Pensions offer not enough, say unions

Unions are pressing ahead with plans for the biggest strike in a generation despite a new Government offer on public sector pensions described as the "chance of a lifetime".

Unison will announce the result of its ballot of over a million workers tomorrow and other unions will follow suit in the coming weeks, raising the prospect of a huge walkout on November 30 which will disrupt schools, courts, hospitals, councils, driving exams and other services.

Hours after receiving details of the new offer from Chief Secretary to the Treasury Danny Alexander and Cabinet Office minister Francis Maude, union leaders said they welcomed the proposed changes, but they were not enough to call off the planned industrial action.

TUC general secretary Brendan Barber said there were still "major areas of concern" over the Government's proposals, which will lead to increased pension contributions and later retirement.

Ministers warned that the offer could be withdrawn if there was no agreement reached by the end of the year and replaced with less generous arrangements.

Mr Alexander said: "I reserve the right to reconsider whether these enhancements are appropriate under circumstances where agreement is not reached."

The Liberal Democrat minister said the offer was the "best we are going to get" in terms of money, although he believed there was a "lot more" to talk about over how the changes will affect the four separate schemes.

Mr Alexander said the new offer involved an increase to the cost ceiling, so future schemes will now be based on a pension to the value of 1/60th of average salary accruing for each year worked rather than 1/65th - an 8% increase on the previous offer.

The minister said he had listened to the argument that those closest to retirement should not have to face any change at all, announcing that no-one within 10 years of retirement will see any change over 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," he said.

He also announced that no further changes would be made for 25 years if an agreement could be reached.

"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.

"So I hope that the trade unions will now grasp the opportunity that this new offer represents. It is the chance of a lifetime to secure good, high-quality and fair public service pensions."

But the Public Services Liaison Group (PSLG) of unions 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 November 30."

Public and Commercial Services union general secretary Mark Serwotka said: "Any new offer is always welcome but the latest concessions are only marginal and would still force public servants to pay more in and work longer for less in retirement.

"Effectively ministers are saying they will only raid pensions by slightly less than they were planning to.

"We will look at the details to see how they affect our members, but we continue our plans to make November 30 the biggest strike we have ever seen."

Unite assistant general secretary, Gail Cartmail said: "If it wasn't for the strength of feeling amongst public sector workers, the government would have never made this change to their original and dreadful proposals. This is welcome, but it is a first step. Now the negotiations with the government can begin in earnest, but there is no time to waste."

Simon Walker, director general of the Institute of Directors, said: "The previous Government watered down reforms to public sector pensions in the face of a general strike threat.

"The present Government risks repeating their mistake. The public sector unions cannot be allowed to hold a gun to the Government's head in this way."

John Cridland, director general of the CBI, said: "These proposals offer additional protection to public sector workers, particularly to the low-paid, while still achieving the essential reform which taxpayers need.

"It is not in the interests of public sector workers to plough on with industrial action, which would cause significant disruption to everyone."

Mr Alexander said the Government was asking public service workers to contribute more to their pensions and to work longer, adding: "But we are offering the chance of a significantly better pension at the end of it for many low and middle-income earners.

"A fairer pension, so that low-income workers stop subsidising pensions of the highest earners. A sustainable deal, that will endure for at least 25 years."

The minister said that, under the latest proposals, a teacher with a lifetime in public service with a salary at retirement of £37,800 would receive £25,200 each year, rather than the £19,100 they would currently earn in the final salary Teachers' Pension Scheme.

A nurse with a lifetime in public service and a salary at retirement of £34,200 would receive an annual pension of £22,800 if these reforms were introduced, whereas under the current 1995 NHS Pension Scheme arrangements they would only get £17,300, he said, adding that pensions would remain "considerably better" than those available in the private sector.

"To earn the equivalent pension in the private sector, the teacher retiring on £37,800 would need a pension pot of around £675,000, the nurse retiring on £34,200 a pot of £600,000. Both would require an annual contribution of around a third of their salary."

Prime Minister David Cameron's official spokesman said that Mr Alexander had made clear that the current offer was "as good as it gets".

PA