The cost of public sector pensions in Scotland Prepared for the Auditor General for Scotland and the Accounts Commission


In the police scheme, differences in the pensions of recently retired men and women are lower than indicated in Exhibit 3



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29. In the police scheme, differences in the pensions of recently retired men and women are lower than indicated in Exhibit 3 and are because women have shorter service and not because of pay differences. There were too few female pensioners within the fire service to reach any conclusions.

Final salary schemes reward employees with higher pay progression

30. Final salary schemes reward employees with higher pay progression compared to those with less pay progression (Exhibit 5). For each pound of pension contribution they make, some employees can receive almost twice as much in pension payments than others. On average, across the five schemes where we have data only two per cent of staff receive pensions of £30,000 a year or more. However, annual payments to these pensioners represent around 11 per cent of all pension payments (Exhibit 4, previous page). Some of this difference is the result of longer service and higher pension contributions.

31. Pensions are based on final salary for all but one scheme. As a result of the most recent reforms, the civil service has introduced the nuvos scheme, in which pensions are based on average pay for the whole period of service (uprated for inflation) rather than final pay. This scheme is known as a CARE scheme (Career Average Revalued Earnings). Both the NHS and local government schemes include tiered employees’ contribution rates designed to reflect difference in pay levels; this reduces, but does not remove, the higher effective benefit rates for those with higher pay progression.





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