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Who wins? Evaluating the impact of UK public sector pension scheme reforms

Published online by Cambridge University Press:  01 January 2020

Alexander M. Danzer ,
Peter Dolton  and
Chiara Rosazza Bondibene
Alexander M. Danzer
Affiliation:
KU Eichstätt-Ingolstadt, IZA Bonn, CESifo Munich
Peter Dolton*
Affiliation:
University of Sussex and CEP, LSE
Chiara Rosazza Bondibene*
Affiliation:
National Institute of Economic and Social Research and Centre for Macroeconomics
*
e-mail: [email protected]
e-mail: [email protected]
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Abstract

Radical changes have been implemented to pension schemes across the UK public sector from April 2015. This paper simulates how these changes will affect the lifetime pension and how the negotiated pension changes compare across six public sector schemes by level of education. Specifically, we simulate the occupation specific Defined Benefit (DB) pension wealth accumulated for a representative employee over the lifecycle by factoring in the recent changes to pension conditions. We find that less educated workers with low or moderate earnings in the NHS, Local Government and Civil Service schemes are the winners having secured an increase in the value of their pension of between 10–20 per cent. Graduate workers with faster wage growth in the Civil Service, Teachers and Local Government schemes lose between 3 per cent and 5 per cent. This is in sharp contrast with the Police and Fire services who have lost around 40 per cent irrespective of their education.

Keywords

pension reformspublic sectordefined benefitJ32H55J45
Type
Research Articles
Information
National Institute Economic Review , Volume 237 , August 2016 , pp. R38 - R46
Copyright
Copyright © 2016 National Institute of Economic and Social Research

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Footnotes

Disclaimer: This work contains statistical data, which is Crown Copyright; it has been made available by the Office for National Statistics (ONS) through the Secure Data Service (SDS) and has been used by permission. Neither the ONS nor SDS bear any responsibility for the analysis or interpretation of the data reported here. This work uses research datasets, which may not exactly reproduce National Statistics aggregates.

Acknowledgements: The financial support of the Economic and Social Research Council grant reference ES/L014920 is gratefully acknowledged. We would like to thank Matt Dickson, Richard Disney, Katerina Lisenkova, John Ralfe, Steven Taylor, Ian Tonks, Lucy Stokes and participants at the conference on the Future of Pensions at NIESR for useful comments. Guidance received from Margaret McEvoy and her colleagues at the Office of Manpower Economics, BIS is also acknowledged although OME takes no responsibility for the contents of this paper and it may not represent the views of OME or BIS.

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