The SSRB has set out their considerations on pensions, in relation to the overall effect of the recruitment or retention of senior public sector workers, which is welcomed by the FDA.
The report focuses on the tax regime and the recent regime changes: “The tax regime which affects public sector workers disproportionately, as the pension makes up a far higher proportion of their remuneration package than for senior private sector employees. In addition, public sector workers lack the flexibility over their pensions that private sector employees typically have. Changes to the pension annual allowance announced in the March 2020 budget were an important recognition of the very high marginal tax rates and disincentives that many senior public sector workers have faced. These reforms will go some way towards addressing the problems we have set out in previous reports.”
The SSRB also identifies the likelihood of substantial further reform to public sector pensions over the next year or two, following the proposed remedies to the McCloud judgment and responses to the regular valuation of pension schemes. “Their respective pension schemes are of substantial value to our remit group members and we will continue to monitor the impact the changes to total remuneration have on recruitment and retention.”
The tax regime had led to a significant reduction in take-home pay and total net remuneration over the last decade for many senior civil servants. The annual allowance taper tax changes are welcomed by the FDA, however the lifetime allowance remains an issue for some of our members.
The FDA is actively involved in the civil service pension scheme governance and working with the TUC around the McCloud judgement outcomes and scheme valuations and will keep members updated as the landscape develops.