TRADES UNIONS in the United Kingdom have threatened mass strikes if the Conservative/Liberal Democrat coalition attempts to implement proposals to curb pensions for public service workers after 2015.
Under the plan, drawn up by former Labour minister, Lord John Hutton, pensions based on final salary would be phased out from four years’ time, to be replaced by pensions that reflect the average earnings of a worker over the course of a career.
However, he said workers would hold on to the benefits that they had already built up. “Everything you’ve currently got, you keep. But going forward, I think we’ve all got to share in the cost of rising longevity.”
The retirement age for State employees would move to 66 by that date, while firefighters, police and others who can retire currently at 50 or 55 on a full pension would have to wait until they were 60 before being eligible to claim their entitlements.
However, Lord Hutton rejected charges that State employees enjoyed “gold-plated pensions”, pointing out that the average is £7,800 (€8,837), while half receive less than £5,600 and nine out of 10 get less than £17,000-a-year.
“I also reject the argument the downward drift of pensions in the private sector is justification that pensions in the public sector must follow the same course,” he said.
Rejecting the proposals, Brian Strutton of the GMB union said: “Many of his conclusions are questionable and will infuriate public sector workers. It’s not cogent enough to be a blueprint for reform but it might well light the blue touch paper for industrial action.”
Meanwhile, unions warned that pension contribution increases announced by chancellor of the exchequer, George Osborne last October, due to come into force in three years’ time, could force many workers out of schemes.
Two years ago, UK state employees paid £6 billion in contributions, but £22 billion was paid out. Following Mr Osborne’s decision, contributions by State employees will rise by three percentage points, but higher-paid staff could face far higher charges because Mr Osborne has ruled those earning below the national industrial wage should not suffer.
Condemning the recommendations, Trades Union Congress general secretary, Brendan Barber said: “Public sector workers are already suffering a wage freeze, job losses and high inflation. They are now desperately worried that they will no longer be able to afford their pension contributions, and will have to opt out.”
Supporting the recommendations, the Confederation of British Industry said Hutton offered “a good deal” to two-thirds of all State employees, because unlike many private sector staff their pensions would not be dependent “on the vagaries of the equity market”.
Only 11 per cent of private sector workers in the UK enjoy final salary schemes today, compared with 85 per cent of those working for the government, local authorities, or agencies. Indeed, 35 per cent of all UK private sector workers in the do not have any employer-sponsored pension scheme.