Cameron: Time to slash public sector pensions

THE BALLOONING cost of Britain's public sector pensions would be slashed by an incoming Tory government, David Cameron has signalled.

The Conservative leader has argued that generous final salary schemes should be phased out and replaced with money-purchase schemes in a bid to save taxpayers billions of pounds.

Mr Cameron's remarks, to a private meeting of businessmen, will strike a chord with millions of private sector workers who face the threat of paying more in tax to feather-bed state workers in their retirement.

Many workers are seeing their own final salary schemes scrapped or scaled back and believe there is a growing "apartheid" between the public and private sectors. In the wake of the pre-Budget report, a shake-up of pensions could create yet further "clear blue water" between the Tories and Labour, while releasing billions for tax cuts.

But trade unions today reacted angrily to any suggestion of a threat to the future of more than five million NHS staff, teachers, police, civil servants and council officers. The row erupted as it emerged that women who take a career-break to look after children will now have to pay thousands of pounds more to secure a full state pension, a measure buried in the pre-Budget report.

Mr Cameron told a meeting of the Greater Manchester Chamber of Commerce earlier this week that "my vision over time is to move increasingly towards defined contribution rather than final salary schemes" for the public sector. He accused the Government - which recently introduced minor reforms to save £13billion on a total liability that the Treasury puts at about £650billion - of being "remarkably feeble" on the issue.

Treasury figures show Britain's public sector pensions are set to rocket to £3.8billion in 2009/10 from £1.2billion in 2006/07.

Trades Union Congress general secretary Brendan Barber said the news would come "like a bolt from the blue to millions of hard-working public servants".