By Max Clarke

The Confederation of British Industry (CBI) has issued a stark plea to the government: ‘stick to your guns’ on public sector pension reform, despite the looming threat of widespread industrial action.

“Reforming pensions is never easy,” said the CBI’s deputy Director-General. “But the Government has already said it will protect lower earners from the full increase in contributions, and public sector workers will still have among the best pensions in the UK.

“What’s clear is that public sector pensions must be fair for employees and for the taxpayer. The gap between contributions and the value of benefits being promised is £10 billion a year and growing."

Dr. Bentley implored the unions to negotiate before committing to industrial action. But the Trades Union Congress stated that there was no negotiation before Chancellor Osborne's announcement in the Budget.

"Meaningful negotiations require two willing partners," retorted Brenden Barber, TUC General Secretary.

"And where was the negotiation before the Chancellor stood up in the House of Commons on October 20 and completely out of the blue announced the savings target and the three per cent plus contribution increases? Answer, there was none."

Pensions currently account for by far the largest single expenditure, costing the UK taxpayer more than the entire education and defence budgets combined. It accounts for around £1 in every £5 spent by government, so the need for reform- at a time of round-the-board expenditure cuts- has never been greater.

But instead of negotiating with government, the trades unions have joined in unison to refuse any erosion of a pension package that remains considerably more generous than the mean private sector pension.

Furthermore, research from Sky News shows that the pension as a proportion of current earnings for the public sector since 2005 has in fact grown by 1% for the public sector, whilst for the private sector, the sum has shrunk. Nonetheless, the unions are likely proceeding with their strikes.

“Strikes cause major disruption for families and businesses, and mass strike action would mean thousands of parents forced to take a day off work to look after their children,” continued Bentley. “We urge union leaders to get round the table with the Government and negotiate on the details.”

The trades unions, however, argue that the pension reform is poorly thought-out.

"[Pensions reform is] the government, pure and simple, seeking to impose in effect an extra tax on public servants to contribute to meeting the government's deficit reduction targets, with nothing to do with the long term sustainability of the schemes."

Join us on
Follow @freshbusiness

Topics