Hutton hints at staggered contribution increases

Speaking to schemeXpert.com in the wake of his interim report's publication last week, the former Labour minister expressed concern about the lack of detailed research into the relationship between member contribution increases and opt-out, stressing keeping state employees in schemes would be one of the cornerstones of his ultimate recommendations.

He said his team would be examining a raft of options for keeping low earners in schemes, and was looking at staggered increases by salary, with staff earning less than the public sector average as a "yardstick" for defining low earners.

"I don't want to lose one of the great advantages that we have built up in the public sector, which is very high take-up and participation rates in the pension schemes," Hutton told schemeXpert.com .

"Although we don't have detailed research on the subject at this stage, at the point of contribution increases, people will be looking at the immediate value of the amount they are contributing, versus the value of their pensions.

"This will be part of the work that we do towards the final report, and we could stagger contribution increases, based on salary."

Speaking about his interim report – which confirmed he would recommend members pay more for their pensions – at the 2010 annual National Association of Pension Funds conference in Liverpool, Hutton was tight lipped on the likely form of his final proposals, which will be drawn from a number of prescribed options, including career average and hybrid schemes.

"Some are more radical than others," he said. "This will not be an easy task, but I intend the recommendations I put forward in my final report will provide the basis for a new long-term pensions deal for the public service."