Public sector workers will lose

Public sector workers will lose out, despite IFS claims

Prospect has severely criticised the Institute of Fiscal Studies for issuing a press statement on the government's pensions and pay changes which fails to reflect the content of its own report on the issues.

An IFS press release issued yesterday and reported widely in the national press, said:

  • the government's changes will "make little or no difference to the long-term costs of public service pensions."
  • it would take the whole of the two-year public sector pay freeze and two years of 1% cent pay increases to return public pay to where it was relative to private sector pay in 2008.

Prospect deputy general secretary Dai Hudd said: "The IFS press release doesn't match its full report and reflects badly on the organisation's impartiality. It is absurd to judge the cost savings of the government's measures on pensions solely by considering future scheme design.

"Three other changes will mean public sector workers paying more and working longer to end up with less in their pension pot. Yet the IFS press release ignores the increase in employee contributions and the impact of the later retirement age, and only briefly alludes to the CPI uprating switch."

TUC head of campaigns and communications Nigel Stanley said that "it seems that even the lofty IFS cannot resist the temptation to feed the right-wing media with friendly lines".

Though it was nonsense to claim the government's changes had made little difference to public sector pensions, the analysis was not without merit.

"It does show that negotiations – bolstered by the TUC's day of action – did force the government to make real concessions. The changes in the acrrual rate conceded by ministers, the IFS now says, may be cost neutral across schemes."

The IFS report says the expected future cost to the taxpayer of public service pensions WILL fall – but largely due to reforms already implemented by the last Labour government [which were negotiated with and agreed by unions], as well as this government's shift from RPI to CPI indexation. IFS says: "These reforms will significantly reduce the generosity of these pensions for many public sector workers."

It also points out that employee pension contribution increases between 2012-14 will save taxpayers an estimated £1.8bn a year from 2014-15.


IFS press release

IFS full report

TUC press release