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Unions have misunderstood report’s cost data, says Hutton

Lord Hutton says the trade unions have fundamentally misunderstood his report on public sector pensions, which they claim shows the schemes are affordable without reform.

The report includes a table which shows that public sector pensions as a share of national income will fall from a peak of 1.9 per cent this year to 1.4 per cent by 2060.

Unions have argued that as the cost of public sector pension provision is falling, there is no need for reform.

But in an interview with the Financial Times last week, Lord Hutton said: “The fundamental mistake the trade unions are making is that the chart assumes that the reforms have taken place. They are the post-reform costs.

“The chart does not show that public sector pensions are sustainable as they stand. If they were, I would not have made 27 recommendation for fundamental change.”

Under the Government’s proposals, which are based on the recommendations of Lord Hutton, public sector workers will have career-average rather than final-salary pensions.

Contributions are also set to increase for many public service workers while most members’ retirement ages will be brought into line with the state pension age.

Last week, the Centre for Policy Studies urged the Government to go beyond Lord Hutton’s recommendations, claiming the proposals are not sustainable.

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