Budget June 2010 - Q & A
22 June 2010
Changes to uprating – Q & A
Q. How will my Teachers’ Pension be affected by the change to pension uprating that was announced in the budget?
A. Your Teachers’ Pension will continue to be protected against price increases and uprated in line with State Second Pensions. The Budget announced that the uprating of the majority of state benefits and the State Second Pension will be moved from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI), consequently your Teachers’ Pension will be uprated by CPI rather than RPI in the future.
Back to the topQ. When will the change be made?
A. From April 2011.
Back to the topQ. Why has the change been made?
A. CPI, already used by the Bank of England, is a better measure of the general level of prices for indexing pensions and benefits, helps fiscal consolidation and the sustainability of pensions.
Back to the topIndependent Public Service Pensions Commission (IPSPC) – Q & A
Q. What’s this I hear about a review of public service pensions?
A. The Chancellor, on behalf of the Government, has set up a commission (the Independent Public Service Pensions Commission (IPSPC)) to make recommendations on how public service pensions can be made sustainable and affordable in the long-term, fair to both the public service workforce and the taxpayer, and ensure that they are consistent with the fiscal challenges ahead.
The Chancellor has asked John Hutton to Chair the IPSPC. The terms of reference for the IPSPC, which have been agreed by the Chancellor, were published on Sunday 20 June and are available online alongside a full list of schemes the Commission has been asked to consider. (The full release can be found on the HMT website)
Back to the topQ. How will the IPSPC work with the public service schemes in considering the issues involved?
A. The exact workings of the IPSPC, and interaction with individual schemes is not yet finalised – this is currently being discussed with the Chair.
Back to the topQ. Will the IPSPC take account of stakeholders’ views in considering the issues involved?
A. The IPSPC will consult a wide range of stakeholders, including Trades Unions, on possible reforms.
Back to the topQ. When will the IPSPC report on findings?
A. The IPSPC will produce an interim report in the Autumn. This should consider the case for delivering savings on public service pensions within the spending review period (i.e. the next three years). The IPSPC will consider possible options for the longer term in due course.
Back to the topChanges to annuity arrangements – Q & A
Q. Is it right I will have more flexibility on when to draw down my AVC following the budget?
A. From April 2011 the Government will remove the rule that creates an obligation to purchase an annuity by age 75, this will give you more flexibility on when to draw down your AVC. A consultation on the detail of this change will be issued shortly.
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