Strike alert at public sector pension cuts

Julian Harris
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MEASURES to rein in the spiralling costs of public sector pensions were proposed by Lord Hutton yesterday, prompting strong threats from trade union leaders.

A cap should be imposed limiting cost to the taxpayer, the independent pensions commission suggested.

As a result, workers “might need to increase their contributions, or take a smaller pension,” Lord Hutton said.

The proposals signal an end to final salary pensions, which would be replaced by pensions based on average earnings over the course of the job.

The normal retirement age could also increase in line with the state pension age.

The review was attacked as “the spark that lights the blue touch paper of co-ordinated strike action,” by RMT boss Bob Crow.

“There is no question that this is the issue where co-ordinated strike action is on the cards,” Crow said.

Public sector pension payments are on an upward trajectory, according to the Office for Budget Responsibility (OBR). Pension costs carried by the Treasury will soar from £4.3bn in this tax year to £7bn in 2015-16, according to the OBR’s latest forecast.

Lord Hutton’s report proposes changes to the pension scheme of all the UK’s six million government sector workers. “Public sector employers should determine their own terms of employment,” criticised Philip Booth of the Institute of Economic Affairs. “Reforms must run with the grain of decentralisation and localisation.”