U.K. Public-Sector Pensions Need Urgent Reform, Hutton Says
Britain’s deteriorating economic outlook has made the need to overhaul public-sector pensions more urgent, according to the former minister who carried out a review of the system for Prime Minister David Cameron.
“Change is going to be the order of the day,” John Hutton, who was a pensions minister in Tony Blair’s Labour government, said in an interview broadcast on BBC Radio 4 today.
Thousands of public-sector workers staged a one-day strike on Nov. 30 over plans to make them pay more toward their pensions, retire later and accept a pension based on a “career average” salary rather than their final salary.
The proposals formed the basis of Hutton’s review of the system, concluded in March. Cameron’s Conservative-led coalition government says the move, part of a program of spending cuts to narrow the budget deficit, is fair because state workers get pension benefits no longer available to their private-sector equivalents.
Hutton’s comments come after the Office for Budget Responsibility last week cut its U.K. forecasts and said the 2008 financial crisis and recession had inflicted more damage than previously thought, limiting the economy’s growth potential.
“That’s going to affect the sustainability of public sector pensions in a negative way,” Hutton told the BBC. “We could be heading for the rocks unless we make adjustment now.”
He described the government proposals as “credible” and urged ministers and unions to reach an agreement quickly.
To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net
To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net
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