Unions warn of anger over pension changes

Union leaders warned today that public sector workers would be "angered" by the review's call for them to pay more for less generous pensions but some said Lord Hutton had not given the green light for an all-out attack on retirement schemes.

TUC general secretary Brendan Barber said: "Public sector workers are already facing job cuts, a pay freeze and increased workloads as they are expected to do more with less.

"They have already had the value of their pensions cut by the switch to CPI indexing, which will slice a little off their pension every year.

"At a time when inflation is breaking targets and pay is already frozen, asking people to pay immediate increased contributions adds up to a significant pay cut.

"But the precise details of what will happen are as yet far from clear, and on important issues John Hutton has firmly pushed the ball back into the Government's court. These should be negotiated with unions rather than imposed from above."

Mr Barber said many of the critics of public sector pensions - including ministers - had been "rebuffed" by today's report.

"Public sector pensions are not gold-plated, and the report says that pensions should be linked to salary, that change should be introduced in ways that do not deter pension saving, and that there should be protection for the low-paid. This will stop a race to the bottom.

"The review is also a challenge to Government to do more in the private sector. If ministers accept these proposals, the two in three private sector workers who get no employer pension support have every right to ask why they can't have decent pensions too."

GMB national officer Brian Strutton said: "GMB consider that Hutton has not given the green light to attack public sector pensions and Hutton is right to resist a slash-and-burn approach.

"We have always believed that public sector pension reform should be evidence-based and Hutton has dispelled some of the myths peddled by politicians and the media alike.

"It is the correct message for him to send to the Government that defined benefit provision is the most suitable method of providing affordable and fair pensions for most public sector workers - indeed, GMB believes this applies to all workers.

"Hutton has identified an affordability gap that he does not think should fall on taxpayers."

Joanne Segars, chief executive of the National Association of Pension Funds, said: "Lord Hutton has heeded our warnings about not placing too much of the burden on the low- paid, recognising the risk that many may opt out of pensions altogether.

"Reforms should be focused on those who are set to gain the most out of the current system.

"The report dispels some of the myths about these pensions but is realistic about the need to reshape them. The long-term solution to public sector pensions mustn't become a race to the bottom. All workers deserve a good workplace pension, whether private or public sector."

Dave Prentis, general secretary of Unison, said: "Our key priority is to make sure that our members' pension schemes, that they pay into all their working lives, remain sustainable and affordable and that there is no damaging race to the bottom.

"We will seek to maintain, using all means possible, the agreements reached two years ago to make our public service schemes sustainable and also protect existing members of the scheme.

"We are pleased that Hutton recommends keeping a defined benefit scheme, but we are adamant that the final salary scheme should be retained.

"There is a real danger that taking a career average to calculate pensions will see the low-paid getting less in their retirement - especially as the Government has switched from using the RPI to using the CPI to calculate pensions.

"Public sector workers already pay a sizeable amount into their pension schemes year in, year out. Many of our members would struggle to pay more.

"Council workers, including home carers, librarians, social workers and dinner ladies, pay in 6.4% of their wages, while NHS workers pay an average of 6.6%.

"Plans to make public sector staff work until they drop will hit the low-paid hard. For many public sector staff, working longer is not an option.

"Many nurses, home carers, paramedics and refuse collectors are already forced into early retirement because of the physical nature of their jobs, and the damage it does to their health.

"It is time the Government turned their attention to the private sector, where two-thirds of employers don't provide a single penny towards their employees' pensions, forcing taxpayers into picking up a massive long-term benefits bill."

The National Pensioners Convention warned that the report may cause future generations of low-paid public sector workers to retire in poverty.

General secretary Dot Gibson said: "It's a myth that all public servants have a gold-plated pension. Even now, many who retire are still entitled to additional benefits because their income is so low and Lord Hutton's report could make that situation worse for future generations.

"We also face making a decision about future pensions based on population projections that are completely false.

"There is a direct link between life expectancy and income, so the poorest in our society - care workers, teaching assistants, school dinner ladies - will be those who may have to work until they drop if the retirement age goes up."

David Yeandle, head of employment policy at the Engineering Employers Federation, said: "It is important for public sector pensions to be affordable and sustainable, both now and in the future, with their costs and liabilities made more transparent than is currently the case.

"John Hutton's review should also address the complex and expensive problems that companies undertaking public procurement exercises face when taking on public sector employees due to the Fair Deal reached between the previous government and public sector unions.

"These problems have resulted in some companies being discouraged from bidding for public sector contracts or deciding to withdraw altogether during the bidding process.

"It is important that public sector pensions do not aversely affect the movement of employees between the public and private sector, as this element of labour market flexibility benefits employers on both sides."

Emma Boon, campaign manager at the TaxPayers' Alliance, said: "Taxpayers face a bill for more than a trillion pounds needed to pay unfunded public sector pensions. The Government should increase employee contributions and raise the pension age to make much-needed immediate savings.

"Final salary pension schemes are all but extinct in the private sector, but necessary changes in gold-plated public sector pensions haven't been made.

"It is not right for taxpayers to be subsidising million-pound retirement benefits for the public sector elite while seeing the value of their own pensions plummet. Public sector staff are well paid and we can't afford to pay for such generous benefits as well."

Bob Crow, general secretary of the Rail Maritime and Transport union, said: "The summary of the ConDem pension enforcers proposals is clear - work longer, pay more and get less. This attack on the people who make this country tick will spark a furious backlash and will drive millions on to the streets in French-style protests to stop the great pensions robbery."