Imposing harsh changes to public sector pensions could leave future pensioners in poverty

Brendan Barber

Commenting on the final report of Lord Hutton’s Review of public sector pensions published today (Thursday), TUC General Secretary Brendan Barber said: “Public sector workers are already suffering a wage freeze, job losses and high inflation. They are now desperately worried that they will no longer be able to afford their pension contributions, and will have to opt-out.
“Even without any changes recommended in today’s report, public sector pensions have been reduced in value by 25 per cent by a mix of negotiated change and the government’s arbitrary switch to the CPI measure of inflation.
“On top of this the government has announced a £2.8 billion increase in contributions and a review of the discount rate that could also increase contributions. Even without further changes public sector workers will pay much more for substantially less.
“Lord Hutton’s report is a serious piece of work with aspects we can welcome such as the call for good quality pensions and better scheme governance. But while we hope the government will heed his advice to get employers and unions around the table to make sure any changes are properly negotiated, these talks will take place against a very difficult background.
“Issues such as moves to a career average scheme will have very different impacts on different schemes – and unless there is an increase in the accrual rate the switch will simply mean that some will lose out more than others.
“And if changes force members to leave schemes this could make the short term cost of pensions for the government greater and store up real problems for the future.
“Imposing changes without agreement could lead to real industrial tensions and getting the decisions wrong could leave future pensioners in poverty.”