Unions angry at pension reform plan
Battle lines are being drawn between the Government and millions of public sector workers after an official report paved the way for sweeping pensions changes to tackle a massive black hole in the system.
Former Labour Cabinet minister Lord Hutton said long-term structural reform was needed, including an end to the current final salary schemes, increases in employee contributions and later retirements.
Unions reacted with anger, saying the recommendations meant that millions of employees would have to "work longer, pay more and get less". Workers were already facing a pay freeze and job cuts so the latest "assault" on their conditions would be challenged "robustly", said officials.
TUC general secretary Brendan Barber said: "Public sector workers are already facing job cuts, a pay freeze and increased workloads as they are expected to do more with less. At a time when inflation is breaking targets and pay is already frozen, asking people to pay immediate increased contributions adds up to a significant pay cut."
Meanwhile, Labour leader Ed Miliband warned the trade unions that he would not support a wave of public sector strikes over changes to pensions. Mr Miliband said that industrial action would alienate the wider public and undermine their efforts to fight other spending cuts.
His comments angered many union officials, who pointed out that they were not threatening strikes over pensions.
Lord Hutton will publish his final report next Spring, ahead of the 2011 Budget, although unions are braced for more "bad news" during the comprehensive spending review later this month.
He made it clear he favoured increased contributions by public sector workers to make schemes more affordable and said it was "unfair" that employees could retire at 60 now whereas their children would have to work until they were 65.
"I feel very uncomfortable at retiring at 60 while my children will have to retire at 65. I don't think that's fair," he said. "There is a general principle - it is unsustainable to remain wedded to this idea that you can still retire at 60. We are all living much longer in retirement. We expect to live to 88 or longer."
Lord Hutton, a former Work and Pensions Secretary in the last Labour government, said public sector workers would be spending 40% of their life in retirement. "My real focus has been on long-term reforms. We have under-estimated the cost of providing the current range of public sector pensions for years."