You’d be forgiven for not having read Cost Control Mechanism Consultation: proposal to reform the mechanism, published by the Treasury late last week. It sounds more like a surefire insomnia remedy than a gripping page-turner.
But, underneath the financial jargon, the document contains an important message — the government wants to bring more stability to public sector pensions.
In short, the cost control mechanism is used to determine if pension scheme costs have deviated too far from target. If they have, scheme benefits can be increased or decreased to bring costs back in line.
The intention was for those adjustments only to be triggered by “extraordinary, unpredictable events”. So, when the 2016 pension schemes valuation — the first time the mechanism had been properly put into practice — called for improved benefits despite significant cost increases, the government handed its actuaries their notebooks and asked for their help coming up with something which didn’t lead to — as Nikki Ayriss, a partner at LCP, points out — “unintuitive and perverse outcomes”.
While a system which calls for benefits to be boosted on a whim undoubtedly has its attractions, trading it for a more stable calculation has its upsides.
“An increase in the stability of benefits and contribution rates should be welcomed by members as it provides greater certainty when planning for retirement,” said Robert Bilton, head of LGPS valuations at Hymans Robertson.
Moira Warner, senior intermediary development and technical manager at Royal London, added: “I think stability is absolutely key to helping members understand their benefits… and helping with retirement planning.”
It’s not often chief executives speak out publicly against the government but a prominent NHS chief has done just that.
Sarah Jane Marsh, who is NHS England lead for children and young people’s transformation programmes and chief executive for Birmingham Women’s and Children’s FT, called out the government yesterday for its lack of action over challenges for children.
In a tweet today she said: “We need an urgent plan to vaccinate, daily test or accept that for most under 18s it’s a mild illness and the risk of isolating contacts outweigh the benefits.”
In a subsequent message she added: “We have been calling on the government to hold a press conference with and for young people for many months now. They deserve answers and to know they are listened to even though they cannot vote. Come on @BorisJohnson our children and young people need to hear from you.”
The strong words come after the repeated requests from the Royal College of Paediatrics and Child Health for the government to hold a press conference setting out its plans for children.