Total Reward, the Great Recession and the Public Pension Reforms; Evidence from the UK

The Great Recession of the world economy from 2008-14 has accelerated the need for pension reform. The Public Sector Net Cash Requirement brought benefit entitlements and contribution rates under scrutiny, as unsustainable levels of public debt are cut back. As a result, radical changes have been announced to pension schemes across the public sector from April 2015. This projects investigates what will be the effect of the new pension reforms for different categories of public sector workers and how their Total Reward package will be affected by these pension reforms.

Methods

This research project will answer these questions combining the concept of Total Reward, a recently developed methodology to value various components of job remuneration over the lifecycle, with simulation methods that are fed with the proposed changes to the parameter setting. This conceptual method for the measurement of Total Reward makes average careers in specific occupations and sectors comparable in monetary terms and allows to simulate the impact of policy changes on absolute and relative remuneration as well as on switching behaviour of employees across sectors. Total Reward includes conditions of work (hours of work, paid holidays, the likelihood of unemployment) and all direct financial remuneration when working (earnings, bonuses, employer provided health insurance) and deferred as pension payments in the future.

Investigators
Chiara Rosazza Bondibene, Professor Peter Dolton and Professor Alexander Danzer

Timescale and funder

The evaluation is funded by the Economic and Social Research Council (ESRC). It began in January 2015 and will be completed in June 2016.

Output

Papers

National Institute Economic Review (237-1)
"The Future of Pensions: Reforms and their Consequences", featuring:

 

"Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms
NIESR Discussion paper 457
May 2016

"Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms"
IZA Discussion paper 9936
May 9936

Presentations

“Total Reward in the Public and Private Sector”
Friday 10 July 2015
Office for Manpower Economics “Reward in the Public Sector” Research Seminar

“Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms”
Friday 11 December 2015
NIESR

“Who Wins? Evaluating the Impact of UK Public Sector Pension Scheme Reforms”
Saturday 18 June 2016
European Society for Population Economics (ESPE) annual conference, Berlin

Events

The Future of Pensions: Reforms and their Consequences
Friday 11 December 2015
NIESR
Programme for this event here