Union chief warns over 'knee-jerk' reaction on pensions

By Jon Smith, Press Association

Tuesday, 15 June 2010



The leader of Britain's biggest public sector union today warned the Government against a "knee-jerk" reaction after its new fiscal watchdog forecast the cost of pensions was set to soar.

The Office of Budget Responsibility said the cost of public sector pensions would more than double to £9 billion by 2014, but Dave Prentis, general secretary of Unison, said the notional cost of the scheme was rising because of the collapse in the stock market.

Mr Prentis - due to address his union's annual conference later today - told the BBC Radio 4 Today programme: "You have got to look at why it's rising. It's based on stocks and shares.

"If shares go down and if you do an actuary's report based on that very low point, you can find that you can increase costs."

He said a 20-year timeframe was more appropriate to assess the true costs of pensions such as the scheme for local government workers.

"This is just a knee-jerk reaction. These increases are put there to build up an aura for cuts and they are not the true story," he added.

"They come out with statements prior to the Budget to soften us up for cuts."

He said the Government was trying to pit private sector workers against public sector workers.

"It won't work. We are not going to fall for it," said Mr Prentis.

The Government is committed to setting up a commission on public sector pensions and Deputy Prime Minister Nick Clegg yesterday criticised the "gold-plated" system as "unfair" on private sector workers.

Brian Strutton, national officer of the GMB union, said: "The costs of the local government pension scheme are not included in the OBR figures. Local government pensions scheme costs are not doubling.

"The hysteria surrounding public sector pension costs has to stop and be replaced by rational discussion. The OBR report saying that the cost of other public sector pension schemes will double is deliberately portraying a worst-case scenario.

"For a start these figures cover the so-called pay-as-you-go schemes and exclude the strongly positive cashflow of the local government pension scheme, they are old statistics and they exclude plans for controlling the cost to taxpayers that have already been accepted.

"The new Government has proposed an independent commission to look at public sector pensions yet seems hell-bent on pre-judging the outcome. Nick Clegg gave us another of his pension gaffes yesterday when he said that public sector pensions are gold-plated and unaffordable.

"He should look at the evidence before speaking. The average council worker's pension, for example, is less than £4,000 and for women less than £3,000. Gold-plated they are not."

TUC general secretary Brendan Barber said: "Ministers are presenting the costs of public sector pensions in a highly selective way. They are not comparing like with like and have not been clear that a main cause of the increased net cost of public sector pensions is their decision to freeze public sector pay.

"The cost of public sector pensions they talk about is the difference each year between how much it costs to pay pensions to staff who have already retired and the contributions that current staff and employers are making, even though contributions are to pay tomorrow's pensions not today's.

"As ministers have decided to freeze pay, contributions - a straight percentage of pay - are also frozen.

"As pensions rise with inflation, inevitably the gap between pensions and contributions will grow even though the cost of pay and pensions will fall as the freeze bites."

Union chief warns over 'knee-jerk' reaction on pensions - UK Politics, UK - The Independent

I think Dave Prentis is talking from the orifice through which even suicide bombs lack effectiveness. He is addressing a genuine part of an important problem. But if you imagine that the problem is one metre long, he seems to be unaware of the other 90 centimetres.