Magazine article Public Finance

Force Majeure

Magazine article Public Finance

Force Majeure

Article excerpt

The long-standing conundrum of what happens when an irresistible force meets an immovable object has at last been solved. They sit down and do a deal on public sector pension reform.

Trade and Industry Secretary Alan Johnson set out this week to shift the implacable opposition of the trade unions to reforming their members' occupational pension schemes. But it turned out that neither the forces of progress nor their immovable opponents were quite so unyielding.

Just 48 hours before the meetingjohnson had declared that the logic for raising the public sector retirement age from 60 to 65 was 'irrefutable'. By the time they got around the table he had apparently picked holes in his own argument.

So all existing civil servants, health service and education staff will keep their right to retire aged 60. But from next year new recruits will have to put in an extra five years to earn full pension rights.

Notwithstanding the shrieks of protest from some quarters - the CBI cried 'disgrace' - the deal is a sensible compromise. It honours the contract with existing workers while recognising that such generous pension entitlements, standing in marked contrast to trends in the private sector, are not sustainable.

And it is not cost-free for the unions. …

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