Move Your Pension

The eurozone crisis: five ways it affects you

Pensions — Fri, 18 May 2012 23:59:06 +0000

From pensions and savings to holidays, we look at how the latest market turmoil will impact on your finances

1 Your pension

If you are retiring this year Greece has been very, very, bad news for you. There is an ongoing slow-motion collapse in annuity rates, and this week it got a little worse. When a man aged 65 swaps £100,000 in his pension pot for an annuity – a regular monthly income for the rest of his life – the sum will be just £6,000 a year. That compares with the £14,000 a year that someone retiring in 1990 earned from a savings pot of £100,000. If the pensioners wants to build in 3% a year cost-of-living increases into the annuity, the rate he'll get for that £100,000 will be a paltry £4,150 a year.

But why blame Greece? Because the surprise status of the UK as a "safe haven" for international money during the crisis has pushed the interest rate on government bonds (known as gilts) to historic lows – and the price of gilts has a strong influence on the price of annuities.

This week the return on 10-year bond yields, which reflect the cost of borrowing by the government, fell to 1.87% as investors fearful of the enveloping euro crisis reduced their lending to Spain and Italy in favour of the UK, Germany, the US and Japan. The fall in gilt yields this week beat the previous low of 1.92% in January, and is the lowest level since Bank of England records started in 1703.

This week Canada Life cut annuity rates, and others are expected to follow, says Billy Burrows of Better Retirement Group. "It's another nail in the coffin for UK savers. The retired have been paying the price for the banking crisis through lower savings rates, now people reaching retirement are paying the price for Greece."

What's more, the outlook for men is much worse for women – because on 22 December an EU directive will force pension companies to equalise annuity rates between males and females. Men, who suffer shorter longevity than women, receive better annuities as a result, but after 22 December these will be cut, while those for women will be increased.

The options for those approaching retirement are grim; work for longer and defer retirement (and if you get ill in the meantime, there's the silver lining of better rates as the insurer assumes you'll die earlier) or buy a temporary annuity. These can be bought for a fixed period, usually with a minimum of five years and a maximum of the period until age 75 is reached. But as Gemma Goodman of annuity brokers Alexander Forbes says, there is no guarantee it'll be better value; at age 75 annuity rates may be even lower.

A PricewaterhouseCoopers report this week suggested that babies born today may have to work until 77 before they qualify for a state pension. Given the ever-shrinking value of annuities, it may be worth younger adults considering alternative ways of saving other than a pension – such as Isas or property – where you do not have to buy an annuity at retirement.

2 Your investments

The stock market continues to fall heavily in response to the Greek crisis, with speculators assuming a disorderly default, and its hit on the banks could lop as much as 5% off the GDP of Europe. The FTSE has lost 1,090 of its value since it hit a high of 5,965 as recently as 16 March, wiping £190bn off the value of the UK's biggest companies, much of it still held in pension funds.

Investors who have stock market-based Isas invested in Europe have fared a lot worse. Over the past year some giant funds have lost as much as a quarter of their investors' money. Invesco Perpetual European Equity, a £1bn fund, is down 26%, while the £200m Artemis European Growth fund is down 25.8%. Even over five years the average fund invested in Europe has managed to lose 16.5%, with some down as much as 40%.

There have been few safe havens from the Greek crisis. Gilts have had, once again, a good crisis. The average UK gilts fund is up 4.8% over the past three months, and investors who have held for the past five years are enjoying gains of 58%. Most corporate bond funds have also held their heads above water, but almost everything else has been in negative territory. Interestingly, China has been worst, performing even more poorly than mainland Europe. Analysts say that when investors become risk-averse money pours back into safer territories, leaving emerging markets exposed.

But gold has been the odd man out during the latest phase of the Greek tragedy. Its price this week dropped to about $1,530 an ounce, its lowest level for nearly nine months, and 20% below its $1,895 high in early September 2011. Investors have preferred the safety of US dollars and US treasury bonds to the traditional safe harbour of gold. Some people also argue that in times of extreme economic stress investors sell gold to get their hands on cash.

