CLASS WAR

SOYMB has earlier reported the attacks on public sector workers in the USA and now we witness similar onslaughts against UK public workers. The former Labour pensions secretary, Lord Hutton, proposes sweeping changes to the conditions otf those who work in the public sector.

• The normal pension age of 60 should increase to match the state pension age, which by 2018 will be 65 for men and women, rising to 66 in 2020. The changes should be brought in by the end of this parliament.

• The schemes that link pensions to final salaries will be scrapped and replaced with payments based on career averages. Accountants say that may have to put in 20 per cent or more of their pay to get the same benefits under career average that they would have got under final salary. A 32 year old public sector worker with a normal retirement age of 60 is unlikely, under current plans, to get their full pension untill 68.

• Uniformed workers — including the armed forces – should not qualify for their full pensions until they are 60. Currently, the armed forces can draw a full pension after 22 years, and must retire at 55. They should get longer than the four-year target for other workers to make the changes.

• Ministers should get more powers to raise employee contributions if schemes are becoming unaffordable.

The whole point of Lord Hutton's plan is to rein in costs, the vast majority of public sector employees will receive a worse deal than their current pension scheme offers.

Matt Wrack, Fire Brigades Union general secretary, said: "This is the great pension's robbery and is completely unacceptable..."

In 2009, 12.7 million workers and pensioners were members of public pension schemes, most based on final salaries.

Around 15 million households will be unable to maintain their current standard of living when they reach retirement age and face a 60% drop in their income.

The report says that middle-income workers will be faced with the stark choice of working into their 70s or 80s or surviving on just £13,500 a year in today’s money. A further 10 million households on below average incomes, the poorest 40%, will be almost entirely dependent on the state pension. The pensions crisis has been caused by the scrapping of final salary schemes for both public and private sector workers and a fall in the value of index-linked private plans. Those approaching retirement have also seen the value of their savings eroded by low interest rates and high inflation while the value of their properties has plummeted.

Hutton told the BBC: “In dealing with that problem we have a number of choices: we can cut the benefits of pensioners, we can increase the contributions significantly. I think the responsible thing to do is accept that because we are living longer we should work for longer.”

Dave Prentis, general-secretary of union Unison explained : “This will be just one more attack on innocent public-sector workers who are being expected to pay the price of the deficit, while the bankers who caused it continue to enjoy bumper pay and bonuses."