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Last Updated: Saturday, 22 May, 2004, 13:30 GMT 14:30 UK
Strikes loom over pensions
By Paul Lewis
BBC Radio 4's Money Box

Network Rail has closed its scheme to new employees

Britain could face strikes and industrial unrest if the government tries to reduce the pensions paid to public sector workers.

The President of the Trades Union Congress Roger Lyons gave the warning to BBC Radio 4's Money Box programme as two rail unions threatened industrial action over changes to their pension scheme.

Speaking to the programme on Saturday, he said: "In many areas of the public service, salaries and pensions are seen as one and the same. Pensions are seen as salaries continuing into retirement.

"There is a review taking place now in the NHS pension fund, and if there was any attempt to undermine the basis of that fund I am sure there would be a massive reaction in the NHS."

No guarantees

Those changes have already happened at many private companies, including Network Rail, which closed its existing pension scheme to new members of staff joining from 1 April, 2004.

Instead of a pension related to their salary - as much as two thirds of pay after 40 years of service - they will be offered a much cheaper pension plan with no guarantees.

The unions want that decision reversed.

It is as safe as putting all your money onto the next favourite in the Grand National
Gerry Doherty, TSSA union

The RMT union representing signal staff, has already got a majority for strike action, partly over pensions. And the moderate TSSA, representing rail managers, is calling for action for the first time since the General Strike in 1926.

Its General Secretary Gerry Doherty told Money Box:

"The biggest issue for us at this time is pensions. Our members are absolutely livid at the actions of Network Rail.

"At the moment the employer pays 12% of the employee's salary into the scheme. Under the new arrangements the employer will pay between 3 and 7%, so that is more than halving their contributions.

"The other issue is the nature of the scheme itself. It transfers all risk onto the individual. It is as safe as putting all your money onto the next favourite in the Grand National."

'Unsustainable' costs

The TSSA ballot will be in June and industrial action could follow in July.

But one leading actuary warned that the cost of public sector pensions was "unsustainable".

With people living longer, public sector pensions will cost more
Gordon Pollock, Association of Consulting Actuaries

Gordon Pollock, Chairman of the Association of Consulting Actuaries, told Money Box:

"Less than one in four private sector employers, who provide a pension, provide one linked to final salary. That means people who retire in the future will have less pension.

"And with people living longer, public sector pensions will cost more. So they will have to pay higher taxes, while their own pension is less."

He said he knew of people who had been told on the same day that their own private pension was being cut but their council tax was going up, partly to pay for local authority pension shortfalls.

But Mr Lyons insisted that public sector pensions must stay:

"They have been paid less than in the private sector but they have had this index-linked final salary pension scheme, which they have seen as a very important part of the employment package.

"Any attempt to undermine it would cause dismay and a big reaction from public servants."

BBC Radio 4's Money Box was broadcast on Saturday, 22 May, 2004, at 1204 BST.

The programme was repeated on Sunday, 23 May 2004, at 2102 BST.

Q&A: Rail strike threat
21 May 04  |  UK

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