The good news is that virtually all commodities have fallen back in price in recent months, although that has as much to do with softening of the Chinese economy as problems in Europe. Since September wheat is down from $8 a bushel to $6, coffee is down from $2.80 to $1.77 a pound, and sugar has fallen from $850 a tonne to $570. Whether we'll see these falls reflected at Sainsbury's or Tesco is another matter. Meanwhile, copper thefts from Britain's railways should become less attractive; the metal is down in price from $9,600 a tonne last July to $7,700 this week.

3 Your savings and mortgage

Relief for savers suffering from paltry returns on their building society accounts remains as far away as ever. The latest fall in gilt yields brought by the Greek crisis will help keep interest rates in Britain low for longer than anyone imagined back in 2009 when Bank of England base rate fell to an historic low of 0.5%.

Savers who want a better return on their cash may have to start considering riskier alternatives – such as "retail bonds" from the likes of Tesco, which, although not offering any guarantees under the government's compensation scheme, pay interest of 5%-8% a year.

There's better news for mortgage holders, though – except those on pricey long-term fixes. Last week the latest meeting of the Bank of England's monetary policy committee kept interest rates on hold once again, and economists are virtually united in forecasting near-zero rates through to 2014. "Interest rates seem set to remain at their current level of 0.5% until at least late 2013 and very possibly into 2014. Interest rates are clearly not going to be raised for some considerable time to come given the fragility of the economy and the need to counter extended tight fiscal policy," said Howard Archer of IHS Global Insight.

The outlook suggests that those on existing tracker mortgages or low-standard variable rates – such as Nationwide's 2.5% base mortgage rate – should cling on for as long as possible. For new buyers the best tracker rates are on offer from First Direct, which has a mortgage that tracks the Bank's base rate plus 2.39% for life, giving a rate of 2.89% for now. However, it is only available to those able to put down a deposit of at least 35%, and comes with an arrangement fee of £499. If you can only afford a 15% deposit HSBC's tracker at 3.99% is top of the table. It has no arrangement fees.

4 Your car

The problems in Greece are at least providing some relief to motorists, with fears of slowing global economic growth pushing the oil price down substantially over the past six weeks. In mid-March Brent crude was selling for $125 a barrel, but this week it fell to a six-month low of $108 amid renewed concerns that a breakup of the euro would send economic shockwaves around the world.

The fall has sparked a price war at the supermarket petrol pumps, with Asda cutting its prices four times over the past four weeks. On Tuesday this week Morrisons cut its price to 132.9p for unleaded and 137.9p for diesel. Then on Wednesday Asda undercut Morrisons, offering unleaded for 0.2p less at 132.7p. The price reductions mean the cost of unleaded is now 8p below its March peak.

Asda said it "always aims to lead the way when we get the chance to cut prices because of a drop in the global cost of oil," and took a swipe at rival supermarkets, which vary their petrol prices around the country. "Unlike other retailers we do everything we can to reduce prices for all of our customers wherever they live. Research taken from PetrolPrices.com shows some retailers get away with charging their customers more for fuel – as much as 8p a litre more – in towns without an Asda nearby."

According to PetrolPrices.com the average price for a litre of unleaded in the UK is 138.1p, but some petrol forecourts are charging as much as 155p a litre.

However, prices will nudge back up again in August with the 3p rise in duty announced in the budget.

5 Your holiday

Most holidaymakers heading to France, Spain or Italy will benefit from the euro's slide against sterling, falling to €1.25 this week and with some currency experts forecasting further declines to €1.30. But what if you are heading for a fortnight on a sunny beach on a Greek island, only to find that the country has crashed out of the eurozone? Will your holiday be at risk? Bob Atkinson of travelsupermarket.com says: "The issue will be around how your tour operator interacts with the hoteliers in Greece, and what the terms of their contracts say. They should all have plans in place that will allow you to continue with your holiday.

