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Alexander warns public sector workers of making 'colossal mistake' over pensions

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Alexander warns public sector workers of making 'colossal mistake' over pensions

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Published by Jon Land for 24dash.com in Central Government and also in Education, Health, Local Government

Alexander warns public sector workers of making 'colossal mistake' over pensions Alexander warns public sector workers of making 'colossal mistake' over pensions

Public sector workers were warned today that it would be a "colossal mistake" to spurn the Government's pensions deal and sacrifice the best offer they will be made "for years to come".

Against the threat of a wave of industrial action, Chief Secretary to the Treasury Danny Alexander urged rank-and-file union members to help "shape" the current reforms now or face "uncompromising" change later.

Writing in The Daily Telegraph, the Liberal Democrat Cabinet minister insisted that reform was unavoidable and that, by working with the Government, "better change can happen" for those affected.

His intervention appeared designed to undermine union leaders ahead of a day of strikes by up to 750,000 teachers and civil servants on June 30.

Public sector workers are facing changes to their pensions which, for most, will mean paying more - on average 3.2% - and working longer.

But ministers insist that the changes are necessary given spending cuts, rising life expectancy and when most private sector workers do not enjoy such generous pensions.

Mr Alexander said low and middle earners in the public sector would still receive "broadly as generous" pensions after the changes as they do now.

Stressing that only one in five members of the Public and Commercial Services union had voted for strike action, he said union bosses would "sacrifice your pension for their political platform".

Strike votes by the National Union of Teachers and the Association of Teachers and Lecturers were also backed by only a minority of members.

The strikes are set to close schools and sixth form colleges, jobcentres, government offices and courts. They will also involve prison staff, police community support officers, immigration officials and staff at the DVLA.

Mr Alexander said: "It may be that those who oppose change think they can force the Government to change its mind. This is a colossal mistake. We will reform public service pensions. This is the time to shape that change, not to try to block it."

He urged the workforce against "denying the facts when reform is needed".

The Government wants to adopt former Labour Cabinet minister Lord Hutton's recommendation for final salary pensions to be replaced by those based on career-average earnings.

As a "defined benefit" scheme, the career average system will still be more generous than many private sector workers can hope to join.

Most private firms have shifted to defined contribution pension schemes in which staff shoulder the risk of fluctuating savings investments.

"Eventually, reality bites and when it does, the reform that follows is urgent and uncompromising. But where people seize the chance to shape it, a much better change can happen," he said.

"Lord Hutton, the former Labour Work and Pensions Secretary, has created the chance of a better change. And our offer is by far the best that is likely to be on the table for years to come."

Mr Alexander's article comes ahead of a speech to the IPPR think tank today when he will say it is "unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more".

He will also set out how the Government plans to protect the lowest earners from the changes. Staff on less than £15,000 a year pro rata - roughly 750,000 people - will not face any increase in contributions.

Another 500,000 workers earning between £15,000 and £18,000 will see their contributions rise by no more than 1.5%.

In a further overture to union members, the Government will phase in the contribution increase, with only 40% of the rise taking effect in April next year, 80% in April 2013 and in full from 2014.

None of the changes affect pensions earned up to the present, including final salary benefits.

In his speech, Mr Alexander will say: "There is an indisputable case for reforming public sector pensions to ensure that they are affordable and sustainable but still amongst the very best available.

"That case is simple. People are living much longer - the average 60 year old is living 10 years longer now than they did in the 70s. This advance comes at a price.

"It is unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more themselves.

"The changes to contributions from April next year are vital to putting pensions on a fair and affordable footing."

Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), which represents four million public sector pension holders, said: "These proposals spare the low paid and the phased rises make sense. There was a real risk that the poorest would be priced out of their pension.

"But even with these changes there is still a real threat that too many average earners will quit their pension, especially at a time of flat wages and tight household budgets.

"Lord Hutton has dispelled the myth that public sector pensions are gold-plated. All workers, whether public or private sector, should have the opportunity of retiring with a good pension.

"Moving to career average and increasing retirement ages will help put public sector pensions on a sustainable footing, while protecting the low paid."

Mr Alexander is expected to use today's speech to confirm that the Government wants public sector workers to wait until 66 to reach pensionable age, rather than retiring at 60 as many now do, bringing them in line with workers in the private sector. There are expected to be exemptions for some occupations, like firefighters and the military.

GMB union national secretary for public services Brian Strutton said Mr Alexander's intervention could be a "show-stopper" for negotiations.

Mr Strutton told the BBC Radio 4 Today programme: "What he seems to be saying is the Government has already made its mind up on some of the matters we are negotiating on.

"If that's right, if that's the Government's position - that they have decided what they want the answer to be - then it is going to make it impossible for us to stay in these negotiations.

"I have committed my union to see these negotiations through. Well, we can't do that if the Government isn't going to negotiate.

"We expected Government to have a view about these things, but in the middle of negotiations, you don't expect them to come out and say 'We've made our minds up'."

The Government's position on contribution increases was "plain barking mad" and was contradicted by "overwhelming" evidence from unions and employers, said Mr Strutton.

He added: "I was convinced that the Government was reconsidering its position on that and thinking it through carefully.

"I'm worried now that they are not. If Danny Alexander is going to say 'Actually, we've made our minds up', then that is a show-stopper."

On BBC Breakfast, Mr Alexander said public sector workers will need to work to the state pension age, which is due to rise to 66 by 2020.

He said: "The plain fact is that people are living much longer now than they were even 20-odd years ago and that's a fantastic thing for society.

"But we have to ensure that it is affordable in the context of our pensions, and we're asking people through the state pension age to work longer; in the private sector people are working longer and the same is going to need to happen in the public sector too.

"That means that people have to work to the state pension age, that's what we're proposing, that we will increase people's pension contributions over the next three years."

He said the debate over public sector pensions was "bedevilled by extremes" but there was a "measure of agreement in certain areas" in talks between union leaders and the Government.

He added: "Living longer is something that everyone, including people who work at the BBC, including people who work in the private sector, are going to have to accommodate.

"I know that is perhaps unpalatable but it is a fact of life for the entire population and the public sector cannot be excluded from that."

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