Pensions 'imbalance' criticised

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Pensions Commission chair Lord Turner has criticised a decision to let public servants continue to retire at 60.

During a Pensions Bill debate, he said there was an "asymmetry" between the state pension age, due to rise to 68, and that of public sector pensions.

The Tories criticised the "disparity" between the two, but the government said other reforms would make savings.

The bill, which enacts many of the Pensions Commission's proposals, later received an unopposed second reading.

The Pensions Commission published its recommendations in November 2005, including a gradual rise in the state pension age to 68, in return for an increase in the basic state pension.

'Pensions justice'

But a proposal to raise the public sector pension age from 60 to 65 was met with protests by hundreds of workers and the threat of strikes as the unions pledged to fight for "pensions justice".

The government said that existing public sector workers would still be able to retire at 60, although the pension age for new members of staff would be 65.

During the debate on Monday, Lord Turner, a crossbench peer, said the public sector comprised 17% of the working population, but 35-40% by value of all the occupational pension scheme rights in the UK.

We are making substantial changes to public service schemes to secure their long-term sustainability Lord McKenzie

He said there was "an asymmetry between a state pension age, quite rightly rising now to 68 by 2045, while someone who joined the civil service before 2005, even if currently aged only 25, will retire at age 60".

For the Tories, Baroness Noakes said: "The disparity between public and private sector workers is unsustainable and will threaten the durability of the proposals in this bill."

But junior work and pensions minister Lord McKenzie of Luton, told Lord Turner: "We are making substantial changes to public service schemes to secure their long-term sustainability. The reforms will achieve the savings that were originally projected."

'Step forward'

The Pensions Bill also allows for the restoration of the link between pensions and earnings from 2012 or the end of the next Parliament.

Lord Turner said he and the commission were at least "90 to 95% in agreement" with the bill which he described as "a major step forward towards a more generous and less means tested state pension system."

Lord McKenzie said he was comforted to have Lord Turner's general support and described it as the "most ambitious reform of the pensions system in modern times".

But during the debate both the Lib Dems and the Conservatives said they would fight to ensure more financial help to people whose occupational pension schemes had collapsed, when the bill reached committee stage.

A similar amendment has already been rejected in the Commons - by 22 votes.