March 2011
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women fare better under CARE structures, because the salary effects are largely stripped out, leaving the effects of the assumption that women will live longer.
Effective employee benefit rates by career progression C.27 The EEBRs have been determined for three career progression scenarios representing low, mid-level and high flyers: ••
low flyers are assumed to receive earnings growth in line with general wage inflation;
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mid-level workers are assumed to experience standard assumed promotional salary scale and earnings inflation; and
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high flyers are assumed to receive standard assumed promotional salary scale increases and earnings inflation plus an additional 1 per cent per annum.
C.28 Chart C.4 shows how members with these career progressions could fare under the different scheme structures. The EEBRs are taken as an average across the whole age distribution but are assumed to have initial earnings of around £16,000.3
Effective employee benefit rate
Chart C.4: Effective employee benefit rates by career progression 30% 25% 20% 15% 10% 5% 0% Proxy
CARE (CPI)
Low flyer
CARE (earnings) CARE (CPI) + CARE (earnings) £35k cap with + £35k cap with DC top up DC top up Mid flyer
High flyer
Source: IPSPC analysis of PPI results.
3 This is at the 30th percentile level and explains why the capped schemes show an overall slightly higher level of EEBR than the uncapped CARE schemes – see Chart C.1 for further details.
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