1
Conclusion
Sixth Report - Public Sector Pensions
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury and the Government Actuary’s Department about public service pensions.1
Government response AI summary
The government response reiterated the committee's opening statement about taking evidence and confirmed the report publication and the nature of the current document.
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HM Treasury
7
Conclusion
Sixth Report - Public Sector Pensions
Acknowledged
As a part of the 2011–2015 reforms, HM Treasury offered ‘transitional protection’ to those closest to retirement. This meant that scheme members within 10 years of their normal retirement age would see no change to their pension age or their expected pension.12 In 2018, the Court of Appeal ruled that …
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As a part of the 2011–2015 reforms, HM Treasury offered ‘transitional protection’ to those closest to retirement. This meant that scheme members within 10 years of their normal retirement age would see no change to their pension age or their expected pension.12 In 2018, the Court of Appeal ruled that these protections were discriminatory on the basis of age (the ‘McCloud judgment’).13
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Government response AI summary
The government response reiterated the factual background of the public service pension reforms, including the McCloud judgment and its finding that transitional protections were discriminatory.
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HM Treasury
23
Conclusion
Sixth Report - Public Sector Pensions
Acknowledged
The National Audit Office found there were stark differences in the average pension received by scheme members, when analysed by gender. Their report identified that the average pensioner is paid £10,000 annually, but there is a 45% gap in the average pension being paid to male and female pensioners. The …
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The National Audit Office found there were stark differences in the average pension received by scheme members, when analysed by gender. Their report identified that the average pensioner is paid £10,000 annually, but there is a 45% gap in the average pension being paid to male and female pensioners. The largest gap the NAO identified was in the NHS Pension Scheme, at 63%.54 We challenged HM Treasury on whether it was right and fair for there to be such a gap. HM Treasury told us this gap in average pensions is determined by differences in the pay history of these two groups and what we see in the pension data reflects historical inequalities in pay over many decades. HM Treasury said that its response is to try and close the pay gap and it is seeing evidence that it is closing. However, HM Treasury commented that closing the pay gap alone will mean the gap in average pensions will likely persist for many decades, although it did not have a target for closing the gap in average pensions, nor could it commit to a timescale.55 However, the National Audit Office also identified other factors that affect the gap in average pensions, such as differences in working patterns between gender (for example, female scheme members are more likely to work part-time).56
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Government response AI summary
The government acknowledges the gender pension gap, attributing it to historical pay differences and existing pay gap reporting, and stating it agrees on the importance of collecting and analysing data on the drivers of these differences.
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HM Treasury
24
Conclusion
Sixth Report - Public Sector Pensions
Acknowledged
HM Treasury told us it does not collect and analyse data on how pension outcomes differ across groups of scheme members or across generations.57 GAD told us that insufficient data means government is unable to analyse similar gaps that are likely to exist in other groups, such as black and …
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HM Treasury told us it does not collect and analyse data on how pension outcomes differ across groups of scheme members or across generations.57 GAD told us that insufficient data means government is unable to analyse similar gaps that are likely to exist in other groups, such as black and minority ethnic members. However, GAD said it would expect that similar gaps exist in the average pensions of black and minority ethnic members compared to white scheme members, because they are similarly affected by differences in historic earnings.58 HM Treasury told us that schemes do not typically hold 48 HM Treasury (Catherine Little) letter to the Committee, 12 May 2021 49 Qq 30–31 50 Qq 30–32, HM Treasury (Catherine Little) letter to the Committee, 12 May 2021 51 Qq 20–21, 30–32, 57–60, 74 52 Q 35 53 Qq 21, 36–41, 57, 74 54 C&AG’s Report, para 11 55 Qq 5–6, 26–29 56 C&AG’s Report, para 11 and Figure 3 57 Qq 57–60 58 Qq 7, 30, 58–60 Public Sector Pensions 15 data on members’ protected characteristics (other than gender because this is relevant to longevity assumptions), because of data protection regulations.59 However, HM Treasury recognised the possibility that there could be other legal challenges in the future.60
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Government response AI summary
The government acknowledges the importance of collecting and analysing data on the drivers of pension differences, but highlights practical challenges and data protection regulations regarding collecting data on protected characteristics beyond age and gender.
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HM Treasury