The Office for Budget Responsibility estimates that the Treasury’s review of the discount rate used to calculate public sector pension contributions will see public sector employers pay an extra £2bn per annum from 2019-20.
“Most of this money will not go towards paying for pensions; it will be paid to the Treasury instead,” said Prospect general secretary Mike Clancy.
“If the Chancellor holds on to this windfall and does not disburse the funds back to the public sector, it will have to find this amount in savings on top of the cuts it is expected to deliver under the last spending review.
“George Osborne is hiding the true extent of the cuts he is imposing behind stealth measures such as this.”
The impact of levying employer National Insurance Contributions on redundancy payments in excess of £30,000 is also likely to weigh heavily on public sector employers.
Clancy added: “Public sector employers are expected to reduce their workforces by tens of thousands over the course of this parliament. Levying employer NICs on redundancy payments will significantly increase the cost of these exercises and will result in a further transfer from service providers to the Treasury and more back-door public sector cuts.”
For further information contact:
Neil Walsh (pensions officer)
0207 902 6601 (w)
07595 204502 (m)
020 7902 6681 (w)
07770 304480 (m)