Chief secretary to the Treasury Danny Alexander has set out details of the government’s offer on public sector pensions.
The offer includes:
- An 8% increase in accrual rate, from the 1/65ths offered in October to 1/60ths.
- Anyone within ten years of their pension age on 1 April 2012 will be protected, meaning they will see no change in when they can retire nor any decrease in the pension they receive at their normal pension age.
- Others very close to being ten years from retirement age may also see some additional protection, the details of which will be subject to further discussions.
The proposals are conditional on agreement being reached in scheme-by-scheme talks.
Sign up to our newsletters
Receive news and guidance on a range of HR issues direct to your inbox
The previously announced increase to pension contributions will start in April 2012, and will still apply to those earning more than £15,000 a year.
In July, the government agreed a process with the unions for taking forward Lord Hutton’s proposals for long-term reform through scheme-specific talks. To provide the parameters for talks with trades unions, the government set out initial cost ceilings at the beginning of October, which set out the combined employee and taxpayer contributions.
Danny Alexander, chief secretary to the Treasury, said: “From nurses to teachers, civil servants to road sweepers, public service workers provide a valuable service and deserve good pensions in retirement. But people are living longer, so public service pension reform is inevitable.
“We have listened to public service workers and come up with a deal that is fair and affordable. The lowest paid and people ten years off retirement will be protected – and pensions will still be among the very best available.”
Francis Maude, the minister for the Cabinet Office, added: “From the beginning we have been absolutely committed to engaging with the unions on making the necessary reforms to public service pensions. We have listened to the concerns of public service workers and responded.
“It is time now for the unions to respond in a responsible manner and remember that industrial action will cause unnecessary disruption to small businesses and working people up and down the country who themselves do not have access to such generous pensions schemes.”
Read more articles on public sector pension schemes