Pensions – The Big Picture


Joanne Batty, Pensions Manager


The independent review into public sector pension schemes by Lord Hutton published its final recommendations recently.


Whilst there has been much initial press comment on the changes, perhaps the most important consideration is for those who are not one of the 12 million public sector pension members.


The cost to the State to provide the pension benefits earned by Government workers is the main reason for the review and the payments into these schemes for Teachers, Civil Servants, NHS staff and other key workers are estimated to be 20% – 30% of salary each year.


There are very few people in the private sector that are making this level of


contribution. Information from 2005 showed that while those in the public sector were accruing benefits equivalent to 25% of their salary, those in the private sector had only accrued a little over 8% of their salary. How much are you saving?


The bigger picture around all of this is thinking about the income you need in retirement and planning to ensure you achieve this. Many of you will have other sources of income such as rent from land or property, and savings outside of pensions. However you choose to save, it is important that you have enough set aside to support you through 30 – 40 years of retirement (or even longer).


As the Government has changed the State Retirement Age for many, you may need to consider when you want to retire. If you are planning to retire earlier than the Government wants to pay you your State Pension, then you may need to reconsider your plans in light of these changes.


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