26 October 2012

Developments published this week confirm the British Government’s commitment to reducing the costs of the civil service.  

The Guardian has posted a schedule identifying staff reductions in most of the 118 central government agencies. The civil service has shrunk by 12% since 2010, with 34,621 jobs lost in the last 12 months. 

Restructuring the Border Agency with an 18% downsizing,  removed 8000 positions. “…The worst-hit departments in the last year are the Department for Work and Pensions, with 10.7% cut from 109,440 to 99,960; the Ministry of Defence, with a cut of 10% from 61,750 to 53,370 jobs. Even the Treasury is not immune, down from 1,330 to 1,070, a cut of 17%.”

The Public Service Pension Bill soon to be introduced will reduce the value of retirement benefits for civil servants.  The retirement age will be increased and the basis for the defined benefit pension scheme will change from final salary to career average earnings. Civil servants will have to make larger contributions than at present.

Although the revised superannuation rates are calculated to be “more valuable” than private sector schemes, they will reduce from the current benefit of 23% of the member’s salary at retirement to 15% when the reforms come into effect. Apparently about 85% of public sector employees in the UK are members of defined benefit superannuation schemes, while only 5% of the private sector is in a defined benefit scheme.

In New Zealand there are 13,000 contributing members of the Government Superannuation Fund  (closed to new members for 20 years) which is a defined benefit scheme ( based on the average salary over the last five years of service). There are 44000  members drawing annuities.  Most public servants are Kiwi Saver members with the same benefits as any private sector contributor. 

The 2012 Human Resource Capability survey released by the State Services Commission this week shows FTE staff numbers in the New Zealand public service dropped in the last year by 350  to 43,345 ( 0.6% compared with nearly 10% in Britain). There were 764 public servants made redundant during the year (down from 882 in 2011), with the average redundancy payment of $50,650.