John Hutton's final report on public sector pension reforms looks likely to act as a starting gun for industrial action. Photograph: Anthony Devlin/PA Trade unions representing a million state employees are drawing up plans for strikes that could bring Britain's schools, universities, courts and Whitehall to a standstill as early as June in protest over government plans to end so-called "gold-plated" public sector pensions, the Guardian has learned.
Lord Hutton, the Labour former work and pensions secretary charged by the coalition with reviewing public sector pensions, will publish his final report on Thursday, and it now looks likely to act as a starting gun for extended industrial action against the government's austerity programme.
The report will recommend that 6 million nurses, teachers, local government and other public sector workers should pay more into their pension pots, retire later and receive less when they do. All state employees will be affected, and it will create the first legal basis for simultaneous strikes across the public service unions.
Under the plans, the normal pension age of 60 would increase to match the state pension age, which by 2020 will be 66 for men and women. The changes should be brought in by the end of this parliament, though the armed forces should get longer to implement them, Hutton says.
Hutton has called on the unions and government to negotiate, saying the status quo is not tenable long term. "These proposals aim to strike a balanced deal between public service workers and the taxpayer. They will ensure that public service workers continue to have access to good pensions, while taxpayers benefit from greater control over their costs," he said.
The most generous schemes, which link pensions to final salaries, would be scrapped and replaced with payments based on career averages. Hutton has previously called the existing schemes "fundamentally unfair" compared with private sector schemes.
Ministers should also get more powers to raise employee contributions if schemes are becoming unaffordable, but there will be moves to protect the lowest-paid from proposed increases in contributions.
The TUC is locked in a debate about the timing of the coming action. Some unions insist any strikes must wait until the government publishes its response to Hutton, which is not expected until the summer. But a hardcore are preparing to ballot members, saying that changes announced after Hutton's interim report – to increase contributions by percentage points from next year and change the rate of interest paid from the Retail Price Index to the smaller Consumer Prices Index – provide a legal basis to walk out now.
The Cabinet Office minister, Francis Maude and chief secretary to the Treasury, Danny Alexander, made it clear in the first pensions negotiating meeting at the beginning of the month that they would not reconsider the decision to increase contributions and the change from RPI to CPI, leaving some unions arguing that the talks are meaningless.
The PCS civil service union, one of the most militant unions, is preparing to take action in June, when the National Union of Teachers and the University and College Union are also considering joint strikes, pending ballot decisions, their national executives' approval and the outcome of further meetings with ministers.
Teaching union sources said any action would be timed for before the summer holidays, to maximise political impact and minimise any effect on exams.
A delegation from the unions will meet Maude and Alexander next week to discuss Hutton's proposals and the TUC will regroup later to confirm a timetable for industrial action. It appears unlikely that the entire public sector will strike, but instead waves of strikes will be planned sector by sector.
Mark Serwotka, general secretary of the PCS, said: "If we get all the teachers, lecturers and civil service, you'd have visible protests in every town in the UK. Jobcentres, tax offices, schools, courts, ports, universities would all close. There would be disruption. You would see a scale of unity across the professions that you haven't seen in a long time. It's a sequence of events and it will bring new political pressure."
Sally Hunt, general secretary of the UCU, said her union's decision would depend on a ballot result due on Monday and the outcome of the talks with ministers. She said: "These are cuts that have nothing to do with the credibility or viability of the public sector pension schemes and everything to do with the political impetus to trim away at public sector pay."
Dave Prentis, the general secretary of the biggest public sector union Unison, said: "On top of a pay freeze, and the threat of redundancy, they now face a pensions raid. This brings the threat of industrial action closer."
Brendan Barber, general secretary of the TUC, said: "The TUC and the unions are involved in negotiations with the government about proposed contribution increases. These increases are not needed, and will be an extra tax on teachers, civil servants, local government employees, firefighters, nurses and millions of other public service workers."
Government sources said they would not comment before the report's publication.
How the reforms will work
What does Hutton recommend?
Ending "gold-plated" final salary schemes, which link pension payments to salaries at retirement. Instead they will be linked to career average, reducing payments overall. The normal retirement age will rise to meet the state pension age of 65 (for men and women by 2018). Ministers have already announced increases in contributions of three percentage points from next year and a switch in the rate at which interest is calculated from RPI to the less generous CPI.
Who is affected?
Six million state employees.
Why is the government doing this?
Ministers say the current system is unaffordable and that the public thinks it unfair that taxpayers subsidise generous pensions. The cost of paying public sector pensions will hit £30bn in the next year. Unions say that in some cases the pension schemes are getting cheaper and the changes are merely a tax on state employees to meet the deficit.
Are public sector pensions really "gold-plated"?
Hutton emphatically says no, warning against changes to state pensions to become a race to the bottom. Average local government pensions are £4,000 for men, £2,800 for women.
What happens next?
Ministers will meet unions next week and the TUC will consider a timetable for action soon after. The government must tread a careful line: make the new pension system too punitive and people will opt out, storing up a welfare timebomb for the future.
• These articles were amended on 10 March 2011. The original piece, and the panel on how the reforms will work, referred to an increase in pension contributions by 3% next year. This has been corrected.
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