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

Gold plated pensions deal still not enough

J. Kirkup

Daily Telegraph, Nov. 3rd 2011, p. 1 + 4

This article announces concessions by the government in its proposed reforms to public sector pensions. The government offered an improved accrual rate of 1/60 of annual salary for every year of service instead of 1/65 and promised that staff within ten years of retirement would not be asked to work longer or contribute more to their pension pots. Unions were not appeased by the concessions, and said that their 'day of action' on November 30th 2011 would continue as planned.

Mass strike action looms after a yes vote from Unison

D. Milmo, N. Watt and D. Campbell

The Guardian, Nov. 4th 2011, p. 1

The prospect of Britain's most significant bout of industrial unrest in decades loomed closer after the country's main public sector trade union, Unison, voted in favour of strikes on 30 November 2011. Unison balloted 1.1 million members across the public sector, from nurses to probation officers and librarians, who were then set to join teachers and health professionals in a national day of action over pension reforms.

(See also The Independent, Nov. 3rd 2011, p. 8; Nov. 4th 2011, p. 9, Nov. 18th 2011,p. 28, the Guardian, Nov. 15th 2011, p. 9, Nov. 2011, 17th, p. 11, Nov. 18th 2011, p. 20)

Pensions for private sector fall by a fifth

P. Farrow

Daily Telegraph, Nov. 29th 2011, p. 1 + 4

Reports a claim by Hargreaves Lansdown, a financial advice firm, that a worker retiring from a private company in 2011 would receive a pension worth 16.7% less than if they had retired in 2010. Private sector pension funds have been hit by falling stock markets and low interest rates.

Public service pensions: good pensions that last

H M Treasury

London: TSO, 2011 (Cm 8214)

The report sets out the Government's preferred scheme design for public service pensions. It is built on the foundations laid by Lord Hutton in his report 'Independent Public Service Pensions Commission: Final Report'. The cost of public service pensions paid out has risen by more than a third over the last ten years to £32 billion a year. Reforms to date have been insufficient to reverse the increase in costs of public service schemes due to rising longevity. The Government's offer is:

• benefits already earned are protected
• for those in final salary schemes, those past benefits will be linked to their final salary when they leave the scheme or retire
• public service workers with ten years or less to their current pension age, will see no change in when they can retire
• Government will continue to pay more overall toward pension benefits than the workforce.

The scheme design will ensure:

• guaranteed, index-linked pension benefits on retirement
• an accrual rate of 1/60ths and earnings indexation for benefits while still working in the public service
• fairer distribution of benefits across the workforce
• that most low and middle earners working a full career will receive pension benefits at least as good as they get now.

But in return, the Government is asking public service workers to pay more towards their pensions and work longer. The Government's offer is conditional on the trades unions and the Government reaching agreement on the reforms.