But what if the hotelier has gone bust? "If you have booked an Atol-covered package your tour operator is obliged to organise alternative accommodation, or if there is no immediate alternative, a holiday on a different date or a full refund.

"If you have booked independently, you may still be covered provided you paid by credit card and the deposit was £100 or more, you paid by Visa or MasterCard debit card (and can do a charge-back), or have travel insurance which includes end-supplier failure in its cover," says Atkinson.

He recommends that Greek-bound travellers hold off buying euros until the last minute. "Unless the whole banking system goes into meltdown you are also likely to be able to use credit and debit cards, although it's impossible to say which currency your transactions will be made in until it actually happens."

Brits with holiday homes in Greece, and an account at a local bank, would be wise to swap their euros for sterling. That probably also applies to ex-pats in Cyprus, which is independent of Greece but whose banking system is closely entwined with the country.

In the worst case (and still highly unlikely) scenario – contagion from a Greek collapse across to other Mediterranean countries such as Spain and Portugal – British retirees abroad will want to make sure they have very little of their assets deposited in local banks.

Patrick Collinson

The 100-year-old woman whose state pension is frozen at just £6 a week

Pensions — Wed, 16 May 2012 15:42:30 +0000

£6 state pension buys just three loaves of bread in Australia

Is there an expat pensioner who is getting a worse deal than 100-year-old Annie Carr? Mrs Carr, who was born in Sunderland and emigrated to Australia in 1970 to join her only daughter, receives a UK basic state pension that is frozen at just £6.12 a week. Yet if she had stayed in the UK, or emigrated to a country such as Spain or the US, she would be getting up to £107.45 a week. Instead, she is out of pocket by more than £5,000 a year.

Campaigners say that cases such as this demonstrate why the UK government's "frozen pensions" policy – highlighted in Guardian Money last Saturday – is discriminatory and unfair, and results in financial hardship for British citizens around the world.

We reported how, if you decide to move to Australia, Canada, South Africa or one of a number of other countries, your basic state pension won't increase annually, as happens in the UK. It will be permanently frozen at the date you retire or when you arrived in that country, and will never increase. However, if you move to an EU country, the US, or one of a list of other places including Israel and the Philippines, your state pension will increase in line with inflation.

There are around 555,000 "frozen" pensioners around the world, almost half of whom live in Australia. One of the oldest is Mrs Carr, who is thought to receive the smallest full pension of any of the expats. She was born in July 1911 in Monkwearmouth, Sunderland, and lived in that area all her life until she went to Australia on Christmas Day 1970. She worked from home doing hem stitching before she was married, and helped bring up her siblings after her father died. Mrs Carr's husband Edward died in 1964, after which she worked part-time at a department store in Sunderland until she emigrated.

"As I was her only child, and Deborah the only grandchild at that stage, she came to Australia to join us," says her daughter, Mavis Wilson, who lives in Camden, New South Wales, on the outskirts of Sydney. "At that time the Australian government made up her pension to the Australian level, and after five years she received an Australian pension in her own right."

She adds: "Mum has always been content with what she got – but that is not to say it was right. When she arrived, I think her pension was about £5. She went back [to the UK] for about nine months in 1972 to help a cousin whose wife had died and was left with a young son. She came back with the present level of £6.12.

"Given the fact that what she gets would buy about three loaves of bread today, you could say the Australian government have kept her for at least the last 20 or 30 years."

The divide between the pension haves and have-nots widened last year when the UK government restored the link between the basic state pension and earnings. The annual increase in the basic state pension is now protected by what has been described as a "triple lock" – the rise is in line with earnings, prices or a 2.5% increase, whichever is the greatest. As a result, last month saw the amount people receive per week rise by £5.30 to £107.45.

