§ Mr. Arthur Lewisasked the Minister for the Civil Service whether, as a means of saving public expenditure, he will initiate an earnings rule scheme, to ensure that all public servants contribute towards their retirement pensions.
§ Mr. Charles R. MorrisNo. As I explained in the reply I gave to my hon. Friend on 27th July, civil servants already contribute towards their pensions by forgoing pay. Including the payment for family benefits the average deduction across all grades is of the order of some 7 per cent. This represents some £200 million on the current Civil Service salary bill. To change to a contributory system would merely add to the salary bill a sum to be deducted as contributions—thereby saving nothing whilst requiring elaborate machinery to bring these to account. I can foresee no saving in public expenditure from such a change.
§ Mr. Arthur Lewisasked the Minister for the Civil Service whether he will give an estimate of the savings which would accrue to the Exchequer if all public servants including civil servants were to contribute 7:50 per cent. of their salaries towards their retirement pensions.
§ Mr. Charles R. MorrisIt is estimated that if employees in the Civil Service, local government, NHS, teaching and the police and fire services paid a pension contribution of 7½ per cent. the extra annual contributions would amount to £270 million. This would not, however, represent the saving to the Exchequer. As I pointed out in reply to my hon. Friend's Question on 27th July, the effect for the Civil Service could be to increase costs, since a switch to a contributory basis would imply higher pay and lead to additional administrative costs. Similar considerations would apply to the other services if increased contributions led to higher pay. Moreover, only a part of the employer's pension costs in local government, teaching and the police and fire services are met by the Exchequer.
§ Mr. Arthur Lewisasked the Minister for the Civil Service whether he will give 807W details of when civil servants have forgone pay to help meet the costs of their pensions; and whether he will give the actual or estimated amounts of such salaries that have been forgone for any stated period of time.
§ Mr. Charles R. MorrisThe fair comparisons process requires detailed adjustments for superannuation benefits and contributions for each pay research exercise, and I would refer my hon. Friend to the Adjournment debate of 2nd July 1976 on the Civil Service pay and pensions in which I described these. As I explained in reply to another Question from my hon. Friend today, the average deduction across all grades, including the payment for family benefits, is of the order of some 7 per cent. This represents some £200 million on the current Civil Service salary bill.