Public sector pensions deal 'generous'

04 November 2011

The coalition government's offer regarding public sector pensions has been described as "generous" by the director-general of Saga.

But equity release schemes could still be in demand from professionals such as teachers who are not sure they are going to have enough money to live on once they give up work.

Strike action had been threatened by members of staff in the public sector over cuts to pensions, but the matter appears to be close to being resolved as a result of the latest offer from the state.

Dr Ros Altmann, director-general at Saga, stated that she believes the strike action should not proceed as the proposal is far more than those in the sector could expect to receive.

Agreement reached

"Just two days after Parliament decided that taxpayers could not afford to give more than around five years notice of state pension age changes - the government announces that tax payers will be able to pay to ensure public sector workers get at least ten years notice of any change to their pension," she noted of the decision.

But Dr Altmann stated that the coalition government needs to come clean about the cost of this move, as it has so far remained silent on any potential figure.

Public sector pensions were planned to be cut by chancellor George Osborne in a bid to reduce the UK's budget deficit, but the proposals were met with outrage by members of staff.

Retirement planning

Danny Alexander, chief secretary to the Treasury, stated that it is only right people coming up to their retirement are given information regarding the money they can expect to receive.

For those who do not believe they will be able to manage, equity release schemes could prove to be an attractive way to raise funds, as it allows homeowners aged between 55 and 95 to raise money from the value of their home without selling up and moving to another residence.

Keith Churchouse, director of Churchouse Financial Planning Limited, recently recommended people delay drawing their pensions for as long as possible so that the amount grows over time.

But for those this is not an option for, using the equity release calculator from Key could be a good way for them to investigate methods of freeing up income.

Posted by Alison Stephenson