Pensions: Ministers claim new offer is 'very big move'

 

Danny Alexander said he hoped the offer would lead to ''agreement'' and not to ''damaging'' strike action

The government is urging unions to accept revised proposals it has made for public sector pensions, which it says are a "deal for a generation".

No-one within 10 years of retirement will have to work longer or see their pension income decrease as a result.

David Cameron told MPs the improved offer was "very fair" to workers.

But union leaders said the package was a "long way" from being accepted and preparations for strike action later this month would go ahead.

Unions are continuing to ballot their members on taking industrial action on 30 November.

The BBC's political editor Nick Robinson said that provided serious negotiations continue ministers accept that the strike is likely to go ahead, in part because unions would have to re-ballot their members at an enormous cost if they wanted to delay the action to a later date.

Negotiations between ministers and union chiefs based on pension proposals from the Labour peer Lord Hutton, who chaired an independent review, have been deadlocked.

'Best offer'

But following a 90-minute meeting on Wednesday, Treasury Minister Danny Alexander announced a set of revised proposals which he said could pave the way for a settlement lasting 25 years and which were "more than sufficient" to avert strike action later this month.

WHAT HAS CHANGED?

By Ian Pollock, BBC News personal finance reporter

The government's revision to its long-term plan for public service pensions is substantial.

It wanted to evict all public sector staff from their current, mainly final-salary, schemes and put them in less generous career average ones, with later retirement dates - from 2015.

But anyone within 10 years of retirement on 1 April 2012 - about one million staff - will not be affected at all.

For the rest, in the eventual new schemes which are still scheduled for 2015, pension will now build up faster than first proposed - making them more generous that first envisaged but more expensive to fund.

Under the proposals, about one million public sector workers - including teachers, civil servants and local government workers - who are due to retire in the 10 years from 1 April 2012 will now not work any longer and they will keep their existing final-salary schemes.

The government is proposing more generous accrual rates - the rate at which pensions build up in value - than previously planned and higher "cost ceilings", the limit on contributions paid by the government.

Liberal Democrat Chief Secretary to the Treasury Mr Alexander, who has been leading the negotiations for the coalition government, said it was "the best offer" on the table.

"If reform along these lines is agreed, I believe that we will have a deal that can endure for at least 25 years and hopefully longer," he said in a statement to MPs.

"So I hope that the trade unions will now grasp the opportunity that this new offer represents."

Ministers argue that change is needed because people are living longer, and say the cost of public sector pensions to the taxpayer has already gone up by a third.

Brendan Barber: ''As things stand the plans for November 30th remain unchanged''

Unions say the changes will mean people working longer, paying more and getting less - and point to forecasts that the cost of pensions will drop as a share of GDP by 2060.

Mr Cameron defended the plans at Prime Minister's questions, saying the cost of public sector pensions could not continue to escalate.

"This, I think, is a very fair offer to hard-working public servants to say this is a strong set of pension reforms which will give you pensions that are still better than anything available in the private sector."

'Long way'

TUC general secretary Brendan Barber said he "welcomed" the new proposals which he said would be the basis for detailed discussions on the shape of individual pension schemes.

ANALYSIS

If there is a strike at the end of the month there will be a battle between unions and government for public approval.

Little surprise then that ministers are making their case in the Commons and at a televised press conference.

They want to get their message out first; hoping their offer, and a threat to drop it if a deal isn't done, gets noticed.

They want individual union members, some of whom still have votes to cast in strike ballots, to pay attention too.

And they are keen to put pressure on Labour to declare whether they back the pension package, and what position they will take on industrial action.

Union leaders are cautious; pointing out even "protected" workers facing retirement within the decade will pay more.

Negotiations go on. So too do strike ballots.

But the government is going out of its way to try to talk direct to workers, public and private sector alike.

While unions were committed to negotiating an agreement, he said there had been no shift on the key issues of higher contributions and the rise in the pension age and he wanted to see "further real progress" on the issues dividing the two sides.

"We are a long way from a position where we have offers on the table which might prove acceptable," he told reporters. "As things stand, the plans for 30 November remain unchanged."

Mark Serwotka, from the PCS union, said the proposals were a "slight improvement" but "nowhere near enough" to address his members' concerns.

"If the government's position is 'this is as good as it gets', then I think we are going to see three million people on strike at the end of this month," he told the BBC.

'Insulated'

Labour welcomed the shift in the government's position but said the details - such as protection for part-time workers - still had to be hammered out in order to avert strike action.

"I think it is a really good step in the right direction and a much better deal for people who work in the public sector," shadow Treasury minister Rachel Reeves told the BBC.

But the Institute of Directors said the government was conceding too much and the deal was unsustainable in the long term.

"It is not reasonable that private sector employees who will never enjoy defined benefit pensions should continue to subsidise public sector workers insulated from economic reality," its director general Simon Walker said.

The result of a strike ballot by Unison, which has a million members working across the public sector, is due to be announced on Thursday.

A number of other public sector unions are also proposing strike action on 30 November, and some of them will continue to ballot until 16 November.

 

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  • rate this
    +3

    Comment number 63.

    No sympathy w h a t s o e v e r ! Perhaps if these ungrateful beings had to rely on personal pensions instead of the taxpayer covering their pensions through their salaries then a teacher on £37k looking forward to a pension of £25k might not be shouting so loud. GET REAL!

