An independent review, chaired by former Labour pensions minister John Hutton, will be conducted into public sector pensions.
Chancellor George Osborne referred to the review, which will see Hutton provide an interim report by September, in today's emergency budget.
In building the case for such a review, Osborne referred to figures from The Office for Budget Responsibility, which showed that by 2015-16, £10 billion a year will be spent to meet the gap between pension contributions and payments to the unfunded pensions they support.
He said: "As the Work and Pensions Secretary in the previous Government, [Hutton] brings experience and an unbiased approach.
"He will provide an interim report in September this year to help inform any decisions required for the spending review, and a full report in time for next year’s Budget."
John Hanratty, head of public sector pensions at Pinsent Masons, broadly welcomed the review but urged for it to take account of "shades of grey" when establishing the best method to meet pension provision for the wide range of employees working in the public sector.
He said: “The answers to the questions do not lie in a one-size fits all approach. The commission should focus on protecting the retirement provision for the low paid, part-time and career break workers while not unduly enriching those higher earners whose other remuneration arrangements are more akin to the private sector.
“The approach should not be 'black and white', defined benefit or defined contribution, the commission needs to look at the shades of grey, and apply the most appropriate methods of providing retirement income for the wide range of people employed in the public sector."
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