Cut pensions, say Lib-Dems

By GUY DRESSER
Updated:

 

MORE than a million civil servants would be worse off in retirement under Liberal Democrat plans to take an axe to their index-linked pensions.

The party says public sector pension liabilities are unaffordable and must be reduced as they pose an unsustainable burden on public finances.

Presenting the party's Alternative Budget, Treasury spokesman Dr Vincent Cable said reforms would mean civil servants either retiring later or receiving less pension benefit.

'Some pension benefits can be equivalent to an employer contribution of up to 20% of their salary, unheard of in the private sector,' he said.

'I think that when you see people in the private sector having to work longer, until they're 65 or 70, because their pensions aren't as good as they'd envisaged, we ought to be sending a signal that the same thing ought to apply in the public sector.'

Cable admitted that the civil service, police and armed forces needed to offer competitive pay conditions to attract and retain quality staff. But, he added, the cost of exceptionally generous public sector pensions was becoming acute.

The Liberal Democrats say that liabilities for public sector pensions are equivalent to the national debt.

'We're not quite at the Italians' levels but it is a pressing issue that needs to be addressed,' said Cable. He single out some some early retirement arrangements as being overly generous:

'At the moment it is possible for some police officers to retire at 48 with a full pension. That might have been all right in the days when it was more of a manual job but with many police officers engaged in clerical work it can't be right. In some instances they can be rehired in their 50s.'

The suggested pension cuts were part of a raft of proposals from the Liberal Democrats, including the abolition of four separate Government departments, the sale of city centre prisons and their replacement with PFI-run facilities, and the UK's possible withdrawal from the Common Agricultural Policy.

On the tax front, Cable confirmed the party's commitment to a new, 50% band of income tax for those earning more than £100,000 a year.

The money raised would be used to fund students' tuition fees, to which the party is opposed.

The Liberal Democrats dropped their penny on income tax pledge for education two years ago.

• The London Fire Service spends more than a quarter of its total budget on pensions. This year it will spend £96m on pensions out of a total of £369m.

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