Two-tier pensions plan to spark fury at Civil Service

Senior civil servants could get a better pension than more junior colleagues under a two-tier pensions system being considered by the government, Personnel Today has learned.

The proposals come in a letter to senior civil servants from Kevin White, group HR director at the Department for Work and Pensions (DWP).

The letter, leaked to Personnel Today, gives the DWP’s response to the government’s consultation on public sector pension changes. It warns that a separate pension for senior managers may be necessary to recruit and retain highly-skilled executive staff.

Such a move could outrage rank and file civil servants, who have just called off a 1.5 million-strong pensions strike due to take place tomorrow.

DWP staff were to take action over plans to raise the retirement age for civil servants to 65, instead of 60, and against proposals to replace the existing final-salary pension scheme with a payment based on their average career earnings.

In the leaked letter White said: “Career-average salary pensions are clearly desirable for more junior members of staff and we need to bring this out as clearly as we can.

“But perhaps we should not be too surprised at the reactions of our more senior people, and need to give further thought how to best handle them. Many private sector companies, of course, have separate pension schemes for their executives.”

White said attracting top people into the Civil Service requires a good pension offering to make up for lower salaries than in other sectors.
“It is vital we are able to continue to attract these scarce skills from a small, but significant group of high earners and retain those we have. There must be the risk that extension of career-average salary schemes to executive heads will strike at this.”

Stephen Hill, policy adviser at the British Chambers of Commerce, said that the traditional salary and pensions divide between public and private sector was closing.

There was little evidence to support the retention of non-contributory final salary schemes in the public sector, he said.

Mark Serwotka, general secretary of the Public and Commercial Services union, said it was “deeply disturbing that an HR director, in the response of the government’s biggest department on the future of civil service pensions, appeared to be seeking to further the interests of himself and his immediate colleagues by apparently advocating a two-tier pension scheme”.

A DWP spokesperson said: “This is a small part of our overall input into the cross-Government consultation. DWP supports the principles of the reform. The letter brings out some of the issues which were raised with us through the consultation.”

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