The government has published its new document on public sector pensions – which Danny Alexander has hailed as the big compromise offer to the unions.
There are two elements which seem to be striking changes:
1] The accrual rate will not be 1/65 but 1/60. This is a significant change but not one that necessarily all workers will appreciate.
2] For all public sector workers who have 10 years (or less) until pension age the government has pledged no decrease in pension.
But the central elements remain the same.
a] Pensions will still shift from final salary to career average
b] Contributions will still go up by up to 3.2 percentage points. (This is the equivalent to a 3 per cent increase in income tax.)
c] The retirement age will increase substantially in line with the national pension age.
d] Pensioners will see their annual rise in income go up by CPI rather than RPI
John Cridland of the CBI has claimed the proposals offer “additional protection” to workers while still allowing necessary reforms.
“It is not in the interests of public sector workers to plough on with industrial action, which would cause significant disruption to everyone,” he said.
John Ralfe, the pensions expert, called it a “bad day for taxpayers”. “Not doing anything for 10 years is a spectacular climbdown by the government,” he told me.
But don’t expect many or any unions to capitulate and immediately accept this in full.
As anticipated, the union response has been nuanced but not entirely negative. The GMB said the offer “may be too little too late to avert strikes”: “Our industrial ballot continues as does negotiations.”
The TUC’s “public services liaison group” has put out a statement acknowledging the improvements in the offer – but saying preparations will continue for a day of action on November 30.
They also said the government “indicated” a commitment not to reopen the reforms for 25 years (though how any administration can make that kind of promise is a mystery to me.)
“The PSLG welcomed this movement in the government’s position which has come as a direct result of the strength of feeling and determination shown by public sector workers and the groundswell of support for the TUC’s day of action at the end of this month. These proposals, and their detailed implications for the pensions offer within each scheme, will now need to be considered in detail within the sector specific negotiations, alongside all the other issues including proposed contribution increases, increases in the pension age, and the impact of the indexation change from RPI to CPI on which the government’s position remains unchanged.”