Hutton Problems

Thursday 10th March 2011

Final Hutton report: more recipe for disaster than blueprint for reform says GMB

Lord Hutton had a real chance to make sure low paid public sector workers have good quality, affordable pension schemes; but in failing to address the key issue of affordability to members, that chance has been wasted says GMB.

The Hutton Commission’s report into public sector pensions is fatally flawed and only adds to the confusion. By ignoring issues of member affordability and accepting the Osborne Pension Tax that will price vast numbers of workers out of pension schemes, Lord Hutton has failed to ensure a sustainable foundation for future pension provision.

Lord Hutton should have listened to the evidence submitted to his Commission not his paymasters in the Treasury when formulating his final report says GMB.

On his specific proposals today, GMB said

1. The proposal to move to career average looks like a trojan horse to reduce benefits to everyone including the low paid.

2. The raising of retirement ages is unrealistic in the current economic climate and will simply mean that pension calculations are reduced.

3. Having a cost ceiling for taxpayers ignores the costs for scheme members who increasingly cannot afford to save.

4. As government seeks to widen the ‘Big Society’ public service workforce, it is unfair that under Hutton’s plan, they would be barred from access to the same pension schemes as their public sector counterparts.

His broad brush ‘principles’ with stipulations on retirement age, cost sharing and benefit structures will fall at the first hurdle because Lord Hutton has failed to take into account the devastating impact government cuts to public sector pensions has already had on the nation’s pension saving. The Osborne Pension tax that seeks to impose an annual £1billion levy on members of the Local Government Pension Scheme (the largest scheme in the country) will decimate the scheme, a danger the LGA, NAPF, Unions and LGPS Pension Funds have all highlighted in recent months. Already 1 in 4 workers eligible for LGPS membership do not join. Most of these workers are low paid women, the group most in need of good quality pension provision. Moving to career average won’t benefit lower earners as Hutton argues if they can’t afford to join the scheme.

Brian Strutton, National Secretary for Public Services said:

“Lord Hutton had a real chance to make sure low paid public sector workers have good quality, affordable pension schemes; but in failing to address the key issue of affordability to members, that chance has been wasted. His career average and retirement age proposals are just smokescreens for more cuts. Hutton’s new report has ignored some of the most important responses to his interim report and hasn’t fully taken account of recent government policy changes on contributions and index linking. As a result, many of his conclusions are questionable and will infuriate public sector workers. It’s not cogent enough to be a blueprint for reform but it might well light the blue touch paper for industrial action.”



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