Changes to public service pension schemes introduced in 2007-08 will cost teachers, civil servants and NHS staff a total of £67bn over the next 50 years, according to a National Audit Office (NAO) report.
The first major reform of the schemes since the 1970s achieved the saving for taxpayers by requiring employees to make larger contributions to pension plans and work in most cases until 65, rather than 60.
The NAO has concluded that the changes were “on course to deliver significant savings and stabilise pension costs around their current levels as a proportion of GDP”.
But the spending watchdog stopped short of ruling that the reform provided value for money, as there had been no assessment of the long-term impact of the changes on recruitment, motivation and retention of staff.
The NAO also warned that there was still a risk that the overall cost to taxpayers will be greater as a proportion of national income, if GDP growth permanently underperforms expectations.
The 2007-08 changes affected schemes that account for nearly three-quarters of UK public service pay-as-you-go pension payments, covering more than 2.9m current employees.
As well as higher contributions and delayed retirement, staff were required to take on more of the risk of extra costs from future pensioners living longer than expected.
The NAO estimated that these changes would reduce costs to taxpayers in 2059-60 by 14%, equating to a total saving over the 50-year period of £67bn in 2008-09 prices.
Amyas Morse, the head of the NAO, said: “By making changes in 2007 and 2008 to pension schemes of NHS staff, civil servants and teachers, the Treasury and employers have taken some steps to tackle potential growth in costs to taxpayers.
“In addition to saving significant sums of money, the changes are projected to stabilise costs in the long-term around their current level as a proportion of GDP.
“However, the savings are being provided by public service employees, in the form of increased contributions or reduced future pensions. We have not seen a strategic assessment of the long-term impact of these changes on the motivation and retention of staff, so we cannot say that value for money has been demonstrated.”