The International Consortium of British Pensioners (ICBP), which last month launched a Pension Justice website to highlight its cause, says cases like this demonstrate why it is wrong to suggest that these individuals are somehow at fault for "choosing" to live abroad in a country where the UK basic state pension is not increased in line with inflation. "Such decisions aren't always straightforward. Many pensioners were originally posted abroad with British companies, the diplomatic service, the armed forces etc, or left to be closer to children or grandchildren. Life can take us in unexpected directions – and it's wrong for some people to be penalised for it, while others are not," the group says.

Rupert Jones

Betty and Beryl of Humberside are northern - and local - stars

Pensions — Tue, 15 May 2012 10:02:04 +0000

Last year the BBC proposed cutting local radio to the bone. After last night's Sony Awards, they must be glad they changed their minds

Local radio, which is one of the Guardian Northerner's favourite things and the subject of one of our recent campaigns, has covered itself in glory at the Sony Awards, especially in the sprightly persons of BBC Humberside's Beryl and Betty.

Their joint age may be 176 (Betty Smith has 90 of those years; her friend Beryl Renwick who she met at a lunch club has 86), but they are every bit as lively as Radio 1 DJs, far less solemn than Radio 4 presenters, and a good deal more 'real' than both.

Admittedly – and speaking as a Sony judge in years past who wasn't altogether impressed by the process – a pair of such broadcasters is a tempting shoo-in for a panel trying to select between all sorts of chalk and cheese. But Betty and Beryl are good. Above all, they have that sense of the genuine article, people just talking naturally, which the artifice inevitable in high quality broadcasting all too often removes.

You can read lots more about them online, and there'll be plenty more to come, but here's what the Sony citation says:

A joyous, entertaining double act, having fun with the medium and unconstrained by any ingrained ideas of what works and what doesn't. They give a voice to a sector of society unrepresented on radio, and do it with a joy that puts many of their fellow broadcasters to shame.

Good to see those two references to joy, which is so often excluded from our contemporary media's obsession with life's downside. Another virtue which could do with a similar airing, and which Betty and Beryl show in their own, robust way, is kindness.

Radio Humberside's station manager Simon Pattern, says:

They have a real local sense of why certain things are important, they are straightforward, pin sharp and will give a view on anything. The show is unscripted, sometimes they'll just have a giggle and other weeks there will be something quite poignant they'll want to discuss.

Every one of those points was made by the first station manager of BBC Radio Leeds, Phil Sidey, both in his work and in his under-read story of those years, Hello Mrs Butterfield. The book's name came from an inveterate phoner-in, who had much in common with B&B.

Tribute is and should be paid, too, to David Reeves who runs the show with the pair and acts with due modesty. That's the third of the graces which distinguish most of those working in the UK's local media.

Martin Wainwright

Should doctors strike over pensions?

Pensions — Mon, 14 May 2012 08:46:37 +0000

Doctors will vote on whether to take their first industrial action since the 1970s over the government's controversial pension reforms

Doctors to vote on industrial action over pension reforms

Pensions — Mon, 14 May 2012 08:31:42 +0000

BMA members to decide whether to withdraw from non-urgent duties in opposition to reforms

Doctors are to start voting on whether to take their first industrial action since the 1970s, in a dramatic escalation of the bitter dispute over the government's controversial pension reforms.

Ballot papers will be sent to 103,000 members of the British Medical Association, with the result due at the end of the month.

The BMA has ruled out a complete withdrawal of labour, but if they vote in favour, doctors would not undertake duties that could safely be postponed.

The last time doctors took industrial action was in 1975, when consultants suspended goodwill activities and worked to contract over a contractual dispute, and junior doctors worked to a 40-hour week because of dissatisfaction with the progress of negotiations.

The BMA argues that higher paid NHS staff already pay proportionately more for their pensions than most other public sector workers, a disparity which it said increased in April when their contributions rose, and which is set to increase again.

