A report by the National Audit Office (NAO) has revealed changes to public service pension schemes introduced in 2007-08 could end up costing teachers, civil servants and NHS staff £67bn over the next 50 years.
The first major reform of the schemes since the 1970s saved taxpayers’ money by requiring public service employees to make larger contributions to pension plans and, in most cases, work until the age of 65, instead of retiring at 60.
As well as higher contributions and delayed retirement, staff are required to take on more of the risk of extra costs from pensioners living longer than expected.
The NAO concluded that the changes were “on course to deliver significant savings and stabilise pension costs around their current levels as a proportion of GDP”.
But the spending watchdog refused to say that the reform provided value for money, as there had been no assessment of the long-term impact of the changes on recruitment, motivation and retention of staff.
The NAO also warned that there was still a risk that the overall cost to taxpayers will be greater as a proportion of national income if GDP growth permanently under performs.
The 2007-08 changes affected schemes that account for nearly three-quarters of UK public service pay-as-you-go pension payments, covering more than 2.9 million current employees.
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