Public Sector: Redundancy Pay

Treasury written question – answered on 7th October 2019.

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Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the inclusion of pension strain within the £95,000 cap on public sector exit payments on long-serving public servants on low to middle salaries.

Photo of Rishi Sunak Rishi Sunak The Chief Secretary to the Treasury

The government was clear during the passage of the primary legislation that the cap will have no impact on the majority of public sector workers. We do however accept that there will be some circumstances where it is necessary or desirable to relax the cap. As such, a waiver system is in place for use in exceptional situations, including where imposing the cap would cause genuine hardship.

An impact assessment was conducted and published in the 2016 consultation ahead of the primary legislation. This impact assessment took the inclusion of pension strain into account and can be found here. A further equalities assessment will be conducted on the final version of the regulations. The government is currently considering responses to the consultation on the draft regulations to implement the public sector exit payment cap and will respond to the consultation in due course.

The government believes it is right to include all payments related to exit within the cap. The cap does not affect any pension that a person has earned through their years of service or have any impact on accrued pension rights. The cap ensures additional contribution to that pension made by the employer to fund early access to a pension is limited to no more than £95,000, on account these costs are ultimately funded by the taxpayer.

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