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Lord Hutton announces public-sector pension review

Lord Hutton has today released his long-awaited review of the UK public sector pension arena with a suggesting that public-sector employees will need to contribute more in the future, work until they are 65 and their average salary over their career should be used as opposed to their final salary when calculating pension payments.

It is believed that UK taxpayers are currently contributing £4 billion per year towards public sector pension payments and this figure is set to increase to more than £10 billion by 2015. This is a situation which cannot go on forever although a simple 1% increase in contributions from employees would reduce the UK taxpayer's liability by around £1 billion a year.

The review also suggest that highflyers in the public sector benefit more than the average public sector worker and when you compare all public sector pension arrangements against the private sector there is a growing gap. Private sector workers are now seeing final salary pension schemes fall by the wayside and indeed many are now struggling for the future and concerned about the security of their pension fund arrangements. There is no doubt that changes need to be made and Lord Hutton's report gives the UK government the perfect opportunity to push changes through.

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