Question to the HM Treasury:

To ask Her Majesty’s Government whether they plan to extend the right of access to pension funds available to employees in the private sector to those working in the public sector; and if not, why not.

The Government has no current plans to extend the pension flexibilities to members of unfunded, defined benefit, public service pension schemes. The last Government restricted transfers from unfunded, defined benefit, public service pension schemes to those arrangements from which the member may acquire a right or entitlement to flexible benefits in order to protect the taxpayer from the increased in-year costs that would result should a large number of members of such schemes elect to transfer out to a scheme providing flexible access to pension pots.

In an unfunded public service pension scheme, there is no fund of assets with which to finance transfer payments. Instead, they are funded from contributions from current members and their employers, and through general expenditure.

Therefore, should the introduction of the flexibilities have led to an increase in the number of members transferring out of their unfunded public service scheme to a scheme providing flexible benefits, there would have been a direct cost to Government. For every extra pound paid out in transfers, the Government would have had one less pound to spend that year on public services.

The Government estimates that if 1% of all public service workers reaching retirement took their benefits flexibly, it could cost the tax payer £200m a year. The Government does not think it is fair to ask taxpayers to meet such in-year costs.

Members of funded, defined benefit, public service pension schemes, such as the Local Government Pension Scheme, continue to be able to transfer. This is because there is a fund of assets available for use to meet the cost of the transfers. Government took the decision to treat funded schemes differently for this reason, extending freedom and choice to as many individuals as possible.