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.


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.


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.


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

    Comment number 103.

    as an ex public sector worker who got made redundant last year earning £24k i paid in 6.5% & the government or taxpayer contributed 18%, totally unsustainable

  • rate this

    Comment number 102.

    morgan its not obvious im sure someone who is unemployed might have the qualifications you have or better this is not a personal attack on you but spare a thought for those unemployed who cant strike and the private sector who have lesser pensions to look forward to by the way i was self employed had several businesses and now retired small pension but at least im happy

  • rate this

    Comment number 101.

    Whilst some people here attack the paltry public sector pensions due to ignorance of the actual facts, they fail to notice the real culprits that have brought us to this situation. It seems to me that many are suggesting that because they are having it bad, everyone else should. I would prefer everyone to retire on a reasonable pension rather than attack those who bother to fight to keep theirs.

  • rate this

    Comment number 100.

    Unfortunately the servants are better treated than the masters in this country.
    No one I know has had a rise in the past 5-6 years because of the "state of the economy" (read, someone will do your job for less)
    Labour created far too many public sector jobs because there were no real jobs and now we can't just keep circulating the same old money, we need manufacturing and private sector jobs.

  • rate this

    Comment number 99.

    This country could have been Great, but thanks to politicians and union leaders it is not.

  • rate this

    Comment number 98.

    Pension contributions are to increase by 3.2% which equates to roughly 1 days pay per month. So here's the question...

    Do I do nothing and lose 1 days pay each month for the rest of my working life or do I strike and lose 1 days pay (with a chance of further govt concessions)... Hmmm 1 days strike every month looks a very attractive bargaining tool.

    Who dares wins Rodney..... who dares wins....

  • rate this

    Comment number 97.

    Where do people think (either public or private workers) the pot of money is which will pay pensions out either now or in the future. It has gone along with all the money given to the banks. All pensions make money in shares on the stock market and when everything is bad shares lose money, on top of that councils lent money to Iceland and much has to be paid back. There are no savings just debt!

  • rate this

    Comment number 96.

    The unions agreed to recent pension changes which were judged to be affordable but gave many staff worse deals. The Coalition decided this hadn't gone far enough - but used estimates based on the old scheme to claim the this was not affordable.

    Publishing new amendments at a late stage but not giving the unions time to analyse the impact, is just manipulating public opinion again. Bad employers?

  • rate this

    Comment number 95.


    You need to do some reserch, in fact lots of you need to do some reserch.

    Yes there is a pensions defecit its nearly £1.3 Trillion. This figure means nothing, it is the cost of pensions unit 2050 as if we had to pay it all now, with 0 payments being made in to the system. Essential political spin.

    Still Public sector pentions will every year cost more than the public sector pays in

  • rate this

    Comment number 94.

    We need a State Pension that you can live on modestly but easily from the age of 65. Stock-Market based individual pensions were only ever a nice little add-on for the rich or those with generous employers. They could NEVER fund everyone's pensions, and those who have made a fortune out of pretending they could should go to prison for a very long time.

  • rate this

    Comment number 93.

    Um, by the way, public sector workers are taxpayers too! By many of the points mentioned here, that would mean the public sector actually contribute to their pension twice...

    Rather than bemoan the pensions of the public sector why not fight for better pensions in the private sector? Or even have a pop at those who make absolutely no provision for their old age and expect the state to provide?

  • rate this

    Comment number 92.

    The NHS pension more than pays for the tune of £2billion per year surplus. This money is used year on year by the treasury. This is an inconvenient fact for the government which they seem intent on concealing. To those who think public sector workers are getting some special deal please get all the facts..and support NHS workers.

  • rate this

    Comment number 91.

    @ IJstock . It is well known that public sector workers pay on a like for like job is historically less. Even comparing crossover trade like IT, accounts and electricians then there is a marked difference.

    I see many professionals saying they would love the "golden pension of the NHS" until you tell them that they will be earning 5-20k less that you would get in the private sector.

  • rate this

    Comment number 90.

    64. Richard Gray
    I remember that time VERY well. I was a progress chaser and I can remember going to factories to find out why it was taking 6-9months for aircraft parts to be delivered. I was told that each worker was only ALLOWED by the Union to produce a certain amount each hour. Productivity was stifled.Not an isolated case by any means. Perhaps YOUR memory is playing tricks with you!

  • rate this

    Comment number 89.

    How does the overall public sector pension cost compare with the overall liability for all the PFI contracts ? I suspect that priority is being given to pay fat cats rather than pensioners.

  • rate this

    Comment number 88.

    @steve1955 “Morgan are you the only one in this country with these qualifications?” No, I’m just pointing out that my job (and many others) can’t go to the millions of unemployed. Thought that was pretty obvious.

  • rate this

    Comment number 87.

    para123(80) I understand your position. However, I work in the private sector. Since 2008, my hourly rate has fallen by 48%. I've had to work longer hours, commute further, make do with less. Is that fair?

    The world changed 3 years ago. The public sector is not immune from the effects of the downturn. We are all affected regardless of the cause. The government has to live within its means

  • rate this

    Comment number 86.

    But the public service pensions which are already in payment have been reduced retrospectively because of the change in annual increases from RPI to CPI. If any private pension provider did this it would definitely be illegal. It is the same as changing pay retrospectively after the employment ends!! Very bad morally even if the legality is valid.

  • rate this

    Comment number 85.

    @John badger "Private sector wages are lower, on average, than public sector wages BEFORE taking account of the generous public sector pensions."

    This is because that average includes all roles from the cleaners up (no offence cleaners of the UK), since these roles were contracted out years ago.

    If you do a fairer like-for-like job (and pay) comparison, the private sector will pay a lot better.

  • rate this

    Comment number 84.

    I have worked in both the sectors and can see both sides. Reforms are needed, but why punish people who have paid into the scheme in good faith?
    Would it not be better to change the pension for new starts.People will know what the pension will be, decide if they wish to join the company and know what they will be paying.

    Most of the pension schemes are self sufficient and in profit


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