TUC says government is leading race to the bottom over pensions


Government assurances that changes to public sector pensions will not hit low-paid public sector workers earning less than £15,000 a year are misleading, says the TUC today as it publishes figures showing that more than 750,000 earning less than this – the overwhelming majority of whom are women – will have to pay higher contributions.

This is because the government measures workers’ income by looking at their full-time equivalent pay, not their actual pay. Someone working half-time on £14,000 a year is considered to be earning £28,000 by ministers.

The TUC research shows that 806,000 public sector part-time workers earn less than £15,000 but have full-time equivalent earnings of more than this and will therefore have to pay theincrease in contributions being demanded by ministers.Of these 732,000 or nine in ten (90.8 per cent) are women. For many, this will mean a 50 per cent increase in the amount they pay for their pension.

The government has said that public sector workers earning less than £15,000 will not have to pay any more for their pensions this year and those on less than £18,000 will see a maximum contribution increase of 1.5 per cent of their pay.

Yet only one in six public service workers (15.8 per cent) – around a million – have full-time equivalent earnings of less than £15,000 and will therefore escape higher contributions, says the TUC.

Overall because women make up almost two-thirds (65 per cent) of the public sector workforce, and just under 40 per cent of women’s jobs are in the public sector (compared to 15 per cent of men’s), women will be the disproportionate losers from the changes the government is seeking to make to public sector pensions, says the TUC.

At a time when public sector workers have already seen 15 per cent wiped off the value of their pensions following the government’s decision to change the indexation link from RPI to CPI, the Chancellor’s plan to make public sector workers pay £2.8 billion more in contributions, comes at a time when most have seen their pay frozen for two, and in some cases three years, says the TUC.

And this is also as family budgets are facing their biggest squeeze since the 1920s as frozen salaries struggle to stretch far enough to cover the huge increases in food and fuel prices, says the TUC.

TUC general secretary Brendan Barber said: “Ministers have made much of their plans to protect the low paid. But there is a big catch in their small print, as hundreds of thousands – nearly all women – earning less than £15,000 will face a steep rise in contributions.

“Yet the government only uses this loop-hole where it suits it. If you apply for tax credits the government measures what you earn, not what you might earn if you worked full-time.

”Women get a lousy deal from pensions in this country. Nearly three in four women in the private sector are not members of workplace pensions. The government’s idea of fairness seems to be putting up pensions contributions for hundreds of thousands of low-paid public sector women, making it much more likely they will opt out. This is a race to the bottom, not an advance in fairness.

“Public sector workers are being told that they need to work longer, pay more and get less from their pensions at a time when they’ve not had a pay increase for years and are finding it increasingly hard to make ends meet. No wonder so many of them feel they have no choice but to vote to take action on 30 November.

“Meanwhile the government is giving false hope to hundreds of thousands of low-paid public sector workers who have been led to believe that they won’t have to dig deep to pay more for their pensions this year.”

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