Public pension reforms 'unlikely to save money'

The latest public pension reforms planned by the government are unlikely to save money in the long-term, according to the Institute of Fiscal Services.

Research from the organisation also suggests that a four-year pay squeeze has prompted the differential between public and private-sector pay to return to its pre-recessionary levels.

The IFS said that any savings from higher pension ages are likely to be offset by the changes to the way pensions are calculated, while the current pay freeze will leave public pay as far behind private pay as it was in 2008.

Carl Emmerson, deputy director of the IFS and co-author of the paper, said: "The reforms to public service pensions implemented by the last Labour government, and this government's decision to switch from RPI to CPI indexation of pension benefits, will in the long run reduce the generosity and therefore the cost of these schemes to the taxpayer.

"But the consequence of the long-drawn-out negotiations over the latest reform appears to be little or no long-term saving to the taxpayer or reduction in generosity, on average, of pensions for public service workers."

IFS research economist Wenchao Jin added that there is a significant various in public sector pay premiums across the UK.

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