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Deal struck on public sector pensions

The Government and unions have reached agreement to reform public sector pensions, with the retirement age for new entrants rising to 65 while current workers continue to retire at 60.

The deal was struck at the Public Sector Forum, made up of public sector unions and the Trades Union Congress, and includes a Government guarantee to retain the defined-benefit structure of public sector pensions.

The forum was chaired by Department of Trade & Industry secretary Alan Johnson and the announcement concludes discussions that began in March. Unions had indicated that they were willing to strike if they did not get their way.

TUC general secretary Brendan Barber declared it a major breakthrough, with the Government now committed to keeping pension promises it made to public sector workers.

Johnson says pensions need to adapt in the public sector as they are doing in the private sector because people are living longer, requiring the pension age to rise.

He says individual scheme negotiations will now take place to agree how reforms will work for existing employees. The agreement covers the civil service, NHS and teachers.

Local government pensions, where a retirement age of 65 already exists, are being discussed separately with the Office of the Deputy Prime Minister.

Barber says: “All new public pension schemes will be based on defined benefits, linked to earnings and index-linked. All public service workers will continue to be able to retire at 60 – if that is their wish – into the future.”

Johnson says: “Public sector workers will continue to get good quality pensions which are defined benefit but, like the state pension and pensions in the private sector, the normal pension age for new entrants will now be 65.”


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