Business

At a glance: Pensions review

Teacher
Image caption Teachers are among those whose pensions have been reviewed

Nurses, teachers, local government staff and other public sector workers should pay more into their pension pots, a major review has suggested.

Lord Hutton has published his initial findings in a review of how to cut the rising cost of public sector pension schemes.

Here are the key points from the interim report:

  • There are 12 million people - one in five of the UK population - who are active, deferred, or pensioner members of public sector schemes
  • The life expectancy of a 60-year-old is 28 years, compared with 18 years in the early 1970s
  • About 85% of public sector employees have some form of employer-sponsored pension compared with about 35% in the private sector
  • In the 10 years from 1999-2009, the value of benefits paid from the five largest public service pension schemes increased by 32%
  • To start covering the increased cost, public sector workers should pay bigger contributions into a pension scheme - although the exact amount is a decision for Parliament
  • Final-salary schemes mean high-flyers get almost twice as much back in pensions than those on more modest earnings for the same amount of pension contributions
  • In the long-term, pensions should be changed from final-salary, possibly to career average
  • Public sector workers should work longer, as life expectancy increases
  • The Dutch and Swedish systems should be considered as models
  • Some changes that have already been made are drastically reducing long-term costs
  • Many schemes have already put up the pension age for new recruits from 60 to 65
  • The average public sector pension in payment is £7,800 a year

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites