Pension cost cap breach decision expected early in 2019
17 December 2018
A decision on how to address the public service pension cost cap breach reported by HM Treasury in September of this year is expected in early in 2019. The Government Actuary Department’s (GAD) draft actuarial valuation report for the police pension schemes indicates that employer contributions need to increase for the period 1 April 2019 – 31 March 2023 and also that the cost of the schemes are not on target.
The public service pension scheme cost cap is designed to limit the cost to the taxpayer of providing pensions to public service workers. The target level of the cap is set as a percentage of pensionable payroll. If a valuation shows that costs have risen or fallen by more than 2%, action must be taken to redress the balance. In this case the costs have fallen by more than 2%.
The Home Office and Police Pension Scheme Advisory Board (SAB) are currently in discussions and must seek to reach an agreement on how to proceed in January. Our National Secretary Alex Duncan said: “Scheme members - including the Police Federation of England and Wales - have been consulted via the SAB. We are considering the options available, but we will ultimately be pushing for what is in the best interests of our members.”
There are currently more than five million active members of the public service pension schemes, which cover the police, NHS, teachers, the armed forces, firefighters, local government workers, judiciary and civil servants.
Take a look at our pension cap FAQs for more information.