Paul Moffatt

Defined benefit is not dead! There are around 6 million public service workers who are active members of such schemes. Will the gap between public and private sector pension provision close over time?

Paul Moffatt

Director & Leeds Office Head

I am proud to be on the steering committee of the Living Wage Foundation’s Living Pension project. The launch of this standard in March 2023 has changed the conversation about the minimum level of contributions to DC schemes required for a comfortable standard of living in retirement. The next phase of the project is to consider how the standard can be applied to defined benefit schemes.

Thinking about the defined benefit schemes in the public sector through this lens is interesting. Average member contributions to the NHS pension scheme are 9.8% of pay. This is much higher than the 5% assumed in the Real Living Wage calculation and is why many low paid workers in the NHS are opting out on affordability grounds. Every 1% counts in a cost of living crisis.

The answer has to be more flexibility, giving people the opportunity to change the balance between current pay, short term savings and long term savings (pension) to suit their circumstances. This will improve staff retention so is a “win win” for employers and employees. It can be done!