The government has appointed former Labour pensions minister John Hutton to chair an inquiry into public sector pensions, and Will Hutton, journalist and executive vice-chair of the Work Foundation to conduct a review of fair pay in the public sector.
The public sector pension commission will 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’. Existing accrued pension rights will be protected. The commission will produce an interim report in September 2010, considering the case for short-term savings within the Spending Review 2010 period, and should be consistent with the Government’s commitment to protect those on low incomes. The Commission will produce a final report in time for Budget 2011.
The public sector pay review will investigate pay scales across the public sector, and make recommendations on how to ensure that no public sector manger can earn more than 20 times the lowest paid person in the organisation. The review will produce an interim report in the autumn, with a final report in March 2011.
Chris Johnson, head of human capital business at Mercer, says: “We fully support the principles behind the review of public sector pay and pensions – there needs to be public and political consensus about pay and pensions especially for senior public servants, and both reviews chaired by Will Hutton and John Hutton provide an opportunity for that consensus to be developed.
“It is right to restrain, if not freeze, public sector pay increases. There is both an issue of affordability and an urgent case for pay reform. While the Government’s short term actions address short term affordability pressures, the Government must address the fundamental long term issues about how much public servants should be paid and how public sector pay can better encourage a culture of performance.