The emergency Budget on 22 June announced the intention to inflation link public service pensions using CPI (Consumer Prices Index) as opposed to RPI (Retail Prices Index).
As you can imagine, the exact details of how CPI indexation will be introduced are still being developed but one thing is clear: it is likely to have a significant affect on local government pensions.
It wasn’t the only Budget announcement affecting pensions either.
A two year public sector pay freeze for those earning £21,000 was also announced, along with the intention to look into the complex proposals to restrict tax relief for high earners.
There are also plans to:
- Remove the compulsory retirement age of 65 from Oct 2011.
- Increase state pensions more generously.
- Consult on raising state pension ages sooner, perhaps introducing an age of 66 for men from 2016.
We also know that further change in the benefits provided by public sector pensions appears inevitable.
Whilst we don’t know what pension changes may be ahead, we are monitoring developments like the establishment of a Public Sector Pensions Commission and its report of 7 July closely.
If and when we become aware of any proposals for change that affect the Local Government Pension Scheme, we will of course keep you in touch with developments.