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Finance Secretary Statement on Public Sector Pensions (Summary)

scotland_iconFinance Secretary John Swinney delivered a statement on public sector pensions in the Scottish Parliament on 28th November 2012. Whilst re-emphasising that UK Government sets the basic terms for public service pensions in Scotland he outlined the clarifications he has received from UK Ministers on the extent to which the Scottish Government has the flexibility to negotiate the detail of Scottish schemes.

Four key aspects of pension policy were clarified:

1. The UK Government's approach to employee contributions in 2013-14 and the Scottish Government's response.

The UK Government expects increased employee contributions in Scotland from April 2013, for a second year. The Scottish Government would face a £100 million budget reduction for every year that the increases are not applied. Mr Swinney stated that the Scottish Government has no effective choice but to implement a second year of increases for members of the NHS, Teachers, Police and Fire pensions schemes.

Increases will not be imposed upon the Local Government Pension Scheme, reflecting the responsibility that local authorities have for the scheme.

2. The latest position on long term pensions reform and how it relates to Scottish pension schemes.

The UK Public Service Pensions Bill and discussions with the Chief Secretary of the Treasury have made clear that current final salary schemes must be closed by April 2015 and new schemes put in their place, though there are protections for people within ten years of retirement.

It has also been made clear that the Bill requires Normal Pensions Age to equal the State Pension Age – or age 60 for police officers and fire fighters.

Mr Swinney reaffirmed the Scottish Government's  commitment to engage in meaningful discussions with its negotiating partners in order to utilise the remaining flexibilities required to deliver reformed schemes which reflected Scottish circumstances.

3. Issues raised by the UK Government's Public Service Pensions Bill.

The draft of the Public Service Pensions Bill proposes the withdraw of the Scottish Government's ability to set the pension terms for a small number of public bodies and individual office holders. Mr Swinney used his statement to lodge a Legislative Consent Memorandum setting-out the Scottish Government's position of opposition on this issue.

4. The next steps.

Mr Swinney concluded that the implementation timetable remains the greatest issue. Only 28 months remain to conclude negotiations; prepare the necessary legislation; and ensure that employers and scheme administrators can prepare their systems and processes, before the April 2015 deadline set by the UK Government for implementation of new schemes.

Mr Swinney urged the Scottish Government's negotiating partners to use the clarity he has provided to reach conclusions on the terms of new pension schemes as swiftly as possible to give certainty to those affected by the reforms in Scotland.

Link to Scottish Government Website