Employee Benefits Live: Limiting public sector pension entitlements for high paid is a distraction

Public sector pensions face a raft of changes in the future amid questions of sustainability and fairness, according to a panel of experts speaking to day at Employee Benefits Live 2009.

Reacting to an announcement by secretary for state for communities and local government, John Denham that the government plans to limit the pay and pensions of council bosses, Joanne Seagers, chief executive at the National Association of Pension Funds, said further modifications were inevitable but questioned the government’s focus on cuts for higher earners.

Denham told the Labour party conference yesterday that pay for senior public sector staff had got ‘out of hand’ and opposed Conservative party plans to freeze pensions for lower paid staff. Instead he said that the final salary pensions of senior public sector workers would be capped.

In an Employee Benefits Live session on public sector pensions, Seagers said: “There are 5.3 million workers and these changes would only affect a few thousand so we have to get it into perspective. We need to focus on the real issues and not just the ones that are going to attract the headlines.”

She went on to say she expected more cost-cutting changes to public sector pensions. “David Cameron has talked about [a change to defined contribution] in terms of MPs pensions so maybe that will be the start. Nothing is ruled out so who knows.”

Another member of the panel in the discussion, Tim Sands, deputy director of NHS pensions at the Department of Health, said: “Any changes that are made [to public sector pensions] will be based on the overall perception of public sector schemes rather than looking at the actual costs.”

The panel’s third member, Gary Delderfield, partner at Eversheds and member of the Pensions Management Institute, said generous final salary pensions in the sector are coming under increased scrutiny and cited a move to career average related earnings (Care) schemes as one possible long term solution that can help public sector defined benefit pension schemes remain sustainable.

The panellists said that as it employs so many workers, the public sector had an opportunity to lead the way in reward and demonstrate good working practices such as flexible retirement.

Read more on occupational pensions

Read more on employee benefits offered to staff in the public sector