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Planned public sector pension changes to be outlined Public sector pensions: Changes are fair, say ministers
(about 1 hour later)
The government is to detail for the first time plans to link the public sector retirement age to the state pension age, which is rising to 66. Ministers say plans for public sector pensions will ensure they are "fair and affordable" but unions have accused them of sabotaging negotiations.
It is also due to confirm plans to base public sector pensions on workers' average salaries, although any benefits already built up will be protected. 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.
Chief Secretary to the Treasury Danny Alexander will say the move will ensure pensions are "fair and affordable". Contributions must go up, he will add, but rises will be capped for the low paid and existing benefits protected.
But unions accused him of pre-empting the outcome of talks over the issue. But unions said the speech, while talks were continuing, was "inflammatory".
Up to 750,000 public sector workers are set to strike on 30 June, angry about changes to the way pensions are calculated and plans to seek higher employee contributions. 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''Affordable and sustainable'
Mr Alexander will confirm in a speech later that many of the recommendations on pension reform made in the Hutton report earlier this year will be adopted. 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".
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. 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.
But he will also say 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%. 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.
All pension benefits that were earned before any reforms are introduced - including retirement ages and final salary benefits - will be protected. 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.
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 were living longer. 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."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" - accusing them of a "head-in-the-sand approach". And he will criticise unions "who seem hell bent on premature strike action before discussions are even complete".
'Need for reform''Need for reform'
Speaking to BBC Breakfast, Mr Alexander said: "The fundamental point is that 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. 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.""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".In his final report in March, former Labour cabinet minister Lord Hutton concluded there was a "clear need for reform".
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.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.The government accepted his proposals as a basis for consultation with public sector workers.
BBC political editor Nick Robinson said unions believed Mr Alexander's speech proved ministers had made their mind up about the future shape of public pensions irrespective of the current dialogue between the two sides. But Brian Strutton, of the GMB union, said Mr Alexander's message could be a "show-stopper" for negotiations.
Brian Strutton, of the GMB union, said Mr Alexander's message could be a "show-stopper" for negotiations.
He told BBC Radio 4's Today programme: "What he seems to be saying is the government has already made its mind up on some of the matters we are negotiating on.He told BBC Radio 4's Today programme: "What he seems to be saying is the government has already made its mind up on some of the matters we are negotiating on.
"If that's right, if that's the government's position - that they have decided what they want the answer to be - then it is going to make it impossible for us to stay in these negotiations. We expected government to have a view about these things, but in the middle of negotiations, you don't expect them to come out and say 'We've made our minds up'.""If that's right, if that's the government's position - that they have decided what they want the answer to be - then it is going to make it impossible for us to stay in these negotiations. We expected government to have a view about these things, but in the middle of negotiations, you don't expect them to come out and say 'We've made our minds up'."
Teachers and lecturers are expected to join hundreds of thousands of civil servants in a walk-out on 30 June which the unions predict will see schools and job centres shut and queues at ports and airports. And the TUC said the government was announcing its intentions before they had been discussed with the unions.
"At such a critical time in complex negotiations this is a deeply inflammatory public intervention," its general secretary Brendan Barber said. "This speech has dealt a serious blow to union confidence in the government's good faith in these talks."
Are you a public sector worker? How will you be affected? Send us your comments and experiences using the form below.Are you a public sector worker? How will you be affected? Send us your comments and experiences using the form below.