In response to the public sector pay and pension announcements in the Chancellor’s  Emergency Budget, Steve Beet, public sector partner, PricewaterhouseCoopers LLP said:

“In today's Budget the Chancellor signalled the start of a worrying time for those working in the public sector.  His announcement of a 25% reduction in the budgets for unprotected departments will have officials calling for their staff lists and starting to work out where the savings can be made.  We can anticipate great pressure on staff numbers, as departments work through the implications of the spending review in the autumn. Those at the top are under greatest scrutiny with the Chancellor planning to address the culture of excessive pay. 

“The Chancellor announced today that inflation adjustments for public sector pensions are to be lowered. The announcement of a switch from the Retail Price Index to the Consumer Price Index as the basis for public sector pensions’ inflation will have a very real impact.  Had this new policy been applied in the year to May 2010, this shift would have resulted in a 1.7% decrease in the adjustment.  No surprise then that the Chancellor announced plans to scrap the default retirement age, as it looks like public sector workers may have to work longer to protect their retirements. For those who stay, there is the two year pay freeze and a real threat to one of the big attractions of public service, the public sector pension.

“PwC welcomes the review under John Hutton as confirmed in today's budget, into public sector pensions. Recognising the challenges of the fiscal position, we believe that a clear and unbiased analysis is exactly what's needed to understand the real future costs of public sector pensions and to identify the options for reform. Public sector pensions need to be fair - both to public sector workers and the taxpayer - and changes need to be deliverable. This is a complex and important issue and it is in everyone's interest that we have an open and frank debate about the future.”

ENDS