Civil service pensions shake-up

Civil servants are already angry over job cuts

Controversial plans to end civil servants' final salary pension schemes and up their retirement age from 60 to 65 have been published by ministers.

Cabinet Office Minister Ruth Kelly said the measures were about making the pensions system fairer, particularly for the lower paid, not saving cash.

Public service unions say some people could see their pensions halved and are already warning of strikes.

The changes could push senior officers out of the public sector, they suggest.

Under the new plans pension payments would be based an average pay throughout the workers' career rather than the final salary prior to retirement.

What we want is for ministers to listen to the argument around pensions. We will engage in dialogue Jonathan Baume First Division Association

Ms Kelly said the proposals "intended to modernise the civil service pension arrangements" while "reaffirming our commitment to the principle of a good quality defined benefit pension scheme".

She added that switching away from the final salary scheme "would not save the Exchequer one single penny."

It would also "put public sector pensions on a much more sustainable footing for the longer term".

Senior Whitehall staff tended to "scoop the pensions pot" leaving less for lower earners, said Ms Kelly. The reforms would redistribute cash.

But she acknowledged that raising the retirement age to 65, in line with government policy, would save some money.

'Tough negotiations'

The vast majority of civil servants wanted to work beyond 60, she added.

The Cabinet Office said on average retirement happened at 62 and predicted more people would want to work part-time or move to less challenging jobs before retiring.

But Jonathan Baume who leads top civil servants union First Division Association (FDA) said those losing the most would be the "most able, experienced, high-performing managers" responsible for driving through the government's reforms.

"They are also those most likely to be poached by the private sector who will always find ways to reward their best talent."

"What we want is for ministers to listen to the argument around pensions. We will engage in dialogue, we expect some very tough negotiations ahead on pensions, we hope they will listen and rethink these proposals."

'Uncertainty'

There was no case for downgrading public service schemes just because many schemes in the private sector had collapsed, he said.

"Equality of misery" was not a principal the government should sign up to, he added.

The Public and Commercial Services Union (PCS) argued people would have to work longer to get their pension entitlement and warned of "tough negotiations" and possible industrial action ahead.

General secretary Mark Serwotka said the changes would "only create uncertainty and deny people choices about their future".

"Our immediate fear is that hundreds of thousands of people could lose out."

If implemented, the proposed changes would apply to new civil servants joining from 6 April 2006 and to current employees from 1 April 2013 - they will not lose pension rights earned prior to that date.

Job cuts

Union bosses have said the proposals have "significant implications" for the whole of the public sector which employs more than five million workers.

A meeting is to be held next week at the TUC to plan a co-ordinated response by unions which could include industrial action in the New Year.

Mr Serwotka said: "If good pensions schemes are ok for ministers, MPs and judges, then they must be ok for our members and public sector workers."

Civil service union Prospect said some of the proposals could create a fairer scheme but general secretary Paul Noon warned that depriving workers of their contractual right to a pension at 60 would merit "outright opposition".

There is already widespread anger over the chancellor's plans to get rid of more than 100,000 civil servants.