Pension reform plans will cost staff thousands, warns union

30th July 2010 at 01:00
NUT calls to fight affordability `myths and lies' as Government review targets final salary schemes

A teacher on a pension of pound;10,000 a year could lose pound;30,000 over the course of their retirement because of proposed changes to how public sector pensions are calculated, a teaching union has warned.

The NUT revealed its calculation to a major review of public sector pensions, which is expected to call into question the future of "gold- plated" final salary schemes.

A recent Budget decision to link public sector pensions to the consumer price index measure of inflation, rather than the retail price index - which is usually higher - showed it was a "fiction" that accrued pension rights would be protected, the NUT said.

The comments come in the union's submission to Lord Hutton's Independent Public Sector Pensions Commission.

Christine Blower, general secretary of the NUT, said the Government has "already made up its mind" to attack public sector pensions. She called on Lord Hutton, a former Labour minister, to "dispel the myths and lies" about teachers' pensions being unaffordable.

"Opponents of public sector pensions grossly exaggerate their costs, ignoring employees' current and past contributions and pretending the costs must all be met at once rather than over very many years," she said.

Lord Hutton has been asked to lead an independent commission to review public sector pensions, and is expected to issue an interim report in September. But details of the full extent of his recommendations, which could include increasing employee contributions, or switching from a final salary to a career average scheme, are not expected until before the 2011 Budget.

A separate commission, set up by the Institute of Economic Affairs and the Institute of Directors earlier this month, said that contributions would have to rise if benefits were to remain unchanged.

Teaching and other unions recently refused to rule out strikes over the issue, which is set against a backdrop of a two-year pay freeze for public sector workers.

NASUWT general secretary Chris Keates has said teachers would be "very, very angry" if job losses due to extensive budget cuts and a pay freeze were accompanied by an attack on pensions.

She argued that teachers should be exempt from the review as their pensions had already come under scrutiny in 2006, when the retirement age was raised to 65 for new entrants to the profession.

Employee contributions were also raised from 6 to 6.4 per cent and a limit of 14 per cent was imposed on employer contributions.

Martin Freedman, head of pay and pensions at the Association of Teachers and Lecturers, said his organisation was worried that the public had been "softened up" by Government statements about the country "going down the plughole" financially.

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