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The coalition gears up for a fight on public sector pensions

Danny Alexander defends plans to make workers work longer and pay more.

Unbowed by the threat of mass strike action, the government is continuing its drive to reform public sector pensions. Danny Alexander has been on the airwaves this morning defending plans to raise the retirement age from 60 to 66 in 2020 and to increase workers' contributions by an average of 3.2 per cent. In an article for the Telegraph, the Chief Secretary to the Treasury writes: "It is unjustifiable that the taxpayer should work longer and pay more tax so that public sector workers can retire earlier and get more than them."

However, in an attempt to sweeten the pill, Alexander has announced that those earning less than £15,000 a year will not face any contribution increases while those earning under £18,000 will have the increase capped at 1.5 per cent. In addition, the increase will be phased in over three years from next April, taking into account the two-year public sector pay freeze.

But the risk remains that many average earners, already facing the steepest fall in living standards since the 1920s, will quit their pensions rather than pay more. As Unison general secretary Dave Prentis remarked: "[T]hose on above £18,000 a year who will see their contributions increase by much more than 50 per cent. These days £18,000 is not a huge amount and this will affect lots of public sector workers, including nurses and social workers." Yet given that the cost to the taxpayer is due to rise from £4bn a year at present to £9bn a year by 2015, ministers believe that they are on the right side of the argument.

In the meantime, the debate over whether the government should tighten existing anti-strike laws continues. Unlike Boris Johnson, who has called for the introduction of a 50 per cent threshold for strikes, ministers currently believe that there is no need to change the law, although in his Telegraph article Alexander pointedly notes that: "Only one in five members of the Public and Commercial Services (PCS) union voted on Wednesday for strike action - the vast majority realise that such a step is unjustifiable."

But it's another Lib Dem, employment minister Ed Davey, who has offered the clearest argument yet against new anti-union legislation. In a speech at the National Liberal Club he warned that changing the law would be "antagonistic and inflammatory", adding that it would "play into the hands of the militants" and undermine moderate union leaders.

All the same, Davey went on to remark that "it's also not as Boris Johnson would have you believe, that the Lib Dems are lily-livered. If there's a case for taking action, we'll take action." Everyone, it seems, wants to keep all options on the table.

38 comments

Union Steve's picture

Is it me or are do they all including Dany boy Look and sound like they have always been true blue Tories? strange?

Drummie's picture

There are so many flaws put forward in the arguments by the coaltion that it is frustrating that none of the labour party pick up on.
For example;
1) The Union only had 40% voted; no mandate etc.
answer; If a Condem got elected on a turnout of less than 50% in a by election would he/she take his/her seat at Westminster.
2) The Private Sector has accepted the Pension reforms (realism ?). This is not true. When the Private Pensions went into a tail spin after Robert Maxwell it was widely accepted as a crime/fraud. The people who had pensions having in many cases paid in to the schemes were left without. They did not accept this situation; they were hoping some people would go to jail for fraud which did not happen. Now the argument seems to be protrayed that the people in the private sector 'accepted' the situation.Therefore (they say)the Public sector should follow suit.
A cynical attempt by the Government to divide the country into pro and anti trade union.

VacillatingDichotomy's picture

I see he's trying to pit taxpayers against public sector workers:

"They're taking YOUR money for THEIR pensions! Wouldn't you be happier if we took it and spunked it on pointless wars and bird baths?"

And the tabloid-reading sheeple just follow the government blindly...

As a public-sector worker i say - bring on the strikes!

capt-price's picture

Why do weasels like Alexander and Osbourne speak as though the "Tax Payer" are some kind of seperate entity? Everyone with a job or savings or a pension is a tax payer, therefore public sector workers are tax payers are they not?

capt-price's picture

BTW how did we get from the global banking crisis caused this shortage of cash to it's all the fault of the public sector and for that they must pay dearly- the "Tax Payer" demands it!! can any of you sage like prophets tell me that?

capt-price's picture

Danny Alexander is a pair of aching balls of a man!!

capt-price's picture

That goes for you as well Eels. You've been hanging around these boards for a while.... Hanging there like a cold fart in a hot room!!

gerry's picture

Danny Alexander and the Lib Dems are 100% Thatcherites pure and simple: on every policy front their response is: more marketisation, more privatisation, make public sector workers pay more, and on and on...

Clegg always said that the Lib Dems were never a left or centre-left party, and all those people (especially public sector workers) who voted for them believing they were "progressive" - you've been had! Truly!

Eddy S's picture

@VacillatingDichotomy. the private sector do not have guaranteed pensions whether they are career average or not yet they have to pay for the public sector workers to have them.

ang's picture

@capt-price.
The reason Alexander and co use the old 'Taxpayer card', is to turn ordinay people against each other, therefore distracting us fools from the fact that the bankers have got off scott free.
It's a poloitical trick that is working, as public sector workers are being branded as robbing the taxpayer to pay for their gold-plated pensions, which is simply untrue.
How about Lord Hutton has a look at MPs pensions, now that would be interesting, but it will never happen.

matthew fox's picture

Hands up those who want to be rescued by a 66 year old fireman?