By 2014, some doctors will see deductions of 14.5% from their pay for their pensions, compared with 7.35% for senior civil servants on similar salaries, to receive similar pensions, said the BMA.

Doctors currently at the start of their careers would be hardest hit, having to pay hundreds of thousands of pounds extra – double what they would have paid – in lifetime pension contributions, according to the association.

"The BMA is taking this step reluctantly. It has always said it would prefer to find a way forward through negotiation, and that industrial action is very much a last resort," said a statement.

"However, it believes the government has mishandled the situation by failing to enter into genuine negotiation on the further changes now being imposed on top of the 2008 negotiated reforms.

"BMA members overwhelmingly rejected the government's 'final offer' made in December 2011, with almost two-thirds of the 46,000 doctors and medical students who responded to a survey saying they were prepared to take industrial action to pursue improvements to the offer.

"The BMA has continued to lobby the Department of Health and the Treasury to return to meaningful talks. But in February 2012, with no movement from the government, and the strength of feeling among doctors very clear, BMA council decided it had no alternative but to ballot on industrial action."

The BMA pointed out that under the government's plans, NHS staff would be required to work until the state pension age (set to rise to 68, and probably further in future) before they could draw a full pension, rather than 65.

If industrial action went ahead, the BMA said patient safety would be the overriding priority. Emergency care, or other care urgently needed by patients, would be provided.

Any action would take place for a 24-hour period initially, with its impact – particularly on patients – assessed before any further action was taken.

GP practices would remain open and fully staffed, so they could see patients in need of urgent attention that day, but it would not be possible to book an advance appointment on or for the day of industrial action.

The ballot opens just days after another national strike by public sector workers, including civil servants and lecturers, over the pensions issue, and inclusion in the Queen's speech of a bill to take forward the reforms.

Dr Alan Robertson, chairman of the BMA's pension committee, said the association was "gravely concerned" that ministers were pushing ahead with the "unnecessary and unfair" changes.

"There is real anger amongst hard-working doctors about the way they have been treated," he said.

Full state pension for carers and parents who stay at home

Pensions — Mon, 14 May 2012 07:51:13 +0000

Women are 'major winners' in reformed system at expense of wealthier workers, increasing pension by average of £40 a week

Mothers and carers who choose to stay at home instead of going out to work will receive a full state pension for the first time under an overhaul of the UK's retirement system.

Under the reforms, mothers and carers who retire from 2015 will be treated as if they had worked throughout their lives, giving them a flat-rate payment worth at least £140 a week and leaving them £2,000 better off a year, on average, the work and pensions secretary, Iain Duncan Smith, announced.

Currently, people who do not work for a full 30 years receive a reduced pension entitlement for each year out of employment.

Duncan Smith told the Telegraph that the state second pension will be scrapped, a measure that will hit wealthier workers. He defended the changes, saying they would leave most workers better off and provide a far simpler system than the "chaotic" one currently in place.

"Nobody understands how it works," he said. "It acts as a major disincentive to save. It penalises women, just for doing the most important thing in the world, which is to make sure that their families [are cared for]."

The government will publish the full details of the pension reform in the coming weeks.

Duncan Smith said: "This is hugely beneficial for women who have a broken record of employment. The really critical point is right now they don't get recognised in the system. But under this system they could build up full points.

"So caring in itself will carry, for the first time ever, a value, and this will be of major benefit to women. Women will be the biggest single beneficiaries from this programme, massively."

The overall cost of the state pension will not rise, meaning other changes will be implemented to fund the reform, said a Department for Work and Pensions spokeswoman.

"Our plans will radically simplify the state pension system and set it above the level of the means-test, providing a fair and sustainable foundation for pension saving for people of working age," she added.

At present, workers can choose to either opt in or out of the state second pension. If they opt in and make national insurance contributions for 30 years, they receive the basic pension of £107.45 as well as their second pension, which can be worth more than £100 a week.

