This week the Government announced that it will make a number of concessions as regards public sector pensions. The main amendments are as follows.
The proposed pension contribution increases will continue to apply to those earning more than 15,000 a year. These will start in April 2012.
The offer was announced by Danny Alexander, Treasury Chief Secretary, who made it clear that it is conditional on reaching agreement. If no deal is reached in the talks scheduled to run until the end of the year, the coalition may simply impose a lower settlement.
With the exception of the unions, commentators have largely agreed that it’s a very reasonable compromise. Tom McPhail, Head of Pensions Research at Hargreaves Lansdown, said that it was a very generous deal, pointing out that the government has made concessions on all but one points.
Mr. McPhail said: “The government has proposed that members pay in an average of 3.2 per cent more. Unions are finding that the most unpalatable of the reforms but the government won’t give ground on this. Unions can’t expect to get much more out of the government. It’s a very fair and proportionate offer and will deliver good pensions for public sector workers and represents a very good deal for members. It’s unclear where unions stand but if they press ahead with strike action without taking time out to think about this offer, that would be irresponsible.”
Having achieved a more generous arrangement than most private sector people get. The unions have indicated – one might say somewhat ungraciously – that they propose to continue with plans for strikes. As their members could lose out in the medium-long term, it may well be best for Mr. Barber et al to quit while they’re ahead.
Some concerns about the proposed deal were flagged up by the Director-General of The Institute of Directors, Simon Walker, who disagreed with the Government’s view that the arrangement would last for 25 years. Mr. Walker said that the previous government had diluted public sector pension’s reforms because of the threat of strike action. The coalition runs the risks of making the same mistake.
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