Civil Servants: Workplace Pensions

The Civil Service Pension Scheme in Great Britain is an unfunded defined benefit pension scheme. The Public Service Pensions Act 2013 (the Act) provided for the introduction of new pension schemes for staff in public services, including the civil service. New schemes were introduced in 2014-15, with benefits calculated on a career average rather than final salary basis.

The Act provides that should the government wish to change, before the 31 March 2040, the extent to which the Civil Service Pension Scheme is a care average scheme it must consult those likely to be affected (or their representatives) with a view to reaching agreement with them and lay a report in Parliament. Under section 27 of the Act, the report must set out why the changes are proposed, having regard to the desirability of not making such a change before 31 March 2040.

The government has not assessed the cost of changing the Civil Service Pension Scheme. The costs of any defined contribution structure would be dependent on the exact design of any reformed scheme, and would need to consider total civil service remuneration, including pay. A move to a funded defined contribution scheme would have significant implications for the public purse, as employer and member contributions that are currently used to meet the cost of current pensions would instead need to be invested, leading to increased Total Managed Expenditure of around £7bn per annum for the Civil Service Pension Scheme.