Workers to pick up £67bn bill for savings

Changes to public service pension schemes introduced in 2007/08 will cost teachers, civil servants and NHS staff a total of £67bn over the next 50 years, according to a report published yesterday.

The first major reform of the schemes since the 1970s achieved the saving for taxpayers by requiring employees to make larger contributions to pension plans and work in most cases until 65, rather than 60.

The National Audit Office concluded that the changes were "on course to deliver significant savings and stabilise pension costs around their current levels as a proportion of GDP".

But the spending watchdog stopped short of ruling that the reform provided value for money, as there had been no assessment of the long-term impact of the changes on recruitment, motivation and retention of staff.

It also warned that there was still a risk that the overall cost to taxpayers would be greater as a proportion of national income, if Gross Domestic Product growth permanently underperformed expectations.

The 2007-08 changes affected schemes that account for nearly three-quarters of UK public service pay-as-you-go pension payments, covering more than 2.9 million current employees.

As well as higher contributions and delayed retirement, staff were required to take on more of the risk of extra costs from future pensioners living longer than expected.

The audit office estimated that these changes would reduce costs to taxpayers in 2059/60 by 14 per cent, equating to a total saving over the 50-year period of 67bn in 2008/09 prices.

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said that in spite of the significant savings, the Government has demanded more and immediate savings. She urged it to allow the impact of the 2007/08 reforms to be realised instead of pushing through further changes.