pension-sThe government has failed to tackle the cost of providing public sector pensions, despite making teachers, nurses and civil servants contribute more, it has been claimed. As a result, the Treasury has found itself with a £3bn shortfall.

Around 6m public servants saw their payments go up by around 3 per cent but this failed to solve the headache for the government. This means that the amount the Treasury pays to top up public sector pensions will go up to £10.6bn.

The Treasury was accused of underestimating the reduction in contributions that would come from people choosing to leave schemes or retiring early and there being 500,000 fewer public servants. The government blamed the problem on employers offering staff early retirement.

Nigel Keogh from the Chartered Institute for Public Finance and Accountancy (CIPFA) was quoted in the Times newspaper as saying: “What has happened is a zero-sum effect. Increases in contributions will be eroded by the double effect of more people taking pensions earlier than forecast and fewer people contributing into pensions schemes.”

Keogh added: “In avoiding the use of compulsory redundancies, both central government and the NHS have used voluntary early retirement schemes as a means of reducing head count.” he said.