The Government is about to announce its pension reform plans, which are expected to see significant increases in pension contributions for public sector workers starting from April 2012.
Public sector workers are about to learn exactly how much more they will be expected to pay into their pensions from April next year – and leaked figures show the highest paid will be hit the hardest.
According to figures obtained by the Daily Telegraph, the Government expects the increased contributions to result in savings of £2.8 billion over three years.
This will mean that in the first year, the 40,000 public sector workers earning well over £100,000 will pay up to an additional £284 per month – or £3,400 per year – into their final salary schemes.
Meanwhile, the 750,000 public sector workers in the lowest-paid bracket will face no increase in their pension contributions. Those remaining will all face varying increases depending on their salary bracket – from £144 more a year for a nurse on £25,000 to £2,000 more for a doctor on £100,000.
Eventually, the increase is expected to result in an average of 3.2% of a worker’s gross salary by 2015.
Treasury Secretary Danny Alexander is expected to say that the proposals are just the beginning of pension reforms.
As more Britons live longer, the cost of public sector pensions is anticipated to more than double over the course of the next five years from £4 billion to £9 billion. Now ministers are asking public sector workers to work longer and pay more into their pensions to compensate for the increase.
Despite the threat of strikes from public sector unions, the Government is pushing ahead with the reforms. In June, Mr Alexander cautioned: “The history of reform is littered with examples of people simply denying the facts. Eventually reality bites. And when it does, change is urgent and uncompromising.”
Moneyhighstreet comments: “If you have a public sector pension, you’re still going to be getting great value from it in the long run despite the increase.
“If, however, you aren’t lucky enough to have a public sector pension, it’s important that you do pay into a pension scheme as this is one of the best ways of saving for retirement – despite the recent beating taken by private sector pensions.
“It’s important that you start setting aside money as early as possible to ensure your future retirement is financially secure.”