Danny Alexander urged to ‘think again’ over pensions

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by a Newsnet reporter

In an attempt to avoid strike action by public sector workers, the UK government yesterday announced a number of changes to its pensions policy.  As a result of the changes, public sector workers will see themselves working longer for a smaller pension on retirement.  The government’s pension offer had been met with dismay by unions representing public sector workers, and another ‘Winter of Discontent’ had been threatened.

In a meeting with union leaders yesterday, Secretary to the Treasury Danny Alexander MP announced that the government had made two important sets of changes to the plans.  

Firstly the introduction of the changes will now be delayed by seven years, and will now come into effect in 2022.  This means that no public sector worker who is within ten years of retiring will be affected by the changes, previously the government had proposed to introduce the changes in 2015.  Secondly the so-called ‘cost ceiling’ will be raised by 8% compared to the government’s previous offer.  

Despite Mr Alexander’s concessions, Brendan Barker, general secretary of the TUC said that the unions still had major areas of concern with the proposals.  The unions will not call off their proposed ballot for industrial action as a result of Mr Alexander’s announcement.

Brian Strutton, of the GMB union which represents hundreds of thousands of public sector workers across the UK, said: “We would want to explore the effect of the improved offer while still seeking answers on the outstanding matters.  We will not be able to resolve these issues quickly or easily, so our industrial action ballot continues, as will negotiations.”

Mr Alexander threatened the withdrawal of the revised offer if the unions press ahead with industrial action, saying that the offer was conditional on agreement being reached

Mr Alexander said:

“This generous offer should be more than sufficient to allow agreement to be reached with the unions.  But it is an offer that is conditional upon reaching agreement.

“I hope that, on the basis of this offer, the trade unions will devote their energy to reaching agreement, not on unnecessary and damaging strike action.

“That way, this offer can inform the scheme-by-scheme talks that will continue until the end of the year. Of course, if agreement cannot be reached we may need to revisit our proposals and consider whether those enhancements remain appropriate.”

Commenting on the the revised pensions proposals, SNP Work and Pensions spokesperson Eilidh Whiteford MP urged the Treasury to re-consider its policy on increasing contribution rates in the manner proposed at a time when members of the public face real financial pressures.

Dr Whiteford said:

“The Treasury must think again over its policy on increasing contribution rates at a time when people face real financial pressures.

“My concern is that we will see workers withdraw from pension plans because they cannot afford the increase in contributions, and in the longer term leave many wondering if they can even afford retirement.

“Most recipients of pensions are receiving only a few thousand pounds per year, not the sort of gold-plated pensions highlighted in the media, and it is women who will be hardest hit by these changes.

“The issue of pension reform requires consent to be built but, with the UK Government making clear they will slash the Scottish Budget if the Scottish Government does not implement the short term increase in pension contributions, that consent is not being achieved.

“Public sector workers are rightly concerned about the impact of changes to their pensions by the UK Government – and the UK Government must think again.”