Government pension reforms provoke fresh anger

The Government today confirmed it was pressing ahead with raising pension contributions next year for teachers and civil servants, sparking fresh anger from unions.

Ministers were accused of being "unnecessarily provocative" and of imposing the increase for some workers, but a business leader said public sector pensions remained "incredibly generous".

Up to two million workers went on strike last month in protest at the controversial pension changes, and intensive talks have since been held to try to break the deadlocked row.

The Department for Education and the Cabinet Office announced that changes from next year would go ahead, although further talks will be held about future arrangements.

Chris Keates, general secretary of the NASUWT teachers' union, said: "This is a wholly unjustified tax on teachers. Choosing to announce the increase in contributions in the final hours before the national discussions on pension changes have concluded is unnecessarily provocative. Regrettably such ill-timed announcements have been a feature of this sorry saga."

Prospect condemned the decision, saying it meant that increases in contribution ranging from 1.2% to 2.4% for civil servants were being imposed in the year from next April, calling it a "blatant tax".

Most teachers will pay more under the changes, which ministers said were part of the Government's long-term reforms to control the increased costs of people living longer and to "re-balance" the contributions paid by scheme members and taxpayers.

The changes, which will save £314 million from the teachers pension scheme in 2012-13, are part of the wider £2.8 billion savings from public sector pensions by 2014-15 which the Chancellor announced in last year's Spending Review, which will see public sector workers pay an average contribution rise of 3.2%.

Schools Minister Nick Gibb said: "Our changes for next year are about keeping pensions affordable for future generations of teachers - while protecting new and low income staff from the biggest contribution increases over the next few years.

"Teachers will still have one of the very best pensions available, with index-linked defined benefits, significant employer contributions, protection for those closest to retirement and all accrued final salary rights protected.

"Reforms to public sector pensions are necessary. The overall cost of public sector pensions has risen by a third to £32 billion in the last decade. The cost to the taxpayer of teacher pensions is already forecast to double from £5 billion in 2006 to £10 billion in 2016 and will carry on rising rapidly as life expectancy continues to improve.

"We've listened carefully to teachers and heads. We've put forward an improved offer on the table and our discussions are continuing."

Cabinet Office Minister Francis Maude said: "The Government is committed to ensuring that civil servants have access to pensions that are amongst the best available.

"We have listened carefully to the concerns raised, but feel the proposal we set out in July is still the fairest approach for civil servants and does most to protect the lowest paid.

"Those earning less than £15,000 a year - that's 3.6% of the civil service workforce - will not have to pay any extra at all. Another 39.5% of workers earning up to £21,000 will have their increase limited to 0.6%."

Proposals for 2013-14 and 2014-15 will be the subject of a separate consultation next year, said the Cabinet Office.

Prospect's deputy leader Dai Hudd said consultations had been a "sham", adding: "Today is the day the reality of the Government's policies bites. We now know what the impact on our members in 2012 will be. What offends them most is that none of these increased contributions will go into the pension schemes or contribute to reducing schemes' liabilities."

Christine Blower, general secretary of the National Union of Teachers, said: "Teacher unions agreed in 2006 to contribution rises if justified by an actuarial valuation of the teachers' pension scheme, conducted by the Government Actuary's Department.

"We have consistently called for such a valuation in the current negotiations and the Government has consistently refused to do so."

Mark Serwotka, leader of the Public and Commercial Services Union, said: "We remain committed to the negotiations and will continue to attend all meetings, but ministers only appear to be interested in imposing an unfair and entirely unnecessary tax on people working in the public sector."

Simon Walker, director general of the Institute of Directors said: "Public sector pensions will remain incredibly generous, and modest increases in employee contributions are fair. The trade unions have to get real - people are living much longer, so pensions have to be reformed if they are to remain sustainable."

PA