‘Big move’ on pensions unveiled

Danny Alexander said he hoped the offer would lead to ”agreement” and not to ”damaging” strike action

The government is urging unions to accept revised proposals it has made for public sector pensions, which it says are a “deal for a generation”.

No-one within 10 years of retirement will have to work longer or see their pension income decrease as a result.

David Cameron said the improved offer, in which accrual rates for pensions will also be higher than planned, was “very fair” to workers.

But unions said preparations for strike action this month “remained unchanged”.

Unions will continue to ballot their members on taking industrial action on 30 November.

Negotiations between ministers and union chiefs based on pension proposals from the Labour peer Lord Hutton, who chaired an independent review, have been deadlocked.

‘Best offer’

But following a 90-minute meeting on Wednesday, Treasury Minister Danny Alexander announced a set of “revised” proposals which he said could pave the way for a settlement lasting 25 years and which were “more than sufficient” to avert strike action later this month.

Under the proposals, about one million public sector workers who are due to retire in the 10 years from 1 April 2012 will now not work any longer and they will keep their existing final-salary schemes.

The government is proposing more generous accrual rates – the rate at which pensions build up in value – than planned and higher “cost ceilings”, the limit on contributions paid by the government.

Lib Dem Chief Secretary to the Treasury Mr Alexander, who has been leading the negotiations for the coalition government, said it was “the best offer” on the table.

“If reform along these lines is agreed, I believe that we will have a deal that can endure for at least 25 years and hopefully longer,” he said in a statement to MPs.

“So I hope that the trade unions will now grasp the opportunity that this new offer represents.”

Ministers argue that change is needed because people are living longer, and say the cost of public sector pensions to the taxpayer has already gone up by a third.

Unions say the changes will mean people working longer, paying more and getting less – and point to forecasts that the cost of pensions will drop as a share of GDP by 2060.

Brendan Barber: ”As things stand the plans for November 30th remain unchanged”

At Prime Minister’s Questions, Mr Cameron said the cost of public sector pensions needed to be reduced but they would remain “far, far better” than those in the private sector.

“This, I think, is a very fair offer to hard-working public servants to say this is a strong set of pension reforms which will give pensions that are still better than anything available in the private sector.”

TUC general secretary Brendan Barber said he “welcomed” the new proposals which he said would be the basis for detailed discussions on the shape of individual pension schemes.

But he said ministers had not shifted on the issue of higher contributions and the pension age.

“We are long way from a position where we have offers on the table which might prove acceptable,” he told reporters. “As things stand, the plans for 30 November remain unchanged.”

Brian Strutton, from the GMB, said the union would continue to ballot its workers while it considered the government’s new offer in detail.

“We don’t know how this will translate into actual proposals for the different pension schemes,” he said. “In addition, there has been no movement on the 50% contribution hike and we still don’t know what overall cost cap will be imposed.”

For Labour, shadow Treasury minister Rachel Reeves said it was “good news that the government has, at last, made a constructive move to begin proper discussions”.

She said the two sides had a duty to “exhaust every possible avenue” to avoid strike action.

More than a million members of public sector union Unison are being asked to vote on the 30 November strike – the result is due to be announced on Thursday.

A number of other public sector unions are also proposing strike action on 30 November, and some of them will continue to ballot until 16 November.

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