Leading pension consultant Mr John Ralfe has indicated that by raising the public sector pension age from 60 to 67, the government will not make any savings from public sector pensions.

Analysis of the government’s changes to public sector pensions has revealed that the improvements to the public sector pensions that will be granted as a result of retiring later offsets the savings that are being made by forcing people to work an extra seven years.

Instead, the savings are being made through the separate reforms to the public sector pensions, which will force workers to pay a higher rate of contributions towards their pensions. Further government savings will also come from the the switch from using the Retail Price Index (RPI) measure of inflation to the Consumer Price Index (CPI) measure to calculate the annual uprating of the pensions.

The money saving reforms were brought in before the summer strikes by the public sector and were not considered to be a major problem for the unions. However, the raise in the pension age and the complicated changes to how entitlements were earned was the main source of contention in the dispute.

Mr Ralfe’s study suggest that the costs to the tax payer before the latest reforms were introduced was around 31% of the average public sector salary. After the increase in retirement age to 67, and taking into account the higher benefits of retiring later, the study suggests the the costs are still approximately the same, 31% of a teachers salary or 32% for NHS workers.

Although for civil servants, the cost will be around 26% of their salary.

Mr Ralfe indicates that the public sector pensions are at least as generous as they were before and still more generous than most pensions that are available to the private sector workers.

However, the government have criticised the study for not looking at the bigger picture and only taking into account the increase in pension age. They claim that the sum total of their changes will still save billions of pounds for the UK economy.

A spokesperson for the Treasury said: “This analysis is partial, it is based on stylised assumptions rather than an overall workforce model, and only includes one of three strands of public service pensions reform which will deliver savings, where as the overall cost ceilings agreed with unions include all three.”

The Treasury add that public sector workers will pay more towards their pension pots which will help to save the government money in the long run. They also point out that CPI inflation tends to rise more slowly than RPI inflation. By switching the pension upratings to this measure, the government claims it stands to halve the cost of public-sector pensions in the long term.

Whilst the Treasury do not disagree with the analysis of the changes by Mr Ralfe, they argue that it was more important to consider the reforms as a whole, rather than just highlight the increase in the pension age.