Financial implications of the Bill
460 The measures in the Bill will lead to increased payments to members of public service pension schemes over the next five to six decades. The Treasury estimates that the liabilities of the unfunded 1 public service pension schemes (for the NHS, teachers, armed forces, police, firefighters and civil service, but excluding the judiciary) will increase by around £17 billion as a result of the retrospective changes made by the Bill in relation to the period between 1 April 2015 and 31 March 2022. The estimate includes the public service pension schemes in Scotland and Wales, but not Northern Ireland.
461 The estimated increases in liabilities for the other public service pension schemes are:
a. £130 million for the judiciary;
b. £680 million for Northern Ireland pension schemes; and
c. £1.8 billion for the Local Government Pension Scheme (England and Wales).
462 The newly designed, reformed judicial pension scheme is estimated to cost an additional £35 million per annum, compared to the cost of all judges accruing pension in the Judicial Pension Scheme 2015 from 1 April 2022 onwards.
463 Within Part 2 of the Bill, it is projected that defunding the BBS and NRAM pension schemes and the transfer of the assets and liabilities of the schemes to the Exchequer will reduce Public Sector Net Debt (PSND) by £170 million in 2023–24; the cost to the Treasury of discharging the liabilities of the new schemes is estimated at £35 million per annum from 2023–24.
1 Most of the public service pension schemes are unfunded. There are no investments and the schemes operate on a pay-as-you-go basis. The public authorities responsible for meeting the costs of the schemes use pension contributions of employees and employers to help offset the cost of payments to current pensioners. The Local Government Pension Schemes are funded schemes, where employer and employee contributions as used to create investment assets in a pension fund, with those assets and associated returns used to pay for current and future pensions.