Prentis warns change in calculating pensions sees millions of people worse off


From today, millions of retired public sector workers will see the real value of their pension drop, because payments will be linked to increases in the September CPI (consumer prices index), rather than increases in the September RPI (retail prices index), says UNISON.

Based on the average pension rates in the health and local government schemes, UNISON calculates that the move has taken more than £35 million out of the pockets of retired public sector workers in just one year alone.

September’s RPI figure has historically been used to calculate the yearly uplift in state and public sector pensions, as well as a range of other benefits, to reflect the cost of living. With CPI consistently lower than RPI, this represents a cut in pensions and other benefits, at the same time as the government is trying to claim it wants to protect pensioners.

Dave Prentis, UNISON General Secretary, said: “This is nothing but a multi million pound raid on pensioners to pay down the deficit. It’s a disgrace – retired people getting a state or public sector pension did not cause the economic crisis – but they are paying for it. At the same time the government is trying to claim it is protecting pensioners – these claims are hollow.

“We already know that pensioners are struggling to cope with the rising cost of fuel, food and housing. From April next year, life will be a little harder for some of the most vulnerable in our society. It could push more people into poverty in their old age.

“Public sector pensioners will be hit twice – once in their basic state pension, and again in the public sector pension they have saved all their working life for.

“Taking money out of pensioners’ pockets will also hit our chances of economic recovery. Our stagnant economic growth desperately needs people to be out spending in shops and businesses – not struggling to cope with the basic cost of living. There are fairer alternatives to pay down the deficit. Instead of clobbering pensioners, and people on a host of other benefits, the government could impose a tiny tax on financial transactions to raise billions.”

The switch in pensions and benefits indexation is part of wider moves to attack pensions. UNISON is currently running the biggest ballot in history over detrimental plans for public sector pensions, and is calling on members to Vote Yes for industrial action. Government ministers are trying to raise £4 billion by making public sector workers pay more, work longer, all for less in their retirement – we believe this is a tax on public sector workers to pay down the deficit.

Reforms already made to public sector pensions have made them affordable and sustainable for the long term. The local government scheme, that council, some education workers and police and probation staff save into, could pay all its liabilities for 20 years without a single penny more in contributions. The health scheme raises £2bn for the Treasury every year, because more money is coming in than going out. Over the next five years it will raise £10 billion that will be used to top up government spending.

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