Public sector pension changes 'could reduce people's incomes'

Proposed public sector pension changes could reduce the amount of income that some people receive during their retirement years, new figures have suggested.

Towers Watson has noted that certain consumers might be negatively affected by government plans to raise public sector pensions in line with CPI inflation.

From April of next year, ministers are expecting to change this over from RPI inflation.

The firm's Head of Defined Benefit Pension Consulting, John Ball, commented that this decision is a radical one for the government to take.

He stated: "The government has concluded that taxpayers cannot afford to pay the pensions its former employees were expecting in return for work they have already carried out."

Last week, Pensions Secretary Iain Duncan Smith and Steve Webb, the Liberal Democrat Pensions Minister, put forward various plans to reform the country's retirement savings system.

The phase-out of the default retirement age is one area that will be looked at, the politicians announced.

Posted by David Shuker.