Pensions dominated the news again last week with the publication of reports by the Institute for Fiscal Studies whose report on Pay and Pensions released to complement their Green Budget offered the opinion that “[T]he pension reforms just negotiated will make little or no difference to the long-term costs of public service pensions. The savings from higher pension ages are, on average, offset by other elements of the pensions becoming more generous. The current pay freeze and additional two years of one per cent increases will leave public pay at roughly the same level relative to private pay as it was in 2008.” This is a bit of a blow taken in the context of the news about private sector schemes in the Purple Book published by the Pension Protection Fund and the Pensions Regulator. The report stated that “[T]he total deficit on an estimated full buy-out basis, for all of those schemes in deficit is £470.7 billion” as at 31st March 2011. The report was covered by many commentators and newspapers including the Financial Times who reminded us that the figure of £470bn is almost half the current national debt.
Those universities who are concerned with LGPS deficits might be interested in following the correspondence in the Financial Times which starts with a call from a group of academics, pensions professionals and councillors for transparency (hear, hear! we hear) and consolidation of the many smaller funds into fewer larger ones; a response from Brian Strutton, National Secretary of the GMB Union suggesting that "big" does not always a synonym for "efficient"; and a reply from Mark Packham, Director, Public Sector Pensions, PwC whose research suggests that there is work to be done and savings to be made "if governance of LGPS investment were to be organised at a higher level."