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Pension reforms 'may not be enough'

The Government's controversial reforms to public sector pensions may not be enough to bring costs under control, former work and pensions secretary Lord Hutton has warned.

The Labour peer, who conducted a review of the system for the coalition, said his findings looked "too optimistic" after UK growth forecasts were drastically downgraded.

He described the Government's proposals for increasing contribution rates and pushing back retirement ages as "credible", and urged ministers and unions to thrash out details quickly.

Hundreds of thousands of public sector workers - including teachers, nurses and civil servants - staged a strike last Wednesday in protest at the changes.

But in an interview with BBC Radio 4's World This Weekend, Lord Hutton insisted the problems were even greater following dire economic predictions by the Office for Budget Responsibility (OBR).

"What we've seen is how very quickly the assumptions which underpinned my assessments of the long-term sustainability of public service pensions have been shown to be too optimistic," the peer said.

"Growth is slower, we know that by 2016 on the latest projections the economy is going to be about 3.5% smaller than we thought it would be. That is going to affect the sustainability of public sector pensions in a negative way."

He added: "The ground underneath those estimates has changed radically and I'm afraid in the wrong direction so we cannot be sure that the costs will fall over time and that we get to a more sustainable balance."

GMB national officer Brian Strutton said: "Lord Hutton's view that the OBR downgrade of short term growth makes a stronger case for reform of public sector pensions is simply not correct. He has failed to take into account the continuing pay caps and 710,000 job losses in the public sector announced by the Chancellor which more than offset the GDP slowdown.

"Therefore over the long term, public sector pension costs will still fall as a proportion of GDP which is the accepted affordability measure."


From Belfast Telegraph