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Pensions hike 'will lead to meltdown'

The planned increase in public sector pension contributions will send family budgets into "meltdown" and could cost taxpayers £2.5 billion a year in means-tested benefits, a union warned today.

Unison said working families were already being hit on an "unprecedented scale" by spending cuts, tax and benefit changes, VAT rises, pay freezes and inflation.

The pensions rise will leave workers with even less money to spend, forcing many to opt out of pension schemes, said Unison.

Research by the union showed a single parent paramedic on £27,600 will lose almost £2,400 by next year because of cuts to services and changes to tax and benefits, while increased pensions contributions will add almost £600 a year by 2014/15.

General secretary Dave Prentis said: "Families are facing an unprecedented squeeze, and sadly things are about to get worse."

Nurses, teaching assistants and social workers all face increased pension contributions on top of losses caused by cuts to services and changes to benefits and taxes, said Unison.

The union is balloting over a million of its members for strike action on November 30.

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