The government has announced two major changes to its plans for public sector pension reform as ministers seek to avoid another damaging round of strikes. In a meeting on Wednesday morning, the chief secretary to the Treasury, Danny Alexander, challenged Britain's trade union leaders to accept the new deal, which could be withdrawn if a further round of strikes takes place. While union leaders gave a cautious welcome to the revised offer, the TUC said it would still press ahead with preparations for a strike on 30 November in which up to three million public sector workers – including nurses, teachers and civil servants – are expected to take part in a 24-hour walkout. The TUC general secretary, Brendan Barber, said there were still "major areas of concern". Alexander told MPs he was revising his plans in two key ways: • The "cost ceiling" will be increased by 8% on the previous offer. This means that the accrual rate – the percentage of salary earned as a pension every year – will be based on one-sixtieth of an average salary rather than the initial sixty-fifth. • The full introduction of the reforms will be delayed by seven years. Under the original timetable, the changes were due to be introduced by 2015. Alexander gave a commitment on Wednesday that anyone within 10 years of retirement on 1 April next year will not see any reduction in their pension pot. This means the changes will not come into full effect until April 2022. Alexander also reached out to trade union leaders, saying that he hoped a deal would last for 25 years or longer, suggesting the government believes that this settlement could last until the middle of the century. Brian Strutton, the national secretary of the GMB, said: "We would want to explore the effect of the improved offer while still seeking answers on the outstanding matters. We will not be able to resolve these issues quickly or easily, so our industrial action ballot continues, as will negotiations." Labour gave a guarded response. Rachel Reeves, the shadow chief secretary to the Treasury, said: "Let me start by welcoming [this] signal that the government is now willing to enter into proper discussions. It is a welcome change from the months of Treasury and Cabinet Office intransigence which have come before." But David Cameron challenged Labour to accept the offer and denounce the strikes, telling MPs: "I really think it is time the party opposite was clear that they do not support strikes later this month. "It does seem to me absolutely vital that we do something that is both fair to taxpayers and also fair to public sector workers. "The cost of our public sector pension system is up by a third in the last decade. It isn't fair to go on as we are, but the new arrangements must be fair to people who work hard in the public sector and on whom we all rely." Alexander made it clear that the government could withdraw the revised offer if unions pressed ahead with strikes. "This generous offer should be more than sufficient to allow agreement to be reached with the unions," he said. "But it is an offer that is conditional upon reaching agreement. "I hope that, on the basis of this offer, the trade unions will devote their energy to reaching agreement, not on unnecessary and damaging strike action. "That way, this offer can inform the scheme-by-scheme talks that will continue until the end of the year. Of course, if agreement cannot be reached we may need to revisit our proposals and consider whether those enhancements remain appropriate." Alexander said the revised offer marked a significant improvement that would particularly benefit public sector workers lower down the income scale. He said a teacher with a lifetime's service who earns £37,800 at retirement would receive a pension of £25,200. Under the current final salary scheme, they would receive £19,100. Speaking about the delay, he said: "No one within 10 years of retirement will see any change in when they can retire, nor any decrease in the amount of pension they receive. "Anyone 10 years or less from retirement age on 1 April 2012 are assured that there will be no detriment to their retirement income." While Alexander was open about the government's decision to revise its offer, he was adamant that the central thrust of the pensions reforms suggested by Lord Hutton would continue. Hutton said final salary pensions are unaffordable as the population ages, and benefit the highest-paid public servants. Pensions would in future be based on a career average salary and involve a greater contribution by employees. Alexander said: "We have to reform to ensure the costs of pensions are sustainable in the long term and to ensure costs and risks are fairly shared between employees and taxpayers. "I believe this package is affordable. I believe it is also fair, not just to public sector workers, but delivers significant long-term savings to taxpayers who will continue to make a significant contribution to their pensions. "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." The TUC's public services liaison group (PSLG) said it "welcomed this movement in the government's position" but still had concerns over contribution increases, increases in the pension age and the impact of uprating pensions by inflation at the lower CPI rate rather than the higher RPI rate. The TUC said: "All the unions have indicated throughout this process their determination to reach a negotiated settlement on all these issues. That remains the position, and unions will engage intensively in the coming weeks. "But unless and until further real progress is made and acceptable offers are made within those negotiations, unions remain firmly committed to continuing their preparations for the planned day of action on 30 November. "A further meeting of the PSLG will be held in November to consider reports on any progress made within the sector talks." Comments Strummered 2 November 2011 3:10PM .........".Alexander made clear that the government may withdraw the revised offer if unions press ahead with their strikes"......... Threats and intimidation, par for the course. Gelion 2 November 2011 3:11PM So you can summarise British society as follows. The bankers and top paid elites get all the UK money + tax cuts - whilst the rest of us have to put up with 5%+ inflation, pay cuts, working longer into our retirements and general austerity. Where is the Atlee of our generation to release us from this neo-Con slavery, where 30% of the UK hold the rest to ransom. It is the 1930s all over again. themissing 2 November 2011 3:12PM When MPs have the same pension conditions as the rest of us, maybe then we will start to listen. retrorik 2 November 2011 3:12PM But David Cameron challenged Labour to accept the offer and denounce the strikes. "I really think it is time the party opposite was clear that they do not support strikes later this month," the prime minister told MPs. If Labour agree with you, they may as well BE you. Chomskyfan 2 November 2011 3:15PM The unions are united and steadfast on this attack on their pensions by a cabal of millionaires who will never need a pension. No surrender. Samsson 2 November 2011 3:16PM One need only refer to Cameron's rejection of a Robin Hood tax for the rich in order to judge the fairness of the current 'offer' by Beaker and Maude. gjjwatson 2 November 2011 3:16PM We are used to the Tories stoking up hostility to public servants, however Danny Alexander now seems to be parroting the right wing mantra, "my pension is crap so your`s should be too." Danny, you will be toast at the next election, still never mind, I`m sure your new friends will find you a nice seat in the Lords. Strummered 2 November 2011 3:16PM The government is obviously on the backfoot over this, the unions speak for anyone who values fairness as the government don't know the meaning of the word - It isn't a race to the bottom. meljomur 2 November 2011 3:17PM I wonder if final salary plans for people who devote their lives to helping others would be affordable, if companies in the City of London paid their taxes??? Now that I know that the City of London is one of the biggest tax havens in the world. I don't see how the British gov. justifies allowing multi national corporations a free pass, while teachers and nurses are asked to effectively take pay cuts??? penpoints 2 November 2011 3:17PM I love the hypocracy - yes you might get more in retirement (i'd doubt whether Alexander's sums add up mind) - but you'll work an extra 7-8 years paying loads more. The chances are you'll need to retire earlier because of ill health and it does nothing to help women who will miss out on years due to childcare. It's okay if you're sitting on a million pounds but most of us are not. Alexander is a politician who is meant to be defending the interests of the population - here he is just defending the interests of the rich who he'll happily give tax allowances and tax breaks to. The problem is not public sector pensions but private sector ones where 2/3rds don't have one. This will cost far more than if public sector workers were all on MPs pensions. Financier capitalism has externalised those costs onto all of us. We should not be working for them. I want the best public services and I want people who are committed to their job and they deserve decent salaries and pensions. This country can afford it. |