The row over pension reform that is set to bring two million workers out on strike on Wednesday has become increasingly bitter as Britain’s top trade unionist accuses ministers of “deliberately misrepresenting” the income public sector workers will receive in retirement.
With more than 20,000 schools set to shut and disruption expected at ports, airports and hospitals, both the government and unions are involved in a desperate battle to swing public opinion behind their cases.
The unions said on Saturday night they have exposed repeated government claims that everyone on low to middle incomes would get as good, and in some cases better, pension deals under the new scheme. They said such assertions were contradicted by the government’s own pensions calculator, produced on Saturday on the official Civil Service website.
Examples fed into the calculator appear to support their claim that some people would lose out under the new scheme, even if they worked until 67.
According to these calculations, if people retired at 60 under the new scheme, which they would still be entitled to do, they could, in some cases, be at least 20% worse off than if they had done so under the existing scheme. And if they worked another seven years under the new system, the calculator shows that, even after paying substantially increased contributions, some would still be worse off than if they had been able to carry on until 67 under the existing system.
Brendan Barber, the TUC general secretary, said ministers had been selling the proposals on a false prospectus but had blown their own cover at the 11th hour through the latest version of the calculator. “They have deliberately misrepresented the generosity of their proposals,” he told theObserver.
Ministers continued to insist that union bosses were behaving irresponsibly in telling their members to come out on strike when the deal on offer was “as good as it gets” and would protect the pensions of low to middle earners.
The crux of the unions’ case is that ministers – while making clear that the official public sector retirement age will have to rise – have given the impression that the proposed deal will deliver at least as good a return to low to middle income workers as they enjoy at present.
David Cameron told the Commons on Wednesday: “What is on offer is an extremely reasonable deal: low and middle income earners getting a larger pension at retirement than they do now, all existing accrued rights being fully protected, and any worker within 10 years of retirement seeing no change in either the age they can retire or the amount they can receive.”
Deputy prime minister Nick Clegg said he was appalled at “increasingly militant” union bosses who were “wilfully misrepresenting” the government’s position. Appealing to the good sense of public sector workers he said: “The only thing I ask them to do between now and next Wednesday is to sit at their desk, flip open their laptop, get on to the government website and look at what we are actually offering and compare it to what they are being told by their union bosses.”
The new calculator appears not to back Clegg in some cases randomly selected by the Observer, however. It threw up data showing that someone aged 37 on April 1 next year, who is currently on the national average salary of £26,200 and who has accrued ten years of service, could expect under the current scheme and with normal career progression to have a pension of £16,910 if he or she retired at 60. If the worker retired at 60 under the new scheme, however, the calculator shows the figure would be only £13,538.
If the same worker worked until the age of 67 under the new scheme, paying higher contributions from this year on, he or she would still lose out, getting a pension of £19,928 under the proposed changes compared with one of £20,412 if he or she carried on working until 67 under the existing lower contribution scheme.
A spokesman for the Public and Commercial Services Union, one of 30 that have balloted for strike action, said: “Ministers continue to insist their changes will mean better pensions for those on low and middle incomes but their own figures prove they are misleading MPs, millions of state employees and the public. In many case the losses to public servants are huge.”
A spokesman for the Public and Commercial Services Union, one of 30 that have balloted for strike action said: “Ministers continue to insist their changes will mean better pensions for those on low and middle incomes, but their own figures prove they are misleading MPs, millions of state employees, and the public. In many cases the losses to public servants are huge.”
The goverment appeared on Saturday night to soften its line on the benefits to members saying that “most will see no reduction in income at retirement”. It added that “many low and middle income earners will in fact receive a larger pension at retirement.”
It also said that low earners on under £15,000 a year – 15% of the workforce – would not have to make increased contributions. Another million workers earning up to £21,000 will have their total increase limited to 1.5% over three years.
Ministers insist that pension reform is urgent because people are living longer and need to be supported for longer.
Minister for pensions Steve Webb said: “It is good news that we are living longer and we should celebrate this fact. As our society undergoes this radical change, we need to ensure that we manage the impact appropriately.
“Those aged 90 today were born in the 1920s, the decade the current state pension age was set. As the pace of life expectancy continues to increase dramatically we cannot continue to pay the state pension at an age set early in the last century.”