New offer on public sector pensions

Nov 2 2011

The Government has offered unions the "chance of a lifetime" over public sector pensions in a bid to reach a deal which will last a generation and avert strikes by millions of workers.

Just weeks before the biggest outbreak of industrial unrest for decades, ministers said they had made improvements to their proposals which would benefit employees in teaching, local government, the NHS and other parts of the public sector.

The new offer was made to union leaders during an hour-long meeting in Whitehall and just 24 hours before Unison reveals whether its one million members have voted to back industrial action.

David Cameron said public sector pensions would still be "far better" than many available to those working for private companies, telling MPs at Prime Minister's questions: "Low and middle-income earners we'll actually see getting more from their public sector pensions.

"Everyone will keep what they have built up so far, anyone within 10 years of retirement will see no change in their pension arrangements. At the end of all this people in the public sector will actually still get far, far better pensions than people in the private sector."

Later, Treasury Chief Secretary Danny Alexander told the Commons that 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 - an 8% increase on the previous offer.

"I fully understand that families across the country are feeling financial pressure right now. These are unprecedented and tough economic times," he said. "But reform is essential because the costs of public service pensions have risen dramatically over the last few decades.

"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."

Union officials met later to discuss the new offer before deciding their next move,

GMB national officer Brian Strutton said: "The move today theoretically gives us around 8% more negotiating room and additional protection for some existing members. However, we don't know how this will translate into actual proposals for the different pension schemes and it will take some time to work out the details. We will not be able to resolve these issues quickly or easily so our industrial action ballot continues, as will negotiations."