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By Marc Shoffman | Published Jun 23, 2011

IEA urges trepidation on pubic sector pension reform

Phlip Booth, editorial director of the Institute of Economic Affairs, said the changes must not result in extra costs for the next generation.

He said: "By proposing that contributions should be varied between members on different levels of earnings it is trying to use an employee benefit as a social engineering tool. Furthermore, the government seems to be centralising the rules regarding public sector pension provision when there is an urgent need for all public sector pay bargaining to be localised.

"There is an urgent need to make the costs of public sector pensions more transparent and to reduce the costs and risks they impose on the next generation."

It comes after Danny Alexander, chief secretary to the Treasury, announced that despite union opposition, the government would link the age on which occupational pension can be drawn, to the age that a state pension can be taken. He said that for future pension accruals, the defined benefit will be linked to the average salary not the final salary.

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