Recently, I encountered a former colleague from the civil service who proudly shared that he had retired from his post-government career.

To my surprise, he had just celebrated his 60th birthday, looking much younger than his age. It seemed premature to retire, but after dedicating three decades to the civil service, he had amassed a significant pension.

As I approach my own 60th birthday, I join many of my peers in feeling anxious about the declining value of my primary retirement income source, my private pension, influenced by the recent volatility in global stock markets. However, unlike my colleague, I also hold a civil service pension from my eight years in Whitehall, which will provide an annual amount comparable to my future state pension after over 45 years in employment. Unlike him, I have no plans or ability to retire at 60.

Interestingly, like my friend, I will begin receiving my civil service pension at 60. I have little choice in the matter. Delaying my private pension could potentially lead to greater savings and better annuity rates in the future. Moreover, I can postpone my state pension for a while after reaching the eligible age to gain a higher annual payment. In contrast, my civil service pension offers no actuarial benefit for waiting; whether I take it at 60 or 67, the annual amount remains the same, adjusted for inflation. Thus, it’s a clear decision for me.

This situation seems unreasonable and sends a message to countless others that age 60 is the optimal time to retire or reduce work hours.

If the government aims to motivate older adults to remain in the workforce, a straightforward solution exists: permit those with public service pensions to defer benefits in exchange for an actuarial enhancement. If properly implemented, this change could incur no additional costs to the government.

While there may be a slight decrease in tax revenues due to some individuals opting to draw their pensions while employed, the potential for increased labor supply could offset this. In the short term, this approach could be financially beneficial for the government, reducing pension payouts while encouraging more individuals to work. Such policy choices can lead to significant wins without additional cost.

This isn’t the only perplexing outcome of public service pension regulations affecting my household. My partner, who is a teacher and the same age as I am, built most of her pension under age 60 rules. Similar to the civil service pension, her plan lacks any actuarial advantage for deferring benefits. If she chooses to postpone her pension, she receives a lump sum for the arrears that may lead to significant tax implications.

The intricate and often confusing rules mean she cannot work full-time as a teacher while collecting her pension, and retiring temporarily could jeopardize her pension should she wish to return to teaching. Again, this implies that retirement at 60 is the norm.

These instances highlight just a fraction of the issues stemming from our complicated and burdensome public service pension systems. The unfunded schemes for civil service, teachers, NHS, armed forces, and police cost approximately £60 billion annually—nearly half the expenditure on state pensions for all retirees. Such schemes often lack value for money.

Surveys indicate that many public sector employees would opt for higher immediate pay instead of participating in pension plans, as some even abstain from joining these beneficial schemes due to unaffordable contributions. This imbalance between generous pensions and lower salaries is inefficient for attracting and retaining talent.

Reforms proposed over a decade ago, following a report by former Labour minister Lord Hutton of Furness, aimed to rectify the system. While there were some improvements, the issues were not fully resolved.

Current methods for calculating pension entitlements have resulted in less desirable outcomes than anticipated, especially given the context of low or negative real earnings growth.

For some low-income earners, despite an increased pension age, the revised scheme could be even more advantageous compared to its predecessor. In fact, it is conceivable for someone with a career in a low-paying role within the NHS to receive combined pensions (state and NHS) exceeding their average income.

This situation lacks practicality. Additionally, the transition to having most pensions distributed at state pension age instead of age 60 is progressing at a painfully slow pace.

Many unresolved issues persist. Addressing this particular challenge could contribute positively to various governmental objectives: stabilizing public finances, enhancing public services, promoting economic growth, and encouraging an engaged labor force. There are few areas under direct governmental influence where clear benefits can be realized.