Public Sector Pensions: The Treasury announces higher employer contributions from 2015, and details of the employer cost cap - DAC Beachcroft

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Public Sector Pensions: The Treasury announces higher employer contributions from 2015, and details of the employer cost cap

Published 18 March 2014

Summary

The Government has confirmed that higher employer pension contributions to public sector pension schemes will come into force in 2015. It has also set out more details of the "employer cost cap", a mechanism to effectively share the risk of increased public sector pension costs between employers and scheme members.

Increase in Employer contributions

The Government has confirmed that current pension contribution rates to the public sector pension schemes are insufficient to meet the future costs of the schemes, including the NHS Pension Scheme, the Local Government Pension Scheme and the Teachers' Pension Scheme. The results of scheme valuations will be published over the coming months and changes to employer contribution rates will come into force in 2015 - i.e. employers (e.g. in government departments, education and health sectors) will need to increase their contributions in line with the results of the new valuations.

The Employer Cost Cap

Please click on the below headings to read more:

  1. Introduction
  2. Setting the level of the cap
  3. Costs that will be controlled by the cap
  4. Operation of the cap
  5. “Employer costs” and “member costs”
  6. Future reviews of the cap

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