Unions lament pension contribution rise

Thursday, 28 July 2011 10:10 AM

By Phil ScullionFollow @PhilScullion

Unions have hit out at proposals for pension contribution increases which will affect 2.5 million nurses, teachers and civil servants.

The government announced that savings of over £1 billion are to be made as a result of higher contributions during the 2012-13 financial year.

Danny Alexander, chief secretary to the Treasury, told the Today programme that the "rebalance" would make pensions "sustainable".

He added: "This year, the cost of the public service pensions is £32 billion - that is an increase of one-third over the last 10 years.

"That is related to the fact that people are living longer, healthier lives and that is a good thing. Therefore it is important to rebalance between member contributions and taxpayer contributions."

However Unite claim that the increases go "far beyond" offsetting any rising costs of the schemes.

Gail Cartmail, Unite assistant general secretary, said that it is "inappropriate" to make decisions on contributions whilst negotiations pertaining to the future structure of benefits are still underway.

She said: "This approach is like a landlord announcing rent increases and saying they are still going to apply even after they have moved you into a much smaller property.

"While the 2012/3 increase might not be unreasonable if current benefits were going to be maintained, the government's intention is that they will be greatly reduced in value after the contributions have been raised."

Government ministers queued up to defend the proposals, following whispers last week of disquiet within the cabinet which culminated in unexpected criticism of the plans from the right wing of the Conservative party. A leaked letter from health minister Andrew Lansley had labelled reforms "unrealistic".

Francis Maude, minister for the Cabinet Office, announced the launch of the consultation and stressed that changes in the pensions for low and middle earners would be minimal.

The government's plans include a rise of no more than 0.6 per cent for those earning up to £21,000, and no increase for people on below £15,000.

Sally Hunt, UCU general secretary, accused the government of once again proving it is not prepared to negotiate in "good faith" and criticised their "hyperbole and ludicrous claims" about pension schemes.

She added: "Any increase in contributions from members will not aid their retirement; they will raise funds for the Treasury. This is simply a tax on public sector workers."

Further increases in public sector pension scheme contributions planned before 2015 are expected to bring the total saving up to £3 billion a year.

Around £300 million will be saved per year from the teachers' pension scheme alone. Schools minister Nick Gibb pointed to former Labour cabinet minister Lord Hutton's review on which the reforms are based and the importance of achieving a "fairer balance".

He said: "It is right that we ask public sector employees to pay more towards their pension to ensure they are affordable for future generations of teachers."

However teachers unions are unlikely to accept Mr Gibb's reasoning and ministers are bracing themselves for future strike action from all public sector unions.

Russell Hobby, general secretary of the National Association of Head Teachers (NAHT) said: "The government had made up its mind a long time ago to raid the teachers' pension scheme. We now have the privilege of commenting on how efficiently it plans to do so."

He added: "It is a tax on teachers to pay for the mistakes of others."

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• public sector pensions