May 26, 2010
Move the public sector from a defined benefits to a defined contributions pension utilising private pension providors.
This could be done by phasing in the new system. New public sector hires would have a 100% defined contributions scheme. Existing staff who are more than 5 years from retirement would also have future contributions placed in a private defined contributions scheme. When they come to retirement age they would receive pension consisting of part defined benefits (in proportion the percentage of years they contributed to the defined benefits scheme) and the remainder from their defined contributions scheme.
This is not a short term magic bullet but it is a step to prevent us writing further blank cheques that we and our children will have to pay for in future decades.