Prospect survey warns 15% will opt out

Prospect survey warns 15% will opt out

More than one in seven Prospect members say they will opt out of their civil service pension scheme if the government insists on forcing through its planned contribution increases for staff.

Over the next three years the chancellor has announced that he intends to raise contributions 1 per cent a year by a cumulative 3.2 per cent - effectively a pay cut immediately after the current two-year pay freeze.

But an online survey of 4,500 members carried out by Prospect since September 1 reveals a growing revolt by members against the threat of imposed rises.

Just over 5 per cent of members say they will refuse to pay next year's increase and will opt out of the scheme.

That figure rises to 15 per cent when members say how they would react to three successive increases over the years 2012-14.

If anything like that pattern were to be repeated in practice, the consequences for the government's finances would be severe. There are 573,000 staff in the civil service and public bodies who belong to one of the four civil service schemes or linked by-analogy schemes.

The more people who opt out, the fewer contributions will be collected from members and the higher will be the net cost to government of paying out current pensions.

"The proportion of staff considering an opt-out is worrying," said Jonathan Green, research officer, who organised the survey. "What is particularly striking is that the proportion of respondents willing to pay the increases right up to 2014 plummets to just a third.

"The group that is most uncertain about paying this increase is female respondents. By 2014 only 29 per cent say they will pay the increase compared with 37 per cent of male respondents - and nearly 60 per cent don't know what they will do."

Neil Walsh, Prospect pensions officer, warned members that it would not be sensible to opt out of the scheme, "though I understand all too well the reasons why members might feel that way.

"Members still need to consider the overall value of scheme membership and think very carefully before making a decision that would have a long-term impact on their standard of living in retirement."

This article was first published in the October-November 2011 issue of Profile.

  • 09 Oct 2011