§ Mr. Dicks
To ask the Chancellor of the Exchequer (1) what is his policy in respect of the appropriateness of a contributory element in public sector index-linked pension schemes;
(2) what would have been the effect on the Exchequer, in the last financial year where figures are available, of a contribution by civil servants to their pensions at rates of 5 per cent. 7 and 9 per cent. of their salary;
(3) what representations he has received regarding the benefits in respect of expenditure and on other counts of introducing a contributory pension scheme for civil servants; and if he will make a statement.
§ Mrs. Gillian Shephard
The Government are satisfied that the contribution arrangements in the public service pension schemes which they control are appropriate. The value of pension benefits, including index-linking, continues to be a relevant factor in public service pay determination. Our policy is to provide a remuneration package, including pay, pension and other conditions of service, which is sufficient to recruit, retain and motivate staff of adequate quality. Public servants therefore bear their share of pension costs in two ways: by contributions from pay, and through pay set at levels which take proper account of the value of pension benefits.
Civil servants make an overt contribution towards the cost of family benefits but in the main meet their share of pension costs through pay being set at levels lower than would otherwise be appropriate. If civil servants were to meet the whole of their share of the pension costs by overt contributions, the consequence for the Exchequer would be broadly neutral. This is because pay would need to be adjusted in order to offer a similar remuneration package to employees.
Representations are made from time to time about the civil service pension scheme. The Government have no plans to alter the way in which civil servants bear their share of pension costs in the foreseeable future.