Those with company or private pensions can choose to opt out, meaning that they and their employers gain a discount on national insurance. This saved money is currently invested in their own pension schemes. The DWP spokeswoman confirmed that this system would end.

Everyone will receive a higher pension of £140 a week, but people will not be able to opt out, meaning wealthier employees could lose thousands of pounds each year.

Damien Pearse

Unthinkable? Selling shares in Britain’s economy | Editorial

Pensions — Fri, 11 May 2012 23:12:24 +0000

It takes a brave economist to propose yet another financial innovation, but this one would help pensioners share in national prosperity

Eminent American economist Bob Shiller likes to show off a truly frightening graph. On it, he plots Britain's GDP against the value of our state pension. Strip out inflation, and national income has doubled over the past 30 years. The basic state pension on the other hand has increased only 17%. So while the country as a whole has got vastly richer, someone living on a basic state pension has fallen far behind. The solution, thinks Shiller, is a simple one: the government should sell IOUs tied not to interest rates, but to GDP. He and his colleague Mark Kamstra call these trills – because every three months they would pay a trillionth of whatever British GDP is: just under £1.50 last winter. Compare that to the current system, where the government issues bonds with the implicit promise that they will pay a fixed interest rate for the next 10 or 25 years. Amid a global crisis caused in part by financial tricksiness, it takes a brave economist to propose yet another financial innovation. But this one would help pensioners share in national prosperity. It would also align the interests of people who live off their savings – for whom inflation is a mortal enemy – with the rest of society, who don't mind rising prices as long as they come with increasing pay. And states wouldn't be lumbered with fixed-interest repayments which so many are currently finding impossible to meet. When he was over last month, Bob Shiller discussed his proposal with the Bank of England. This idea may not be so unthinkable after all.

National day of action spreads to prisons

Pensions — Fri, 11 May 2012 01:00:52 +0000

Protest meetings outside jails across UK called off after government views stoppages as industrial action

Prison officers made a dramatic contribution to a day of action by public sector workers with a wave of unofficial protest meetings, before a threatened injunction forced them back to work.

The Prison Officers Association claimed more than 80% of its 25,000 members had supported the stoppages, which appeared to contravene a ban on strikes by prison staff. "This has been a great success in raising the public's awareness to the inherent dangers that the coalition government's policy change will bring to the prison service in the future," said a spokesman.

The protests came as civil servants, lecturers and health workers took part in the third wave of national strikes against pension changes in less than 12 months, and amid reports that the government is planning a system to assess and sack underperforming civil servants.

The Cabinet Office said about 150,000 employees stayed at home, as the general secretary of the Unite union, Len McCluskey, pledged more strikes next month and throughout 2012.

The POA action was a surprise addition to protests. Steve Gillan, the association's general secretary, said the organisation had been warned by the Treasury solicitor that ministers considered the protest meetings tantamount to industrial action and would seek an injunction if they continued.

The prisoners at the jails affected were put on a "lockdown" regime, but Gillan said minimum cover arrangements were in place to ensure prisoner safety.

Echoing concerns among the public sector workers who staged walkouts on Thursday, the POA is unhappy about plans to link the normal pension age for prison officers to the state retirement age.

"The state pension age will ultimately rise to 68 and it is unrealistic to expect 68-year-olds to walk landings and grapple with prisoners aged 20 or 21," said Gillan.

As police officers marched nearby against proposed pay changes and job cuts, a rally in Westminster marked a national strike against public sector pension changes by five unions: the Public and Commercial Services (PCS) civil servants' union; health workers from Unite; teachers and lecturers from the University and College Union; the Nipsa civil servants' union in Northern Ireland; and Royal Navy support staff at the RMT union. The PCS, the biggest participant in the walkouts, claimed support among members was "very strong".

Mark Serwotka, the PCS general secretary, told the rally "if we lose this fight, we will regret it for generations to come", adding that he would ask the TUC to reopen talks with the government on pensions.

