Non-departmental Public Body (Pension Reform)

(Limited Text - Ministerial Extracts only)

Monday 16th July 2012 Written Statements

[The Chief Secretary to the Treasury (Danny Alexander)]

The Government accepted the recommendations of Lord Hutton’s Independent Public Service Pensions Commission (IPSPC) as the basis for discussion with unions on the reform of public service pensions, Official Report, 23 March 2011, column 951. The Hutton pension reform process was explicitly applicable to public service pensions in general, including non-departmental public bodies (NDPBs) and other types of public bodies as the interim IPSPC report (page 134) made clear. As announced in the Queen’s Speech on 9 May, the Government intend to bring forward legislation during the current parliamentary Session to provide a consistent legal framework for public service pensions. Those reforms will allow the major unfunded public service pension schemes to provide pension benefits to employees of new and existing NDPBs with unfunded pension schemes. In future, new bespoke schemes for NDPBs will be allowed only in compelling circumstances, provided they follow Lord Hutton’s design recommendations. The Government will consider further how to reform funded defined benefit schemes in line with Lord Hutton’s recommendations. Funded defined contribution schemes will not be reformed as part of this process as they do not impose liabilities on the Exchequer. A provisional list of existing NDPBs’ pension schemes due for reform will be published when the Bill is introduced.

The Government will honour in full the accrued rights earned by all scheme members and, where applicable, will maintain the final salary link for past service for current members. Members of NDPB pension schemes will also benefit from my announcement on 2 November 2011 that no-one within 10 years of retirement on 1 April 2012 will see any change in when they can retire nor any decrease in the amount of pension they receive, Official Report, 2 November 2011, columns 928-29.

Once the major scheme reforms are settled, we will look to begin discussions with NDPB staff and their representatives, whom we invite to work with the Government to ensure the changes are introduced as effectively as possible no later than 5 April 2018.