Budget 2011: Govt won't 'cherry-pick' on public sector pension reform

Lord Hutton’s recommendations for public sector pension reform have been backed by the Treasury, with Chancellor George Osborne saying there would be no “cherry picking” from his proposals.

Speaking in his annual Budget statement today, Osborne said the government accepted Hutton's recommendations as a basis for further consultation with unions over the plans.

Lord Hutton recommended final salary schemes should be phased out in favour of cheaper career average arrangements by 2015.

The final report from the Independent Public Service Pensions Commission said existing members should be moved to the new scheme set-up for all future accruals but past pension promises would be kept.

He explained the final salary link should be retained when calculating the value of accrued rights under the existing scheme.

Hutton also said the normal retirement age for civil servants should be increased in line with planned state pension age changes.

However, Hutton said for the uniformed services - the armed forces, police and firefighters - a pension age of 60 was still appropriate.

The report also proposed the government set a cap on the proportion of pensionable pay it will contribute to employee pensions. Exceeding the cap should trigger a consultation process.