UK news : Public sector pensions: Changes are fair, say ministers

Ministers say plans for public sector pensions will ensure they are "fair and affordable" but unions have accused them of sabotaging negotiations.

Treasury Minister Danny Alexander will confirm the public sector retirement age will be linked to the state pension age, which is due to rise to 66.

Contributions must go up, he will add, but rises will be capped for the low paid and existing benefits protected.

But unions said the speech, while talks were continuing, was "inflammatory".

The two sides have been holding negotiations over pensions but tensions have risen in recent days after unions representing up to 750,000 public sector workers voted to strike on 30 June.
'Affordable and sustainable'

Chief Secretary to the Treasury Mr Alexander said the government's position had been "misrepresented" and while the strike action was "disappointing", ministers were committed to conducting talks in a "reasonable fashion".

According to pre-released extracts of a speech in London later he will confirm that the government will adopt many of the recommendations on pension reform made in the Hutton report earlier this year.
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It is unjustifiable to ask the taxpayer to work longer and pay more ”

Danny Alexander Chief Secretary to the Treasury

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He is expected to say most public sector workers - bar the army, police and fire service - will see their retirement age - currently set at 60 - linked to the state pension age in the future. This is due to rise to 66 for both men and women by April 2020.

He will say workers, on average, will have to pay 3.2% more in annual pension contributions but the increase will be phased in between 2012 and 2014.

He will also guarantee that low-paid public sector workers on less than £15,000 will not face any increase in pension contributions and those earning less than £18,000 will have their contributions capped at 1.5%.

All pension benefits that were earned before any reforms are introduced - including retirement ages and final salary benefits - will be protected, the government says.

In his speech, Mr Alexander will say public sector pensions must be reformed to ensure they are "affordable and sustainable but still amongst the very best available" at a time when people are living longer.

"It is unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more themselves," he will say.

And he will criticise unions "who seem hell bent on premature strike action before discussions are even complete".

Need for reform

Speaking to BBC Breakfast, Mr Alexander said: "The fundamental point is that if people are going to work longer, contribute a bit more - we can also ensure people's pensions in future at retirement are broadly similar to those at the moment.

"And I think that is a very fair and balanced offer in the context of the enormous demographic and economic changes taking place in our country."

In his final report in March, former Labour cabinet minister Lord Hutton concluded there was a "clear need for reform".
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This is a deeply inflammatory public intervention”

Brendan Barber TUC

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He rejected any suggestion that public sector pensions were "gold-plated", but said that in order to make them affordable for the future, millions of employees should work longer, receive less and have their pensions linked to career average earnings, rather than final salaries.

The government accepted his proposals as a basis for consultation with public sector workers.

But Brian Strutton, of the GMB union, said Mr Alexander's message could be a "show-stopper" for negotiations.

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