39. We compared the benefits of each scheme before and after reform by measuring the pension an employee earning £25,000 a year would receive on retiring after 30 years’ service. This comparison is illustrative and does not take into account the complexities of an actuarial valuation (Exhibit 6).
40. Using our comparison, in the reformed schemes all staff would receive an annual pension of £12,500, except for police officers where the annual pension is lower. However, unlike the other reformed schemes, where automatic lump sums are no longer available, a lump sum of four times annual pension was introduced for police officers. If this lump sum is converted to an annual pension it would make the pension broadly equivalent to that in the other schemes. Because police and firefighters retire earlier, their total pension value is higher because it may be received for longer. However, police officers and firefighters pay significantly more for their pensions, their contribution rates being higher both before and after the reforms.