Hutton privately rueful on CPI shift

Speaking at the Public Sector Pension Reform conference, Neil Record from the Institute of Economic Affairs said Hutton told him in a private conversation he thought it was the wrong decision.

He said: “For what it is worth, he made it clear to me just as a casual, personal view that he felt in a perfect world it would have been better to leave RPI.” He added: “That would be a personal position, not a professional one.”

Participating in a panel discussing Hutton’s reform recommendations, Record said he agreed George Osborne had made a mistake in changing the indexation of accrued rights.

He said: “It was wrong in principle and I wrote to the chancellor that week and said I thought it was a mistake.”

Brian Strutton, national secretary for public services at union GMB, said in taking for granted the CPI shift and the three percentage point rise in employee contributions, Hutton had already locked in much of the planned savings before the changes to scheme design.

He said: “Half of that saving is already found through the CPI shift alone. If you add on the retirement age change, you have already got almost the entire saving.”

John Wright, head of public sector for Hymans Robertson, said the importance of the CPI shift dwarfed the sum of Hutton’s recommendations and risked undermining career average reform.

He said: “Once you start to attack accrued rights, it starts to undermine confidence in the scheme.” 

The panel clashed on the future cost of public sector provision, with Strutton making the point the CPI shift meant the spend decreased to 1% of GDP by the middle of the century. 

In response, Pensions Policy Institute head of research Chris Curry said it was a “lot of money to be paying out to a diminishing group of pensioners”.