Could index linking of existing public service pensions be removed?

KMK

In view of the fast moving political events of the past week and the seeming determination to go for cuts to address the deficit, could the new government remove index linking from retirement pensions already being claimed?

I assumed that index linking for any public service pensions set up in the near future would probably be removed, but could pensions already being paid have the index linking withdrawn, given the dire economic climate?

dasherman

KMK wrote: »

could the new government remove index linking from retirement pensions already being claimed?

I don't think they're allowed to do that.

I would have thought an increase in the pension age and/or higher employee contributions are more likely.

Debt_Free_Chick

KMK wrote: »

I assumed that index linking for any public service pensions set up in the near future would probably be removed, but could pensions already being paid have the index linking withdrawn, given the dire economic climate?

I very much doubt it. It certainly couldn't happen in the private sector as existing rights are protected under the governing trust deed and law.

Public Sector pensions are constituted differently, but I can't see protection for Public Sector pensions being less than that for private sector pensions.

It may be worth putting your question to your pensions office/administrator and ask them to quote the specific statute under which they're protected.

CLAPTON

probably unlikely but parliment is sovereign

mjm3346

Pretty unlikely, they have already lost the case to change redundancy terms.

http://news.bbc.co.uk/1/hi/uk/8672150.stm

DiggerUK

The social unrest following such a move, would be beyond what any of us can comprehend.

Don't forget, every former member of the armed forces, and the police, is on an index linked pension.

bristol_pilot

Very unlikely for a pension in payment. And the Conservatives gave an undertaking that pension rights accrued to date would not be reduced.

Ian_W

I think there is more chance of MP's voting themselves a 100% pay cut than the government trying to sever the index linking of pensions actually in payment.
It's covered by the Pensions (Increase) Act 1971 so in theory it could be repealed but highly unlikely IMO not least because of the likely threat of European Court action from the 2-3 million public sector pensioners who are also voters next time around.
THIS PAGE may also be of interest:

In a letter dated 12 April 2010, Steve Webb said on behalf of the Liberal Democrats "We are very clear that all accrued rights should be honoured: a pension promise made should be a pension promise kept. Therefore we would not make any changes to pension rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected."

In a letter dated 27 April 2010, Philip Hammond said on behalf of the Conservatives "Indexation of pensions in payment is an established part of pensions legislation. The Conservative Party has no plans to change the current index-linking of public sector pensions in payment. We agree with the view that the right to indexation of pensions already accrued is part of the accrued pension rights and those rights will be protected.

CLAPTON wrote:

probably unlikely but parliment is sovereign

Hmm, in the sense that they can repeal previous legislation but not really since one of those EU treaties we never voted on, 'cos they weren't really altering anything, requires UK law to comply with EU law. So only sovereign up to the point that they comply with Europe, so that'll be a half- sovereign parliament then!;)

Debt_Free_Chick

mjm3346 wrote: »

Pretty unlikely, they have already lost the case to change redundancy terms.

http://news.bbc.co.uk/1/hi/uk/8672150.stm

This is a very fair point, as it shows that (certain) changes need the agreement of all the Unions that represent all the workers - in the Civil Service, at least.

Having said that, this ruling only affects those who might be due a payout under the redundancy terms in the future. There is no suggestion that payouts already made would be clawed back, which is more akin to the OP's question.

I don't dismiss your macro-view though - just that it's not absolutely correlated with the OP's question.

Regards

scotsbob

Those receiving a pension may be protected but what about people who have not yet retired?

Let us say a teacher is 45 years old and has been a member of the teachers pension scheme for 20 years. Now one solution for the government would be to buy her out. Give her a lump sum now and she gives up all rights to her index linked pension.

I could see a lot of people in public service being tempted by a lump sum and being too short sighted to realise what they were giving away.

mjm3346

Debt_Free_Chick wrote: »

it's not absolutely correlated with the OP's question.

Regards

The correlation is they have not been able to change the terms of an already accrued right, in this case redundancy terms in the OP's case the right to index linking