Public sector pension plan sparks strike threats

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The Government was tonight facing the threat of a summer of industrial strife by millions of public sector workers after unions warned that radical changes to public sector pensions could "light the blue touch paper" for strikes.

Teachers could be the first group to stage walkouts, leaving England's schools facing mass disruption, although council workers, NHS staff, civil servants and other public sector employees could take coordinated action.

A crunch meeting will be held next week between union leaders and the Government to try to head off the threat of widespread industrial unrest amid warnings that strikes were "inevitable" if ministers implemented recommendations in a report by Labour peer Lord Hutton.

He recommended that public sector workers should be stripped of their final salary pensions and instead have schemes linked to average earnings, while paying more and working longer.

He also called for the normal age at which most public sector staff can start drawing their pension to be increased to be the same as the state pension age, while members of the armed forces, police and firefighters should not be able to retire before 60.

The report was savaged by unions, saying it was a "recipe for disaster", although they accused the government of planning a "Trojan horse raid" on the pensions of hard working public sector workers.

Lord Hutton argued that career average pensions would benefit lower paid workers and said his aim was to make the system fairer and more sustainable.

Around 12 million public sector employees depended on pensions in retirement, but costs were increasing as people lived longer, he said.

"If we go on as we are, we are heading for the rocks. The solution is not a race to the bottom, nor to hack away at public sector pensions. The biggest risk is the rapidly rising life expectancy."

Lord Hutton said it should be possible to introduce new career-average schemes by the end of this Parliament in 2015, although some groups, such as the armed forces and police, could have a longer transition period if needed.

"These proposals aim to strike a balanced deal between public service workers and the taxpayer. They will ensure that public service workers continue to have access to good pensions, while taxpayers benefit from greater control over their costs.

"Pensions based on career average earnings will be fairer to the majority of members that do not have the high salary growth rewarded in final salary schemes.

"The current model of public service pension provision is clearly not tenable in the long-term. There is a clear need for reform."

Unions strongly disagreed, raising the threat of industrial action and warning that public sector employees such as midwives, could resign or stop paying into their pension scheme.

Dave Prentis, leader of Unison, said: "Asking workers to work longer for less is simply not an option. We want to talk to the Government about their response as a matter of urgency, but I am sending out a clear message to our 1.4 million members warning them that industrial action is now one big step closer."

Brian Strutton, national officer of the GMB, said: "Lord Hutton had a real chance to make sure low paid public sector workers have good quality, affordable pension schemes, but in failing to address the key issue of affordability to members, that chance has been wasted.

"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."

Mark Serwotka, leader of the Public and Commercial services union said strikes were inevitable if the government pressed ahead with the reforms without reaching agreement with workers.

Fire Brigades Union leader Matt Wrack said: "This is the great pensions robbery and is completely unacceptable to firefighters across the UK.

"Expecting firefighters to work until they are 60 is wrong. Firefighting is a physically arduous job. Peak fitness is essential where seconds can cost lives. The public will not want an ageing frontline fire and rescue service."

TUC 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."

Business leaders supported the suggested reforms as a "big step forward" towards making public sector pensions affordable.

John Cridland, director general of the CBI, said: "What's vital now is that Lord Hutton's recommendations are implemented in full by Government and public sector employers."

The National Association of Pension Funds, which has four million public sector pension holders among its members, said the report had struck the right balance between fairness and cost.

Its chief executive Joanne Segars said: "Moving to a new career average scheme is a sensible approach that will help protect the lower paid. This could be a better deal than the current final salary arrangements for the lower paid and those whose earnings spike mid-career."

Royal College of Nursing general secretary Dr Peter Carter said: "There's no doubt that these proposed changes are another hammer blow to the morale of dedicated nurses."

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said the union would want to "move quickly" if it did decide to take action.

Downing Street said "careful consideration" would be given to Lord Hutton's recommendations and the Government would publish its response in due course.

"We will be engaging with public sector unions and others in taking forward our reforms in the future," the Prime Minister's official spokesman said.