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Osborne backs Hutton on pensions but promises 'no cherry picking'


Chancellor George Osborne has accepted Lord Hutton’s recommendations on public sector pensions as a “basis for consultation” with unions.

In his budget statement this afternoon, the chancellor insisted there should be “no cherry picking on either side” from the Hutton commission’s report, which backed raising pension ages and scrapping final salary schemes for public sector workers.

He told the Commons: “We… need to make sure that our public service pensions are both fair to those who give their working lives to help others and fair to the taxpayers who have to fund them.”

The chancellor also unveiled plans to change the “discount rate” used to calculate unfunded public service pension contribution rates to one based upon the consumer prices index of inflation.

The new discount rate “reinforces” the government’s case that employee contributions to public sector pensions should increase by an average 3 per cent. “Indeed, the new discount rate could be used to justify further contribution rises,” he said.

But, Mr Osborne added: “As part of the wider package of reforms, I am not proposing to ask for more than the 3 percentage point average.”

Figures in the budget book show that the government expects the increased public sector pension contributions announced in last year’s spending review to net £160m in 2012-13. It expects this to rise to £1.27bn the following year, £1.76bn in 2014-15, and £1.85bn in 2015-16.

NHS pensions could also be affected by the chancellor’s proposals to reform the state pension, bringing in a new single-tier pension worth £140 per week.

“It would be simple, it would be based on contributions; it would be a flat rate, so people know what to expect,” Mr Osborne said.

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Readers' comments (2)

  • So i'm being down graded from a band 6 to a band 5, increments are freezing for 2 years, my pension contributions are going to increase AND i'm going to having to work until i'm 68. Thanks really know how to make your employees feel appreciated!!!

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  • Seriously, time to stop thinking of others and play by the game by the rules set by others, the Govt will lose this one as long as we stick together, RCN, Unison and Unite need to galvanise their collective members for the common good of us and the public.

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