Press release

Civil Service Compensation Scheme reformed

The new Civil Service Compensation Scheme (CSCS) comes into effect today.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The new Civil Service Compensation Scheme (CSCS) comes into effect today. This follows months of discussions and is based on negotiations with five of the six Civil Service unions (FDA, Prospect, GMB, Unite, POA). It is the largest reform of the scheme since 1987.

The CSCS sets out the terms for voluntary and compulsory redundancy. The new scheme gives extra protection to the lower paid and those closest to retirement, whilst also setting a cap on payments to higher earners.

The unions have balloted their members on the terms of the new scheme. Four of the unions (FDA, Prospect, GMB, Unite) have voted overwhelmingly to accept the new scheme. The PCS and POA ballots are due to close early in the New Year.

The Minister for the Cabinet Office, Francis Maude, said:

This has not been a quick process, negotiations have been going on for several months - and indeed for several years before that. But what the new scheme shows is that constructive negotiations with the unions can work and the result is a package that is fair for civil servants and fair for other taxpayers. 

From the start, we said we would do everything we could to engage with the unions on the best way to reform a scheme, which was unaffordable and way out of line which private sector and many public sector schemes. During the negotiating process, we listened very carefully to what the unions involved had to say and took many of their comments on board. I believe we now have a scheme which is fair, protects those who need the most support, addresses the inequities in the current system and is right for the long term.

Sir Gus O’Donnell, Head of the Civil Service, said:

It was important that we achieved a scheme which is sustainable, affordable and fair. Terms based on proposals put forward during negotiations have always been our preferred way forward and I am grateful to the unions involved who worked extremely hard to help us reach a new scheme.

The key facts of the new proposed scheme are: 

Voluntary Redundancy

  • Below normal pension age - one month’s pay per year of service up to 21 months with a taper of between a maximum of 21 months’ and 6 months’ pay for those approaching pension age
  • Above normal pension age - one month’s pay per year of service up to a maximum of six months
  • Staff who have reached minimum pension age (either aged 50 or 55) can choose to opt for early retirement on their current pension entitlement. Staff will be asked to surrender some (or all) of their severance payment to meet the cost of receiving this pension early.

 Pay thresholds 

  • Staff earning less than £23,000 (on FTE basis) will be treated as if they earn £23,000 for the purpose of calculating their redundancy payments
  • There will also be an upper pay threshold of £149,820. Staff will have their salary capped at this figure for the purpose of calculating their redundancy payments.

Compulsory Redundancy

  • One month’s pay per year of service up to 12 months. All staff who may face compulsory redundancy will first have had the opportunity to exit under voluntary terms.

 Notes to editors

  1. The Superannuation Act received Royal Assent on 16 December 2010. This Act removes the requirement for agreement of the Civil Service unions to any changes that could reduce the benefits of the compensation scheme.
  2. After the Superannuation Act received Royal Assent, the Superannuation Act 2010 (Repeal of Limits on Compensation) Order 2010 was made by the Minister for the Cabinet Office on 17 December.
  3. On 21 December the Civil Service Compensation Scheme (Amendment No.2) Scheme 2010 and the associated revisions to the Principal Civil Service Pension Scheme were laid before Parliament.
  4. The Civil Service Compensation Scheme (CSCS) sets out the level of compensation that Government departments can pay their staff if they are made redundant, whether on a voluntary or compulsory basis. 
  5. Following commitments made in the Coalition agreement, in July this year the Government introduced the Superannuation Bill (now Superannuation Act) to Parliament to support reform of the compensation scheme. At the same time it opened negotiations with the Civil Service unions on a proposed new scheme.

CAB 235/10

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Published 22 December 2010