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Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms

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  • Chiara Rosazza-Bondibene

    ()

  • Alex Danzer
  • Peter Dolton

Abstract

Radical changes have been implemented to pension schemes across the UK public sector from April 2015. This paper simulates how these changes will affect the lifetime pension and how the negotiated pension changes compare across six public sector schemes by level of education. Specifically, we simulate the occupation specific Defined Benefit (DB) pension wealth accumulated for a representative employee over the lifecycle by factoring in the recent changes to pension conditions. We find that less educated workers with low or moderate earnings in the NHS, Local Government and Civil Service schemes are the winners having secured an increase in the value of their pension of between 10-20%. Graduate workers with faster wage growth in the Civil Service, Teachers and Local Government schemes loose between 3% and 5%. This is in sharp contrast with the Police and Fire forces who have lost around 40% irrespective of their education.

Suggested Citation

  • Chiara Rosazza-Bondibene & Alex Danzer & Peter Dolton, 2015. "Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms," National Institute of Economic and Social Research (NIESR) Discussion Papers 457, National Institute of Economic and Social Research.
  • Handle: RePEc:nsr:niesrd:457
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    References listed on IDEAS

    as
    1. Richard Disney & Carl Emmerson & Gemma Tetlow, 2009. "What is a Public Sector Pension Worth?," Economic Journal, Royal Economic Society, vol. 119(541), pages 517-535, November.
    2. Danzer, Alexander M. & Dolton, Peter J., 2012. "Total Reward and pensions in the UK in the public and private sectors," Labour Economics, Elsevier, vol. 19(4), pages 584-594.
    3. Peter Dolton & Gerald Makepeace & Oscar Marcenaro-Gutierrez, 2015. "Public Sector Pay in the UK: Quantifying the Impact of the Review Bodies," Manchester School, University of Manchester, vol. 83(6), pages 701-724, December.
    4. Richard Disney, 1995. "Occupational pension schemes: prospects and reforms in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 19-39, September.
    5. Gary Burtless, 2010. "Lessons of the Financial Crisis for the Design of National Pension Systems," CESifo Economic Studies, CESifo, vol. 56(3), pages 323-349, September.
    6. Richard Disney & Carl Emmerson & Matthew Wakefield, 2008. "Pension Provision and Retirement Saving: Lessons from the United Kingdom," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 155-176, November.
    7. Ippolito, Richard A, 1985. "The Labor Contract and True Economic Pension Liabilities," American Economic Review, American Economic Association, vol. 75(5), pages 1031-1043, December.
    8. Crawford, Rowena & Disney, Richard, 2014. "Reform of police pensions in England and Wales," Journal of Public Economics, Elsevier, vol. 116(C), pages 62-72.
    9. Elena Bardasi & Stephen P. Jenkins, 2010. "The Gender Gap In Private Pensions," Bulletin of Economic Research, Wiley Blackwell, vol. 62(4), pages 343-363, October.
    10. Rowena Crawford & Carl Emmerson & Gemma Tetlow, 2010. "Occupational pension value in the public and private sectors," IFS Working Papers W10/03, Institute for Fiscal Studies.
    11. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303.
    12. Disney, Richard & Whitehouse, Edward, 1996. "What Are Occupational Pension Plan Entitlements Worth in Britain?," Economica, London School of Economics and Political Science, vol. 63(250), pages 213-238, May.
    13. Blake, David, 2003. "Pension Schemes and Pension Funds in the United Kingdom," OUP Catalogue, Oxford University Press, edition 2, number 9780199243532.
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    More about this item

    Keywords

    pension reforms; public sector; defined benefit;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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