17th June 2011
The decision appears to have been made over fears that pension reforms price some people out of saving for their future altogether.
The decision comes after public sector unions announced plans to strike over pensions later this month.
Danny Alexander, the chief secretary to the Treasury, is expected to give further details of the plans to increase 6 million public sector workers' pension payments.
In a speech to the Institute for Public Policy Research thinktank Alexander is expected to say: "It is disappointing that there are a minority of unions who seem hell bent on premature strike action before discussions are even complete.
"People are living much longer – the average 60 year old is living 10 years longer now than they did in the 70s. This advance comes at a price. It is unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more themselves."
The Telegraph reports Alexander warning trade union members that the only option is to agree to the Coalition's new terms.
Writing in The Daily Telegraph, Alexander warns: "The history of reform is littered with examples of people simply denying the facts," he writes. "Eventually reality bites. And when it does, change is urgent and uncompromising."
Workers earning less than £15,000 will be spared any increase, those on less than £18,000 will have their contributions capped at 1.5%. The increases will be phased in over three years from next April.
The Guardian says: "There are concerns that a mass opt-out from the local government pension scheme would not only add to the state's welfare bill in their retirement, but it could also cause the investment funds to shrink or even collapse taking billions of pounds out of the economy."
On the Telegraph comment boards, John Sutherland writes: "A simple solution, and a fair one: no-one in public service should be paid more than £50kpa. It is Public Service. I do not teach for the money, nor does my daughter nurse for the money. These are public vocations.