An influential employer lobby group has told the Government it can save £900m a year from public sector pensions without raising employee contributions for two years, according to the BBC.
A letter from the Local Government Employers to Communities Secretary Eric Pickles, seen by the BBC, says workers could either pay more into the Local Government Pension Scheme from 2013 or pay what they do now and receive less when they retire.
The LGE has reportedly put forward a proposal which would see the normal pension age increase from 65 to 66 from April 2014, which it claims would save £300m a year.
The remaining £600m would come from an increase in contribution rates in two years time. Under the plans employees who are not willing or able to contribute more would have the option of accepting a cut in pension benefits.
Trade unions representing public sector staff are preparing to ballot members on a nationwide “day of action” due to concerns the Government will hike workers’ pension contributions next April.