At least we won't have a problem with an ageing population, Cameron and Clegg will have killed off the elderly public sector workers.

Mrs.Josephine Hyde-Hartley's picture

Of course things would turn out a lot more fair if the coalition took this opportunity to remind everyone there's nothing wrong with taking NHS retirement early because of ill-health - even though ill-health retirement pensions may have been targeted at some level of local authority ( I remember being shocked and concerned to see this very target actually depicted in an official chart contained in a council publication in my local library some years ago) There's too much bad information and unsolicited opinions sloshing about when it comes to ill-health retirement pensions applications. I understand these applications can be made via one's G.P. actually.( O but would that the G.P and occ. health man get their act together and communicate more effectively on behalf of an otherwise hapless citizen ) Even the citizen without a union/lawyer or other association could and should find ill-health retirement at any age the fairest and most appropriate way to sort out decent and efficient management of one's own work/life balance, when occasionally necessary.

Think of all the money that would be saved in terms of unnecessary and clearly unaccountable meetings/ incapacity benefits other frustrations associated with poor management.

geoff's picture

Stuart Eels wrote...

Whats wrong with it, there is no money to throw, do you want to end up like Greece?

UK Has Spent More Bailing Out Other Countries Than It Has Saved Through Austerity

Read more: http://www.businessinsider.com/uk-bailout-participation-2011-5#ixzz1QBje...

(your a fool)

geoff's picture

Where is spitting image when you need it, this hideous ginger must be caricatured!

capt-price's picture

@ang:

Yes and appoint a team consisting of a Nurse, a Teacher, a Policeman, a Bin-man, a Social Worker, a Fireman and every other public sector worker who faces the wrath of the Daily Mail and blue rinse brigade to do it.

martybee's picture

as I understand it these pensions are secondary ie not State Pension and were part of the contract of employment.Does anyone in the private sector with a secondary pension have the option to take his pension before state retirement age??.
The fact that a public employee can take his pension before state retirement age does not mean he has earned enough pension to retire from working.
Because the pensions formed part of the contract of employment any modification should only apply to new entrants.
PS..does anyone have any info on the MP/ Government ministers pension scheme??...now that would provide an interesting comparison

Lou's picture

Yes funny how those decrying their taxes paying for public pensions (incidentally public sector employees pay tax too)don't mind the very much more generous payments their taxes pay for to ex MPs, ex PMs and the like.

ang's picture

When Danny Alexander was quizzed on sky news about the cost of the Libyan war, he gleefully replied 'We can well afford it'.
Then why can't we afford to Educate our young people, continue to build new schools, look after our old and vulnerable people, by investing in the NHS and social care, build affordable housing, not raise VAT, not put hundreds of thousands of people out of work, not issue pay freezes to those who work and pay their taxes, in the public sector, not close down libraries and sure start centres...............
Surely we can 'well afford' this really important stuff Danny. Git.

Eddy S's picture

the best way to end this private sector pension discrimination would be to work out what the total cost of the public sector pensions are -

then scrapped all public sector pensions and share this equally to every man or woman in the country of pension age.

that would surely end the private sector pension discrimination.

Hugh Markey's picture

Just because Danny A doesn't wear clown make-up, let's not forget that this laff-a-minute performer ran a 'fun fair'!
And what about 'state funded occupational pensions'. Disgraceful - although they pay tax and pay for their own accommodation and living expenses - there is a certain smugness about these government types.
Now take 'unearned income'! You pays the same rate as a working stiff and may even have benefited from tax relief {taxpayers funds ] if you rent property, sell property, invest in a pension or shares/bonds.
So somebody who has never worked can benefit from taxpayers' largess can sit back and chuckle at the plight of fat-cat state workers.

One Law for the rich ..

Lox's picture

I do, Lou. I mind very much.

And of course public sector employees pay taxes-that's a complete red herring. It doesn't detract from the demographics, does it?

JamesB1's picture

Ah it's bad news... and here comes Danny Alexander!

I almost feel sorry for him now.

puzzlebobble's picture

Alexander:"Only one in five members of the Public and Commercial Services (PCS) union voted on Wednesday for strike action - the vast majority realise that such a step is unjustifiable."

how stupid. That he has to resort to such stupidity says rather a lot about the strength of his arguments. Or maybe he is delusional and really believes he has psychic powers that enable him to read the minds of those who didn't vote.

LF's picture

I wonder when it was decided that public sector workers were no longer taxpayers.

puzzlebobble's picture

and when it was decided that income tax was the only sort of tax paid.

sad to see the LDs adopting daily-mail-speak. I can't believe I ever gave them my vote.

Stuart Eels's picture

Ang

I will write this very slowly and then you might understand. The current Government run the last lot a close second for telling fairytales.

