Estimating the value of a civil servant's indexed pension

In the course of his discussion of benefit indexation during the 1980 Budget speech, the Chancellor of the Exchequer remarked that: 'Serious doubts have been raised as to whether adequate allowance is made for the present pension arrangements in setting public sector pay. The Government intend, therefore, to set up an independent enquiry into that question'. A Commiittee of Enquiry, under the chairmanship of a leading industrialist, Sir Bernard Scott, has now been formed, and is expected to report in the near future. The problem to be considered is the following. Very few members of pension schemes in the private sector receive, or anticipate receiving, a fully indexed pension during retirement. Most are increased in some way, but usually on an ad hoc basis. However, members of the Principal Civil Service Pension Scheme, along with over half of all other public sector pension scheme members, receive a commitment to full indexation. Civil servents, unlike other public sector employees, are expected to make an explicit sacrifice to compensate for their superior pension benefits.