David Cameron has just used his LGA conference speech to defend reforms to public sector pensions, arguing that his proposals are fair. He has suggested that people are being told “scare stories” about the government plans. (Here is the full transcript on the Downing St website and this is our news story).
Does he have a point?
The prime minister has claimed that there are rumours that the government is “closing defined benefit schemes and replacing them with defined contribution schemes”. He also claimed that people are being told that “we are stripping workers of the benefits they have already accumulated.”
This is not true, he points out. Not only will workers still have defined benefit schemes. They will also maintain the “final salary link” for benefits already accrued. “Any suggestion otherwise is completely untrue“.
But who is actually saying this? Anyone? Or has the PM created a paper tiger?
The scare stories are the fault of the unions, Cameron appears to suggest, without actually naming them: “they are giving really bad advice to teachers, nurses and the police officers who are wondering whether to continue with their pension.”
UPDATE: Apparently the PM is not blaming the unions per se, his aides claim. Instead this emanated from the fact that Cabinet Office has spoken to public sector staff, who say they are worried about losing such benefits. “We’re very keen to get the message across out there about what we’re really doing,” says one Downing St aide.
In fact the unions are angry about the following changes, which are not yet set in stone but are proposed by the government – as my colleague Brian Groom recently explained:
* Higher contributions to pensions that will have to be made, typically rising by 3.2 per centage points – a process which starts next spring
* Workers having to work for around five years longer for the same benefits
* The switch from RPI to CPI inflation for those receiving pensions, meaning they will rise less quickly
* The proposed switch from final salary schemes to career average schemes, as recommended by Lord Hutton
Cameron’s aides insist that he is being candid about the reason for the overall package of reforms. He points out that total payments to public service pensioners have already risen by a third, to £32bn, since 1999 – in real terms. Someone who retires at 60 today can expect to live for nearly 30 years, compared to around 20 back in the 1970s.
All this is of course true: but the argument is not improved by pretending that anyone (read: unions) is being alarmist and claiming that the changes will be even worse than they actually are.