In case you haven't noticed we are in the grip of a very deep depression caused 50/50 by the Banks and the previous Government spending money they didn't have against Treasury advice on the very things you now want to throw money that we haven't got at, grow up.

Lou

In most cases they don't if they can help it, so I agree with Kox I mind very much!

Stu's picture

whats wrong with working till you're 66? I have to work till then just like everyone else in the private sector has to and for public sector workers it's not going to come into force until 2020 if I read that right?

Lou's picture

I can't help wondering if the Govt's move on pensions and their announcements despite ongoing negotiations is about laying a trap of kinds. If there are mass continuous strikes then the Govt will legislate, as Vince warned, and the working man or woman will have no protest route at all.

I would like to know if the new pension plans apply to Westminster, afterall why should the taxpayer be expected to pay for the very generous paymetns the Hof C and H of L people get?

Lox - I don't mind at all. I just think the people who treat us in hospitals, teach our kids, protect our children, care for our elderly and all those other public sector jobs that are of such importance and value to society are worth a few of my pennies and I don't see the point in punishing the public sector because the private sector fails it's employees miserably.

I agree pensions need reforming, we are in an ageing population and pensions are being collected for longer - and most union staff and members recognise this too - but to make policy announcements whilst negotiations are ongoing is not the way to get a fair settlement and agreement that suits all.

As for the demographics, well the demographics in relation to taxpayers contributions regarding parliamentary staff (past and present) pensions and resettlements no matter what their length of service, is of much more concern. We fund the 11.9 or 7.9 or 5.9 percent that MPs contribute from their salaries and 3 or 12.5 percent for the Lords, which is also matched by the H of L to a max of 3%.

matthew fox's picture

David Cameron isn't stupid, his pension is based on his old salary. The weasel took a pay cut but made sure his pension pot was based on Gordon Brown's salary.

I find it strange Lox wants a multi-millionaire to have access to a pension paid by taxpayers.

ang's picture

@Stuart Eels.
I'm so glad you wrote very slowly, as I might have missed the fact that you wrote a grammatically incorrect pile of poo.
I don't know why I'm bothering, but what exactly is wrong with throwing money at public services?
Isn't this what a civilized country does for it's citizens.

JohnRuddy's picture

@Grumpy Bob
They mean increasing contributions by 3.2%. After the reforms of 2007, the vast majority of public sector workers contribute at least 6% of their pay to their pension. I know some parts of the public sector contribute even more.

That figure will rise to 9.5%, we will have to work longer, and we will get less (the average pension is £4,000 a year).

The result will be fewer people will join the pension scheme, making it less viable, and possibly leading to its complete closure (as has happened in the private sector), and those pensioners will have to rely on extra state support (eg pension credits) to survive - but we dont worry about that bill, its a different budget!

The change in pensions is just about saving enough money so the Government can throw some of it back at the electorate in 2015 to get re-elected, and screw the public sector workers who wernt going to vote for them in any case.

Stuart Eels's picture

It should be brought in now, not 2020 and if they want to go strike let them, then we will know just what support they have.

jock's picture

i think the goverment need to stop trying to rip off the public sector and local goverment pensions some of us have been in this scheme since the early 80 s they the goverment are nothing but con artists and think everyone is fools well not by a long chalk time to down this useless goverment all out soon i know changes need to be made but not that quick ed balls did speak a lot of sence on andrew marr show on sunday and would make a good pm

Stuart Eels's picture

ang

Whats wrong with it, there is no money to throw, do you want to end up like Greece?

Eddy S's picture

does anyone know whether there is a cap on public sector pensions currently? for example if you have public servant on over 100k and is on a final salary scheme - is there a cap? and if so what is the cap?

bobby's picture

the ConDems seem to forget that public sector workers are also taxpayers. it is also true that many public sector workers have chosen to work for local authorities etc because they are passionate about delivering local services to local people. the same principle that underpins the big society. the majority of public sector workers are paid at or below the average income and the lower paid tend to be female. whilst we all appreciate that things have to change, it would be better for the ConDems to not to present this as an attack on a group of workers who actually make a major contribution to the way the nation is run.

Grumpy Bob's picture

Do you mean "increase workers' contributions by an average of 3.2 per cent" or "increase workers' contributions by an average of 3.2 percentage points"? I think there is confusion here. A 3.2% increase is not huge, but a 3.2 percentage point increase is a large jump.

Suzanne's picture

Good luck Danny holding on to your seat
at the next election. Maybe he's forgotten that he has a Scottish constituency. Not a good idea to be showing such relish implementing Tory policies when your relying on Scots to re-elect you.
They just keep finding new ways to irritate you. Michael Moore saying that 'nation's credit card' guff last night and now Alexander so eager to please his Tory masters. I don't believe all Lib Dems are like these people but the rank and file LD
membership need to ask themselves who is actually running their party.
Are they progressives or has the hung parliament been a convenient opportunity for the right wing element to seize control? At the moment the Lib Dem leadership sound very much like they are very comfortable firmly on the right.

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