Demand for 25% cut in public sector pensions

The government has been urged to “ruthlessly” slash public sector pensions, claiming they are unaffordable and an unfair burden on the private sector.

The Centre for Policy Studies (CPS) think tank has produced a report, The £100 billion negotiations, which claims the current proposals before the government for reforming public sector pensions are “too weak”.

It has called for a 25 per cent cut in public sector pensions, challenging union claims that public sector employees should get better pensions because they have lower salaries.

The report quotes Office of National Statistic figures which show public sector pay is 13 per cent higher than private sector pay, and claims this is “a significant underestimate”.

The think tank adds: “The main cause of this difference is the far more generous public sector pensions.”

The issue is one of the most difficult for the government because of the threat of mass strikes if it slashes public sector pensions to make savings.

Tory back-benchchers have claimed their Liberal Democrat colleagues in the coalition are holding them back from cutting as much as is needed.

But the CPS report claims the coalition government “is being outmanouevred by the trade unions in its negotiations over public sector pensions”.

It says: “Cutting the cost of public sector pensions by 25 per cent would save taxpayers billions of pounds every year, stretching into the future.

“The present value of such an annuity saving would be over £100 billion in today’s money.”

Tim Knox, director of the CPS, said: “The stakes are very high. The relatively lavish pensions enjoyed by many public sector workers are a burden which will largely be met by the private sector.

“Yes, reform of public sector pensions is tremendously difficult. But this must be ruthlessly pursued if we are to have a lasting and fair solution.”