Government to honour public sector pensions deal

A deal to keep the retirement age for current public sector workers at 60 will be honoured, according to trade and industry secretary Alan Johnson.

The former secretary of state for pensions, Johnson told the BBC that an agreement reached last month would be affordable because of the “high turnover” of staff.

There have been suggestions the deal may be re-thought as part of the wider development of pensions policy expected after the Turner Commission reports. Business groups have said that private sector employees resent their counterparts in the public sector being able to retire earlier. And on Monday, chancellor Gordon Brown sparked a minor media frenzy when he told the CBI’s annual conference that there was still “a lot of work to be done” and adding that he wanted a debate on a “full range of options”.

Trade unions have threatened to strike if ministers backtrack on arrangements.

The Turner Commission report on pensions, published tomorrow, is expected to recommend raising the state pension age to 67.

In a speech to the Institute for Public Policy Research in London last week, the current secretary of state for work and pensions, John Hutton, said that any proposals to reform the pensions system must pass five key tests to be effective.

  • Does it promote personal responsibility?

  • Is it fair?

  • Is it affordable?

  • Is it simple?

  • Is it sustainable?

Hutton said: “As my predecessors have made clear, the primary responsibility for security in old age must rest with the individual and their family. The state must provide a floor below which no-one should fall, but it must also allow everyone the opportunity to build a decent retirement income.

“If we are to achieve a lasting pension’s settlement for the 21st century then I believe that any long-term package must be fair and simple to understand. But it must also be affordable to the tax payer and therefore sustainable,” he said.

Hutton added that any new arrangements must be durable and flexible enough to adapt to the changing needs of society.

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