15 October 2004
Government plans to overhaul Britain's troubled pensions system extended deeper into the public sector this week, when ministers announced plans for a radical overhaul of the firefighters' retirement scheme.
The Office of the Deputy Prime Minister's announcement followed a warning that the government would take radical action to ease Britain's wider pensions problems, estimated to be a shortfall, in state spending terms, of £57bn per year.
ODPM minister Phil Hope said firefighters' current pension scheme was 'the most expensive in the public sector' and contained 'unsustainable' benefits.
Explaining his proposed changes on October 13, Hope cited the same affordability concerns that were identified in a wider report that was published by the government-backed Pensions Commission on October 12.
ODPM proposals for both new and existing firefighters would retain the final salary pension structure in decline across the private sector. But the department is set to raise the age at which existing firefighters can access their pension from 50 to 55 and reform ill-health retirement entitlements.
New staff will be offered a cheaper, more flexible pension scheme that will encourage retirement at 65 and will offer partner pensions and an end to compulsory retirement. Provisions for retained firefighters were also outlined.
Hope, who has also published plans to overhaul local government pensions, said: 'We are addressing practices that are no longer viable, like ill-health benefits that give firefighters enhanced pensions even if they are fit to work in most jobs outside the fire service.'
The Local Government Association's fire modernisation task group backed the overhaul. But Fire Brigades Union general secretary Andy Gilchrist said his members would be 'appalled'.
He accused employers of spending firefighters' contributions 'as fast as they have been taking them off us'.
The move came as Pensions Commission chair Adair Turner warned taxpayers to expect 'unpalatable' policies to overcome the deficit.
Options include raising taxes, encouraging people to work longer, raising the age at which people can draw state pensions, and measures to encourage greater savings.
Kay Carberry, assistant general secretary at the Trades Union Congress, claimed there was now 'a compelling case for phasing in compulsory employer and employee pensions contributions'.
But a spokesman for the CBI replied: 'That would cost businesses £22bn per year… damaging investment and jobs.'
PFoct2004
