Public Sector Pensions

Sandra Osborne Excerpts

Thursday 8th December 2011 Commons Chamber

[David Mundell]

I know that the hon. Lady was not in the House at the time, but the 3% figure is broadly equivalent to the sum that her Government had identified in the pre-Budget report in 2009.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

rose—

[David Mundell]

I will give way in a moment, but I want to make some progress.

The Government continue to engage actively with the trade unions to agree what the new pension schemes will look like. Discussions began in February and the Government remain fully committed to meaningful engagement. Scheme-level discussions are continuing with the trade unions, with meetings yesterday, today and tomorrow, which deals with a question asked by the hon. Member for Arfon. Significant progress has been achieved and the trade unions have welcomed many of the commitments that we made at the start of this process, including the one that public sector schemes will remain defined-benefit schemes, with a guaranteed amount provided in retirement. That, of course, was one of the options not put forward by the Scottish Public Pensions Agency.

[David Mundell]

I am going to take an intervention from the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) once I have completed this section of my speech.

The unions also welcomed the commitment that all accrued rights will be protected. Everything that public servants have earned until the point of change they will keep, and it will be paid out in the terms expected, at the retirement age expected. Final salary means just that: that someone’s accrued rights will be based on their final salary, not at the point of change but whenever their career ends or they choose to leave the scheme. No public service worker need worry about the entitlements they have already built up.

[Sandra Osborne]

The Minister talks about public sector reform, so why is the 3% rise going straight to the Treasury? That has nothing to do with the sustainability of public sector pensions.

[David Mundell]

As the hon. Lady knows, the Treasury underwrites the scheme. The Treasury requires to be paid out whatever is required to be paid out in relation to the scheme. The scheme does not operate on a basis of contributions and pay-outs, because the Treasury is underwriting the scheme so that everybody is paid in full as is their entitlement.