Local authority social care workers could lose their entitlement to a pension based on their final salary and would instead receive one linked to their career average pay.
Lord Hutton’s pension review has also recommended bringing the retirement age for all local authority staff into line with the state pension age. This would rise to 66 from 2020 and ultimately to 68 by 2046.
However, Hutton recommended that the government must honour in full pension promises accrued by current public sector pension scheme members, maintaining their link to final salary.
The former Labour government minister, whose plans would come into effect from 2015 if approved by the government, also said public sector pensions should move over time towards a common framework, which would apply to the Local Government Pension Scheme.
However, he recommended that different financing arrangements should be retained for the LGPS, meaning it would remain funded and other major public sector schemes unfunded.
Hutton also said the government should set a “fixed cost ceiling” for the proportion of pensionable pay that taxpayers should contribute to employees’ pensions over the long term. Many of the changes are a response to rising life expectancy and its impact on the sustainability of public service pensions.
As well as the LGPS, Hutton’s review has examined pensions provision for a wide range of public servants, including the armed forces, NHS workers, teachers, police, fire fighters, and the judiciary.
Unions have reacted angrily to the report. Unison said it would “bring the threat of industrial action closer” as it was “just one more attack on innocent public sector workers”.
Most social workers are on the local government pension scheme. They contribute between 5.5% and 7.5% of their salary into pensions, with employers covering about 14% of the overall bill.
Lord Hutton was asked by the chancellor, George Osborne, to carry out a review of public sector pensions in the June 2010 Budget, to recommend ways of ensuring the system is affordable and sustainable, and fair to both taxpayers and public sector workers.
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