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Osborne delays 50% pension hike talks until summer

Plans to push through a radical overhaul of the teachers' pension scheme have been delayed until the summer after a Government climbdown.

Ministers had hoped to thrash out the detail of a 50 per cent increase in teachers' contributions by the middle of this month, but Chancellor George Osborne has now postponed the move.

The TES revealed last month that the average teacher's contribution will rise to between 9.5 and 9.8 per cent of salary by 201415 - all teachers currently pay a flat rate of 6.4 per cent.

The Government has said it needs to save between #163;768 million and #163;852 million a year on the scheme, with total annual spending on public sector pensions reined in by #163;2.8 billion. The pension contribution rise would mean a bill of an extra #163;100 a month for a teacher earning #163;35,000 a year.

Teaching unions were furious that ministers wanted to decide the detail of the increase before the Hutton review of public sector pensions in March. They are also keen to see the calculations based on an up-to-date valuation of the pension scheme.

In a letter to Brendan Barber, general secretary of the TUC, Mr Osborne agreed to central talks with unions on public sector pensions and said a consultation on the delivery of the changes would now start in June. New contribution rates will still be phased in from April 2012, as previously planned.

"There must not be a race to the bottom of pension provision," Mr Osborne wrote. "We want public service pensions to be a gold standard, at the same time expecting that they must be affordable."

He said there was a "clear rationale" for public servants to make greater contributions to the pensions bill to remain fair to taxpayers and the country.

The news came as heads' union the NAHT completes a consultation with members about whether they would be prepared to take industrial action to protect their final salary pension schemes.

NUT general secretary Christine Blower added: "It is welcome that the Government has postponed its inappropriately hasty timetable, but the Chancellor still seems wedded to this tax grab on teachers' pensions."

Martin Freedman, head of pay and pensions at education union the ATL, welcomed the postponement but said he feared the proposed changes would still go ahead.

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