No deal after pensions row talks

Unions have threatened to ballot for strike action

Talks to break the deadlock in the long-running dispute over the pensions of two million local authority workers have broken up without agreement.

Employers want to end the current scheme - which allows some workers to retire at 60 - because it will breach new age discrimination legislation.

But unions have threatened to strike if the pension age is raised to 65.

Deputy Prime Minister John Prescott met employers and union representatives on Monday - but no deal was reached.

'Very helpful'

Mr Prescott's department described the talks as "very helpful and constructive".

"We hope the employers and unions will come together quickly to reach an agreement," a spokesman added.

GMB national officer Brian Strutton said both sides had been trying to find a way forward.

"We were unable to do that today but we will carry on trying to do that over the next week," he said.

Meanwhile, officials from the Local Government Association said both sides were "slowly moving forward" and employers were determined to see the pension arrangements reformed.

"Unique scheme"

BBC labour affairs correspondent Stephen Cape earlier said the "rule of 85" - which allows favourable early retirement - makes the local government pension scheme "unique".

The scheme has a theoretical retirement age of 65.

But the rule means that members can choose to retire at 60, with no penalty for doing so, if their age plus years of membership in the scheme adds up to 85.

Thus a council worker who is 60, with 25 years of pension contributions, can retire without their accumulated pension being reduced.

Pension scheme rules normally penalise staff who retire early because they are paying in for fewer years than planned and, all other things being equal, receiving a pension for more.

Solution offered

Mr Cape said employers and ministers feel new age discrimination laws will mean the "rule of 85" has to be scrapped.

Unions, however, are demanding workers in their 50s be protected if the pension age is standardised.

Mr Cape said a possible solution will be offered during today's talks.

This would see older workers qualify for a cash lump sum and lower pension if they wanted to stop working early.

He said sources insist there would be no impact on council tax.