The public sector pension fight: why exactly did the government bother?

The Treasury is trying to play down suggestions from a pensions consultant that it essentially struck a poor deal for the taxpayer with its public sector pension reforms - so bitterly rejected by unions it led to the biggest walkout in a generation six weeks ago.

According to the expert, John Ralfe, "The total cost of the more generous, but later pension, is virtually the same as the cost of the current, less generous but earlier pension" - and so the fight to get the sector to accept a later retirement age was a needless waste of political capital.

Specifically, the cost to the taxpayer before the reforms of having the retirement age at 60 was 31% of the average public sector salary. Post-reform, with retirement age of 67 - it's still, er, 31%, or, more precisely, will be that proportion of a teacher's wage, 32% of an NHS worker's and 26% of a civil servant's salary.

The Coalition has rejected his findings, claiming Ralfe has not factored in the plus-factor of higher employee contributions. "This analysis is partial," a Treasury spokesperson told the BBC this morning, claiming the state still stands to save "billions of pounds a year" thanks to the changes, still being hammered out with unions.

"It is based on stylised assumptions rather than an overall workforce model, and only includes one of three strands of public service pensions reform which will deliver savings, where as the overall cost ceilings agreed with unions include all three."

Who exactly is losing out here again?

Ralfe's study concentrates on so-called "accrual rates" - the speed at which a pension builds up, which have increased significantly after the changes. For teachers the new accrual rate is 1/57 of salary per annum, for healthworkers it is 1/54 and for civil servants it is 1/44, significantly more generous than the old arrangements.

He also argues NHS and teaching pensions will increase automatically under the new scheme, thanks to a pre-agreed percentage over inflation boost, as measured by the Consumer Prices Index (CPI). According to his analysis, these do not take into account whether there is a pay freeze, or if an individual's salary rises at a lower rate.

"The Teachers Pension Scheme (TPS) and NHS have annual increases over CPI baked in, which gives no flexibility to have a pension freeze along with a pay freeze," said Mr Ralfe in the report.

"Pensions will still go up, even if pay is frozen."

Govt: we're still going to save billions

The government retorts it's increased the amount that workers must contribute to their pension pots by 3.2% of their salaries, switched the basis for inflation-linked rises to pensions from Retail Prices Index (RPI) inflation to CPI inflation, measures it claims together combine into significant savings for the taxpayer.

"The government has been clear that reforms to public service pensions will save the taxpayer tens of billions of pounds over the next few decades and significantly improve the long-term fiscal sustainability of this country," the Treasury spokesperson added.

Critics have been quick to point out those reforms were already forced through before the strike by public employees in the autumn and were not seen as the major source of acrimony between the Cabinet Office and the unions - that being the raising of the retirement age and complex additional benefit clawbacks.

If the pensions are as generous as they were before, and significantly more generous than almost any pension available in the private sector, some may wonder why the Cabinet seemed so keen to pick a fight with unions over the issue.

Commentators have pointed out that there are losers and winners, with fast-track, higher-paid younger staff tending to lose out. But it does seem the majority of lower-paid staff in the sector, will, as the government has been consistently arguing, do pretty well out of the changes after all.

There is fault on both sides here - the employers have communicated the benefits of the changes poorly and the unions went a bit too quickly for militant rhetoric reminiscent of the 1980s.

But did we go through a process here that was basically a waste of all our time?