Government outlines reform for public sector pensions

The government has outlined plans to link the public sector retirement age to state pension age, which is rising to 66.

Danny Alexander, Chief Secretary to the Treasury, said that the public sector cannot be excluded from pension reforms, as 750,000 public sector workers are threatening to strike on 30 June.

The government is set to confirm plans to base public sector pensions on workers’ average salaries.

Mr Alexander’s announcement is expected to explain that that most public sector workers will see their retirement age, which is currently set at 60, linked to the state pension in the future.

Alexander is also expected to safeguard public sector workers on less than £15,000 by not increasing their pension contributions. Those earning less than £18,000 will have their contributions capped at 1.5%.

Mr Alexander will say: "There is an indisputable case for reforming public sector pensions to ensure that they are affordable and sustainable but still amongst the very best available.

"That case is simple. People are living much longer - the average 60 year old is living ten years longer now than they did in the 70s. This advance comes at a price. 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."
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