24 June 2005
Pension reform returned to the top of the political agenda this week, but the government and public sector trade unions remained on a collision course over the issue.
Dave Prentis, leader of Britain's largest public sector union, Unison, warned that his members would take strike action if the government reforms public sector pensions by slashing payments.
Unison, he said, played a major role in forcing the government's pre-election climbdown over plans to raise the pension age in line with the private sphere to 65, and to restructure payments and contributions. One plan is to remove lucrative final salary schemes from the civil service.
Prime Minister Tony Blair delayed the public sector reforms to prevent strikes before the general election and has since promised fresh discussions.
Speaking at Unison's national delegates conference in Glasgow on June 20, Prentis said: 'The government got it wrong. It underestimated our members' anger at plans to break the pensions promise. It underestimated our members' outrage at the blatant hypocrisy of politicians who voted themselves the best pensions in Europe while attacking ours.
'Let me say this to the government… I promise you this, we will take strike action, across all our sectors, to defend pensions,' he warned.
However, ministers are adamant that pension reforms must be implemented during the government's third term. Speaking on June 20, new Work and Pensions Secretary David Blunkett hinted that he could compel employers to enrol all staff in private sector schemes unless employees chose to opt out.
'Just about everybody now accepts that where a pension scheme exists it is a good idea to enrol people into it and force them to opt out,' he said.
Automatic enrolment already exists across most of the public sector. Public Finance sources warned that the key problem of growing liabilities that public schemes have experienced could also occur at the private firms that offer such schemes.
'It's not necessarily an answer to the problem of poor retirement savings rates across Britain,' one senior source said.
Christine Farnish, chief executive of the National Association of Pension Funds, predicted that private sector final salary schemes could disappear within five years.
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