Clampdown on public sector early retirement

A clampdown on early retirement bonanzas for council workers is being planned by ministers.

Deputy Prime Minister John Prescott is to scrap rules which have allowed millions of local authority employees to retire early on a full final-salary pension.

He also wants to lift the minimum retirement age for council staff from 50 to 55.

But unions say the changes will spell the end of the finalsalary scheme for Britain's five million public sector staff.

Under the plans proposed by Mr Prescott, council workers will no longer be able to take advantage of the generous "85-year rule" which allows thousands of teachers, social workers and other town hall staff to stop work at 55 on a full final salary pension.

The controversial rule means

85. that a worker can retire on full benefits if their retirement age and years of service add up to

A council worker aged 55 can retire on a full pension if he or she has worked in local government for 30 years.

But from April, all new employees will face a 33 per cent reduction in their pensions it they choose to retire early.

The changes have been backed by local government employers, who have warned councils are facing a £12billion hole in their pension funds because of stock market falls.

With pay bills for local government pensions running at £14billion a year, town hall bosses say they can no longer afford to spend millions of pounds on early retirement packages. Ministers have long been determined to clamp down on public sector staff taking early retirement.

They blame the generous retirement packages for exacerbating recruitment problems in London's schools.

Hundreds of teachers a year are opting for early retirement, leaving many schools severely short-staffed.

A spokesman for Unison, the public sector union, said: "We are opposed to any attempt to reduce pension entitlement in the public sector.

"This is all because employers took pension holidays in the Seventies and Eighties when the funds were in surplus."

The spokesman added that many council staff put up with low public-sector pay because of the generous pension provision.