Downing St to plough ahead with teacher, civil servant pension reforms
The Government today confirmed it was pressing ahead with raising pension contributions next year for teachers and civil servants even though there is no agreement with unions.
Up to two million public sector workers went on strike last month in protest at the controversial pension changes, and intensive talks have since been held to try to break the deadlocked row.
The Education Department and the Cabinet Office today announced that changes from next year would go ahead, although further talks will be held about future arrangements.
Unions attacked the announcement, saying increased contributions were being imposed without agreement.
Most teachers will contribute more under the changes, which ministers said were part of the Government's long-term reforms to control the increased costs of people living longer and to "re-balance" the contributions paid by scheme members and taxpayers.
The changes, which will save £314 million from the teachers pension scheme next year (2012-13), are part of the wider £2.8 billion savings from public sector pensions by 2014-15 which the Chancellor announced in last year's Spending Review, which will see public sector workers pay an average contribution rise of 3.2%
Schools Minister Nick Gibb said: "Our changes for next year are about keeping pensions affordable for future generations of teachers - while protecting new and low income staff from the biggest contribution increases over the next few years.
"Looking at longer-term pension reforms, we've been clear that teachers will still have one of the very best pensions available - with index-linked defined benefits, significant employer contributions, protection for those closest to retirement and all accrued final salary rights protected.
"Reforms to public sector pensions are necessary. The overall cost of public sector pensions has risen by a third to £32 billion in the last decade. The cost to the taxpayer of teacher pensions is already forecast to double from £5 billion in 2006 to £10 billion in 2016 and will carry on rising rapidly as life expectancy continues to improve.
"We've listened carefully to teachers and heads. We've put forward an improved offer on the table and our discussions are continuing."
Cabinet Office Minister Francis Maude said: "The Government is committed to ensuring that civil servants have access to pensions that are amongst the best available. We announced at the 2010 Spending Review that as well as reforming civil service pensions for the long term, the Government would increase member contributions to pension schemes from April 2012.
"We have listened carefully to the concerns raised, but feel the proposal we set out in July is still the fairest approach for civil servants and does most to protect the lowest paid.
"Those earning less than £15,000 a year - that's 3.6% of the civil service workforce - will not have to pay any extra at all. Another 39.5% of workers earning up to £21,000 will have their increase limited to 0.6%."
The additional contributions are to take effect from next April, while proposals for 2013-14 and 2014-15 will be the subject of a separate consultation next year, said the Cabinet Office.
The Prospect union condemned the Government's announcement, which it said followed a "sham" consultation exercise that closed in October.
Deputy general secretary Dai Hudd said: "Today is the day the reality of the Government's policies bites. We now know what the impact on our members in 2012 will be. What offends them most is that none of these increased contributions will go into the pension schemes or contribute to reducing schemes' liabilities. This is a blatant tax on civil servants.
"Don't forget too that this is just the first tranche - members will face increases in 2013 and 2014 as well, all of it also going straight into the Treasury's coffers."
Rehana Azam, national officer of the GMB, said: "While talks are continuing on scheme reform, the Cabinet Office announcement of increases to member contributions from April is deeply unhelpful to the ongoing discussions which are still under way.
"The Government claims that the increases are fair but not a penny will help secure members' benefits and the impact of tax relief means that some lower paid members will actually be hit harder than those on higher incomes. GMB will be working in the scheme discussions to ensure that members are not priced out of pension saving."
The Education Department said that under the changes, new and lower-paid teachers will be protected from the biggest contribution rises, with higher earners contributing more.
The department said that a classroom teacher earning £25,700 will pay around an additional £10 per month after tax relief next year.
A further 117,000 teachers earning between £26,000 and £31,999 will contribute 0.9% more of their salary into the pension scheme, meaning a classroom teacher earning £29,240 will pay around an additional £18 per month after tax relief, said the department.
Around 505,000 teachers earning under £39,999 will pay up to 1.2% more, while the highest earners, those earning more than £112,000, will pay an additional 2.4%.
The department stressed that the proposed contribution increases for 2012/13 were approximately the same amount that were set out in the 2009 Pre-Budget Report, which it said were agreed with unions.