In a speech made yesterday Danny Alexander, Chief Secretary to the Treasury, (left) has confirmed  that the retirement age for public sector pensions will in future be linked to the state retirement age.

In addition Mr Alexander also confirmed that member contributions will have to rise, although he went on to say that these rises would be capped for the low paid. He also confirmed that existing benefits, already accrued by members, will be protected.

Mr Alexander said that public sector pensions should be “affordable and sustainable but still amongst the very best available”. He went on to say that “It is unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more themselves.”

He also criticised unions “who seem hell bent on premature strike action before discussions are even complete”.

Retirement age change

In his speech Mr Alexander confirmed that the retirement age for public sector workers would in future be the same as the state retirement age, which is due to rise to 66 by April 2020 for both men and women.

Members of the army, police and fire services would be exempt from the increase in retirement age.

Contributions

In the speech Mr Alexander said workers would on average have to pay an additional 3.2% per year into their pensions and that the increase would be phased in between 2012 and 2014.

He did however guarantee that public sector workers earning less than £15,000 a year will not have to increase their contributions and that a cap of 1.5% would be placed on rises for those earning between £15,000 and £18,000.

Ongoing negotiations

Mr Alexander made his remarks whilst negotiations between unions and the government on the future of public sector pensions are still ongoing.

Unions have accused the government of sabotaging negotiations by making these remarks whilst talks continue. Tensions rose further this week as unions representing up to 750,000 public workers voted for strike action on 30th June.

In response Mr Alexander has said that the government was committed to continuing the talks in a “reasonable fashion” and that their position had been misrepresented.