The threat of strike action by 3 million public sector workers grew yesterday when unions rejected a plea from Alan Johnson, the trade and industry secretary, to recognise that the public sector pension age needs to rise from 60 to 65.
The deputy prime minister, John Prescott, withdrew a similar plan to raise the retirement age in local government before the general election to avert a public sector strike.
Mr Johnson now has the job of persuading the unions of the need to reduce the public sector pensions bill.
He told the TUC conference in Brighton: "Whilst we do want to change the retirement at 60 ethos, this is in the context of preserving high-quality, defined benefit, index-linked pension schemes, preserving current arrangements for existing staff for almost a decade, and introducing arrangements which give individuals a choice about when they retire - be it aged 60 or 65 or later."
He admitted that the government had not initially handled the issue well by appearing to be unwilling to negotiate.
Mr Johnson has an alliance of 13 unions ranged against his plans, including the Royal College of Nursing, whose general secretary, Beverley Malone, has described the plans as "lose lose" proposals, bad for patients and staff.
Talks between ministers and unions are planned for September 21, shortly before the Labour party conference.
Ministers believe taxpayers face a £690bn bill to pay for existing public sector pensions, which amounts to a £300 increase in annual tax bills for every household over the next 30 years.
Raising the retirement age from 60 to 65 and ending the generous final salary schemes of public workers could save around £7bn a year.
Dave Prentis, general secretary of Unison, said: "Unless they start compromising - not reissuing the old offers - there will be strike action.
"It is about making sure that future generations of public sector workers will get decent pensions, as well as existing ones."
He said it was not sufficient for the government to suggest that the changes would not come into force until between 2013 and 2018.
Union leaders were also disappointed when the chairman of the government inquiry into pension provision, Adair Turner, told the TUC yesterday that their demand for the introduction of compulsory pensions would almost certainly be dissipated by a cut in wages by companies.
He said instead he wanted to do more to encourage later retirement, warning that on current trends an average pensioner by 2050 will receive about 30% less relative to average earnings than they do today.
