Trade unions are standing firm in their opposition to a higher retirement age for public sector workers, despite the bill for council worker pensions set to total almost £4bn this year alone.
A leaked report sent to John Prescott by local government officials warned that £3.75bn would be needed to fill a shortfall in the local authority pension fund, which is currently said to be worth around £30bn.
The Employers’ Organisation for Local Government confirmed that the figures were accurate.
Plans to raise the age of retirement in the public sector from 60 to 65 to help plug the gap were shelved after the government backed down in the face of massive union opposition.
Talks between the government, unions and local government employers will begin in the next few weeks to discuss the modernisation of public sector pensions.
A spokesman for Unison, which represents 1.3 million public sector workers, said its position on age remained the same.
“Public sector pensions need modernising, but we don’t want schemes to be modernised without consultation, or in a way which detrimentally affects our members,” he said.
Peter Allenson, national secretary for public services for the Transport & General Workers’ Union, said the key to filling the savings gap was marketing schemes more effectively to staff, rather than delaying retirement.