Dismay at Hutton report on pensions

The government should increase employee pension
contributions immediately, raise the retirement
age of public sector workers and end their
final salary schemes over the longer term. These
are some of the recommendations of Lord Hutton
in his interim report on public sector pensions.
But Hutton insisted claims from employers and
right wing pressure groups of “gold-plated” pensions
were wide of the mark. The average public
sector pension is £7,800 a year, his report said.
Unions were unhappy with the former Labour
cabinet minister’s recommendations. TUC general
secretary Brendan Barber said: “Public servants
will be angered by the review’s call for them to pay
more for less generous pensions.
“Public sector workers are already facing job cuts,
a pay freeze and increased workloads as they are
expected to do more with less. They have already
had the value of their pensions cut by the switch
to CPI indexing, which will slice a little off their
pension every year.”
“But the precise details of what will happen are
as yet far from clear, and on important issues John
Hutton has firmly pushed the ball back into the
government’s court. These should be negotiated
with unions rather than imposed from above.”
In the final report, expected to be delivered in time
for the 2011 Budget, Hutton will consider a range of
alternatives to current final salary pension arrangements,
including a career-average scheme.
Hutton’s report also acknowledges that the overall
cost of "unfunded" public sector pensions, including
the civil service scheme, is expected to fall from
1.9% of GDP in 2010-11 to 1.4% of GDP by 2060.
According to the PCS civil service union, the affordability
of public sector pensions is illustrated
by the fact that the cost of tax relief on pension
contributions each year is much greater than the
net cost of public sector pensions. One quarter of
that tax relief — almost £10 billion a year — goes to
the 1% of the population who are paid more than
£150,000 a year.

www.hm-treasury.gov.uk/d/hutton_pensionsinterim_071010.pdf
www.tuc.org.uk/economy/tuc-18609-f0.cfm
www.pcs.org.uk/en/news_and_events/news_centre/index.cfm/id/5555B2EB-7139-
4784-A504437D73235883