GAD’s Analysis Supports Government’s Pension Reforms
The Government Actuary’s Department (GAD) has published an analysis of the government’s proposed pension reforms, which it says supports the government’s case for change.
The GAD’s analysis found that the proposed reforms would:
- Increase the state pension age to 68 by 2046.
- Reduce the accrual rate for defined benefit (DB) pensions.
- Introduce a new defined contribution (DC) pension system for new members.
The GAD said that the reforms would “reduce the long-term cost of public sector pensions by around £30 billion a year by 2060-61”.
The government has said that the reforms are necessary to make the public sector pension system more sustainable in the long term.
The GAD’s analysis is based on a number of assumptions, including:
- That the government will continue to index the state pension in line with inflation.
- That the average life expectancy will continue to increase.
- That the investment returns on DB and DC pensions will be in line with long-term expectations.
The GAD said that the reforms would have a “significant impact” on the pensions of public sector workers.
It said that the state pension age increase would mean that people would have to work for longer to qualify for a full state pension.
The reduction in the accrual rate for DB pensions would mean that people would accrue less pension for each year of service.
The introduction of a new DC pension system for new members would mean that people would have to take on more investment risk in their retirement savings.
The GAD said that the reforms would “reduce the relative generosity of public sector pensions compared to private sector pensions”.
It said that the reforms would “make a significant contribution to reducing the long-term cost of public sector pensions”.
The government has welcomed the GAD’s analysis.
A Department for Work and Pensions spokesperson said: “The GAD’s analysis supports the government’s case for change. The reforms we are proposing will make the public sector pension system more sustainable in the long term.”
The GAD’s analysis is likely to be used by the government to justify the reforms to Parliament.
The reforms are due to be debated in Parliament in the coming weeks.
GAD’s analysis supports government’s pension reforms
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