Welfare Reform on the Web (August 2011): Pensions - UK

Hundreds of thousands walk out – but the real battle is yet to come

A. Grice

The Independent, July 1st 2011, p. 6

Andrew Grice reports on the strike by public sector workers over pension reforms. He quotes trade union leaders who said that it will be followed by an 'autumn of discontent' across the whole of the public sector unless the government rethinks its plans. The unions have also been very critical of Ed Milliband's – the leader of the Opposition – stance on the strike. Although Mr Milliband has been critical of the Government's proposed reforms, he has also said the strike was wrong. The Treasury wants a deal by November. Under the government's proposals, higher pension contributions would be required, pensions would be smaller and the retirement age would be raised. The Treasury is hoping to see the reforms come into effect 1 April 2012.

(See also The Guardian, July 1st 2011, p. 6-7)

Labour warns pension reforms are cover for public sector sell-off

P. Curtis

The Guardian, July 6th 2011, p. 8

Labour has accused the government of using its public sector pension reforms to ‘soften up' the cost base of schools, hospitals and other public services and thus pave the way for a programme of mass privatisation. As part of the plans to reform public sector pensions, the Treasury is consulting on scrapping the ‘fair deal' policy that protects public sector workers' pensions when the service they work in is outsourced.

MPs to defy pensions reform

P. Curtis

The Guardian, July 15th 2011, p. 11

MPs are to fight attempts to make them pay more into their pension pots, risking a backlash from the 4 million public sector workers facing increases in their contributions. MPs who run the parliamentary pension scheme are to defy a government order that they should face the same reforms to their pensions as other public sector workers, arguing that they are already among the highest contributors in the public sector – paying 11.9% of their salary – and saw a rise in contributions only two years ago. The leader of the Commons, Sir George Young, told Parliament that he would pass the issue to the Independent Parliamentary Standards Authority.

Pensions strike threat may fade as the unions keep talking

Anon.

Daily Telegraph, July 20th 2011, p. 10

Unions have agreed to continue negotiations with government over public sector pension reforms, while not withdrawing threats of further industrial action in Autumn 2011. Negotiations on individual schemes, such as those covering local government, the NHS and the civil service, will take place separately. The government has also recognised that the local government pension scheme, which holds its own investments to meet its liabilities, should be treated differently from other public sector schemes, which are funded out of general taxation.

(See also Times, July 20th 2011, p. 26)

Principle Civil Service Pension Scheme: consultation on proposed increases to employee contribution rates from April 2012

Cabinet Office

2011

This consultation proposes in detail increased contributions to the scheme for 2012/13 only. The lowest paid workers earning less than £15,000 per year will not be asked for higher contributions, but the rest will pay more, with highest earners being hardest hit. Increases will be phased in up to 2015 so that the overall extra contributions will total almost £3bn a year. The increases will eventually add up to an average 3.2% of each worker's gross salary by 2015. Even with the rise in contributions, public sector pensions will be far more generous than those offered in the private sector.

(For summary see Daily Telegraph, July 28th 2011, p. 1 +4 and Times, July 29th 2011, p. 25)

Taxpayers face £42,000 public pension bill

C. Hope

Daily Telegraph, July 13th 2011, p. 1 +2

Treasury figures reveal that liabilities from the pensions of public sector workers have jumped from £770bn to £1,100bn in two years. The figures are contained in full accounts of government departments, which are being published together for the first time to show what public finances would look like if they were subjected to the same scrutiny as a private company.