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Last Updated: Sunday, 27 November 2005, 21:04 GMT
Unions warn over pensions plan
Pensioner in post office
The retirement age could be raised to 67
Unions say the government faces a clash if it tries to change the public sector "retire at 60" pensions scheme.

The head of the Public and Commercial Services Union, Mark Serwotka, rejected suggestions from the government the pay deal may have to be negotiated.

Lord Turner's report into pensions, due on Wednesday, is expected to suggest raising the state pension age to 67.

Opposition MPs and business leaders have called for civil service pensions to follow suit.

'Agreements must be honoured'

They have said the public sector deal, negotiated by Trade Secretary Alan Johnson in October, could leave the UK with a two-tier workforce.

Mr Sewotka said: "It was the result of a long and hard negotiation. We did make it clear industrial action would be inevitable if you tear up the contracts of three million public sector workers.

Unions accept their side of the bargain and we expect employers, including the Government, to do the same
TUC general secretary Brendan Barber

"It was a very good deal for public services and it was a deal, I stress, not just reached with Alan Johnson that, but with the whole of the Cabinet, it was endorsed by the Cabinet, and that's why these stories, allegedly coming from the Treasury, really are unacceptable."

The Treasury has denied allegations in the Sunday Times that it is preparing to backtrack on a deal to allow public employees to retire at 60.

TUC general secretary Brendan Barber said: "Industrial relations depend crucially on trusts.

"Agreements must be honoured. Unions accept their side of the bargain and we expect employers, including the government, to do the same."

A spokesman for Unison, the country's largest trade union, said: "We reached an agreement through the public services forum and we expect that agreement to be honoured."

Chancellor responsible

Shadow chancellor George Osborne said the civil service deal was "completely unacceptable" and should be dropped.

"It is completely unacceptable to have an arrangement whereby for example someone who is 20 who may have joined the civil service this year, is going to be able to retire in 40 years' time at 60 when the rest of the country may be being asked to retire at 67."

CBI director general Sir Digby Jones said he feared trade unions would campaign for bosses to be forced to increase employer contributions to pension funds.

That would become a "tax on jobs" he said, that would damage smaller firms.

Ahead of the release of Lord Turner's findings, Gordon Brown has reportedly queried plans to link pensions to earnings and raise the state pension age.

Secretary for Work and Pensions John Hutton
Mr Hutton wants a 'grown-up debate' on pensions

It is believed he opposes the reports predicted suggestion that the state pension age be raised to 67, to pay for restoration of a link between pensions and earnings.

Work and pension secretary John Hutton stressed the chancellor was responsible for public finances and would play an instrumental role in the debate.

But he added: "These are decisions for the government as a whole to take and that is quite clear.

"There will be a debate within government over the next few months about how we can structure these proposals."

The Pensions Commission, headed by former Confederation of British Industry boss Lord Adair Turner, is intended to provide a long-term solution to Britain's looming pensions crisis.


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