Public sector pensions: The details agreed so far

Today the government and unions agreed the basic reforms of four public sector pension schemes.

The unions have agreed to take these models for reform to their membership for approval in the New Year.

These reforms will apply to all four schemes:

• Each scheme will be set up on a career average basis;
• The normal retirement age in all schemes will be set as the same as the state pension age for all post-2015 service;
• An employer cost cap will be set.

Other reforms apply to the schemes differently, as set out below.

Principal Civil Service Pension Scheme (PCSPS)

The new PCSPS have a provisional accrual rate of 2.28% of pensionable earnings each year.

Active members benefits will be revalued in line with CPI. Pensions in payment and benefits earned in deferment will continue to increase in line with CPI.

The average member contribution will be set at 5.6% whilst there will be some protection from contribution increases for the lowest paid, subject to further negotiations.

Spouses and partners will continue to receive a survivor's pension of three-eights of the member's pension, with a lump sum death in service benefit of two times annual salary.

There will be no further reform for the next 25 years.

Local government pension scheme (LGPS)

The new LGPS could be allowed to bypass any increases in employee contributions, as it is believed LGPS members in particular will not be able to afford this, but only if overall financial constraints on the scheme are met.

Teachers Pension Scheme (TPS)

The new TPS will have a provisional accrual rate of 1/57th of pensionable earnings per year.

Active members' benefits will be increased in line with CPI plus 1.6%, whilst pensions in payment and benefits earned in deferment will increase in line with CPI.

Average member contributions will rise to 9.6% with some protection for the lowest paid, whilst there will be a cap on the employer cost of the scheme.

NHS Pension Scheme (NHSPS)

The new NHSPS will have a provisional accrual rate of 1/54th of earnings each year.

Active members' benefits will be revalued in line with CPI plus 1.5%, whilst pensions in payment and benefits earned in deferment will both rise by CPI.

The average member contribution will be set at 9.8%, with protection from employee contribution increases in 2012 for members earning less than £26,557. Member contributions for staff earning more than this will increase by up to £2.4% in 2012.

Spouse and partner pensions will continue to be based on an accrual rate of 1/160th.