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Osborne’s pension raid ‘double’ that of Brown

Osborne’s pension raid ‘double’ that of Brown

George Osborne’s attack on the pension entitlement of millions of workers is double that of Gordon Brown’s much-criticised raid on private sector pension funds, Prospect said.



Commenting on the Treasury’s decision to switch the indexation of private sector pensions from the Retail Prices Index to the Consumer Prices Index, Prospect said it was the second time in a week that the Chancellor had used this device.

On behalf of 122,000 professional workers in the private and public sectors, Dai Hudd, Deputy General Secretary, said: “First, Mr Osborne picked around £110 billion from the pockets of public service pensioners by unilaterally changing the basis for uprating their pension.

“Yesterday he played the same trick on the private sector, which will cost workers and pensioners at least another £80 billion.

“The combined figure of £190 billion or more dwarfs the £100 billion Gordon Brown raised when he abolished dividend tax credits in 1997.

“Like a latter-day Fagin, Mr Osborne thinks he can get away with anything. Only this isn’t Dickensian fiction, it’s real life, 21st century daylight robbery.”

Hudd condemned the government’s complete failure to consult over the changes, the hypocrisy of ministers’ earlier attacks on the Labour government’s taxation of pension funds, and the broken promises made during and after the election campaign to protect the accrued rights of pensioners.

Over the last 15 years, RPI has exceeded CPI by an average 0.8% a year. Prospect calculates the effect of the CPI switch on a public service worker earning £18,000 pa over a full career will amount to a loss of over £20,000 in the course of their retirement. Total savings from more than 12 million past and serving public sector workers would be £110 billion.

Similarly, the same move for the member of an occupational scheme in the private sector earning £18,000 would cost around 10% of their pension’s value over a lifetime. With another 13 million workers in private sector defined benefit schemes, this would potentially cut pensions in payment by at least another £80 billion.

On 12 April 2010, Liberal Democrat pension spokesman Steve Webb said: “A pension promise made should be a pension promise kept. Therefore we would not make any changes to pension rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected.”

On 23 June 2010, Prime Minister David Cameron told the BBC’s Face the Audience programme: “The rights you have accrued so far, of course, no one is going to touch those.”