  • rate this
    +25

    Comment number 62.

    The tragedy of pensions in this country is really in the private sector, which has allowed fat cat executives to divert profits that should be funding their workers pensions into bloated pay packets.

    And compliant pension fund managers who refuse to challenge deals that are not in shareholders or fundholders interests.

    We have allowed pensions to become a race to the bottom.

  • rate this
    +7

    Comment number 61.

    I suspect the Government are telling the whole truth, but then when do they!?
    I don't see them taking pay cuts, pay freezes or changes to thier pensions.

    We're all in it together? I think not

  • rate this
    +20

    Comment number 60.

    @steve1955, I’ve been paying into the existing scheme for nearly a decade. Now the government are saying that they are changing the scheme. Why should I resign? As for letting one of the millions of unemployed people have my job. It really isn’t that simple in many cases. My job requires a degree and a postgraduate qualification.

  • rate this
    +9

    Comment number 59.

    Given that this change from RPI to CPI was made to Military Pensions recently without any public outcry (plenty of military outcry - but the military do not have any union), will any compromise agreement be applied to Military pensions too?

  • rate this
    +4

    Comment number 58.

    Umm, am I right in thinking that the new proposals mean that as a teacher born in August 1962, I will have to work 6 years longer than a teacher born in March 1962?? How fair is that?? Surely, there could be a more equitable approach made here in that I would be able to retire 6 months/ 1 year later than my spring born colleague rather than 6 years later!

  • rate this
    +3

    Comment number 57.

    44.Ro
    Ok, I'll ask you to consider this before you vote to the strike - but appreciate this is just 1 person, me. My salary has been reduced to minium legal and I can not afford to pay into a private pension. All my costs of living have increased (as yours) but your proposal is to maintain or increase myt tax burden for anothers pension. Please think & understand why we cant agree with the union

  • rate this
    +21

    Comment number 56.

    Funny that. During the years when the private sector was doing Very Nicely Thankyou and their pay levels were busy pricing people like me out of the housing market, I don't remember many calls from them to pay more tax so as to share their takings with the less well-off public sector...
    .

  • rate this
    +1

    Comment number 55.

    "But anyone within 10 years of retirement - will not be affected at all."

    Does this mean they are also returning the link to RPI?

  • rate this
    0

    Comment number 54.

    Private sector wages are lower, on average, than public sector wages BEFORE taking account of the generous public sector pensions.
    This situation is getting rapidly worse in the recession.

  • rate this
    0

    Comment number 53.

    45.
    Wideboy
    1 Minute Ago

    This Idea that average public sector pension is only 6000 per year if right but i does include the people who have only worked for a year or two in the PS

    That is probably true but a great many more people work for that period than spend their lives with the one employer. As I mentioned elsewhere my pension rate currently stands at £7500 after 25 years service

  • rate this
    +12

    Comment number 52.

    The NHS pension scheme currently contributes £2 billion a year more to the Treasury then it withdraws for pension payments.

    Arguably payments from our pension scheme to the Treasury fund bailouts, loans and state pensions to private sector companies and their workers as well as pay our pensions.

    Strive to improve your own private sector pensions, not reduce mine.

  • rate this
    +6

    Comment number 51.

    So, as a private sector worker, for another 10 years I have to pay for pensions that I cannot afford for myself.

    And still they want to go on strike.

    At least in Greece I'd have good weather.

  • rate this
    +2

    Comment number 50.

    They'll shaft the civil servants and police first, then reduce your state pension, then put up your taxes. Then cut services.

    And then you'll moan. Oh yes. Then it will be unfair.

  • rate this
    +3

    Comment number 49.

    Those in the private sector have seen their pensions being cut for years now, but the The Public Sector pension gravy train has been rolling along regardless for too long now - it has to come to an end because the UK can't afford it any more.

    Why does the Public Sector think they are a special case ?

  • rate this
    +5

    Comment number 48.

    I would be interested to know how much people in the public sector are prepared to contribute to my pension in the private sector, considering that I am expected to contribute to theirs.Come on now fairs fair and the fairest deal is everyone who works gets a gold plated final salary pension paid for - out of taxation. But the public sector people wouldn't want to have to pay for that would they ?

  • rate this
    -1

    Comment number 47.

    @thiepval68 "The public sector should not be receiving pensions that are better than the private sector at the taxpayers expense."

    Wait.
    What?
    You realise tax-payers money pays public sector salary too, right?

    If we follow your "logic", no public sector worker should earn more than the lowest paid private sector worker.

    You sir, are a genius.

  • rate this
    +1

    Comment number 46.

    As a Unison member I have been bombarded with emails, texts, post-to vote yes to strike. I won't be. I can see the current scheme is unsustainable,given that the NHS alone drains more money from the treasury than the GDP of many countries and looks set to continue rising,just where do the unions think the money is going to come from. Knee jerk strikes,shouting 'I want' doesnt mean we can have.

  • rate this
    +1

    Comment number 45.

    This Idea that average public sector pension is only 6000 per year if right but i does include the people who have only worked for a year or two in the PS

    There are a large amount of people who have only worked 1 to 5 years in the public sector it will reduce the "average" down. If work out how much they are per year of work the are very generous.

  • rate this
    +1

    Comment number 44.

    Mayna, sorry, meant to say pension comparisons CAN'T be done without all the facts and figures (not can :/)

 

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