Referring to Wednesday's comments by the cabinet secretary Francis Maude, that the protests are "futile", Serwotka said: "Francis Maude may say this is futile – but I say it's inspiring."

Serwotka added that members' pensions were being "robbed" by changes that include higher contributions and raising the public sector pension age.

Speaking at the rally, McCluskey said: "If the government thought their fight was over, they best think again. There will be more strike action in June and on into winter, spring and on, and on."

The Daily Telegraph reported that plans to overhaul the civil service were expected to be published within the next month. Aimed at bringing government departments into line with private companies, managers would be expected to rate employees under a "rigorous assessment regime".

In an interview with Francis Maude before the day of strikes, the Cabinet Office minister had said it was a myth that civil servants could not be sacked and that forcing managers to rank people would be one of the issues "we will be addressing in our civil service reform plans".

In a personal speech, McCluskey paid tribute to the care his mother, who died this week, had received from care workers.

Bob Crow, general secretary of the RMT union, drew parallels with the continent as he called for a nationwide walkout in the autumn. "You know the general strike action in Greece and France? We're going to bring it to Britain."

The government played down the impact of the stoppages, saying 102,000 civil servants had stayed at home compared with 146,000 in a national day of action in November, when other civil service unions took part.

The Cabinet Office said nine out of 700 jobcentres had closed, while four courts had shut. Major airports including Heathrow said there had been no significant disruption or delays at immigration halls following stoppages by PCS members in the Border Agency. The Department of Health said the strike by Unite members including radiologists, pharmacists and health visitors had "little impact" on the NHS, with some hospitals claiming that there had been no walkouts. Unite said "tens of thousands" of NHS and Ministry of Defence employees went on strike.

Maude ruled out reopening talks on changes to pensions for education, health, civil service and local government employees. He added: "The combination of the dedicated majority of public service workers who came to work as usual and our rigorous contingency plans ensured that public services were mainly unaffected."

The PCS and Unite are proposing another day of national walkouts next month and the TUC is planning a repeat of the March for the Alternative that attracted 250,000 people last year.

Dan Milmo

Alan Travis

Public sector pensions strikes and police protest – Thursday 10 May

Pensions — Thu, 10 May 2012 21:04:02 +0000

Paul Owen with coverage of the strike by up to 400,000 public sector workers and march through London by police protesting against job cuts

Paul Owen

Public sector workers prepare to strike over cuts and pension reforms

Pensions — Thu, 10 May 2012 11:51:36 +0000

More than 400,000 staff including police officers, health workers, teachers and lecturers could be involved in protests and walkout

Hundreds of thousands of public sector employees, including police officers, lecturers and border control staff, will stage a day of protest against the government austerity programme on Thursday.

About 20,000 off-duty police officers are expected to March in central London and plan to wear a total of 16,000 black caps to mark projected job losses over the next four years.

At the same time public sector unions will hold their third one-day walkout in 12 months, led by the Public and Commercial Services (PCS) civil servants' union, health workers at the Unite union, teachers and lecturers at the University and College Union, the Nipsa civil servants' union in Northern Ireland and Royal Navy support staff at the RMT union.

More than 400,000 public sector employees could be involved in the walkout, with the PCS representing the largest bloc, with 250,000 members, followed by Unite, with 100,000.

The PCS general secretary, Mark Serwotka, said the strikes over changes to public sector pensions would show that "the tide has turned" against pension reforms. A national strike by around 1 million public sector workers on 30 November last year was followed by a series of outline agreements for civil service, health, education and local government employees. Pension reforms were included in the Queen's speech, despite opposition to changes that include pegging the public sector pension age to the state pension age and higher contributions.

However, major health, civil service and education unions have not backed the reforms, and Serwotka said he would urge the Trades Union Congress to reopen pension negotiations with the government.

Speaking before a rally in central London to mark the strikes, Serwotka said: "The significance of this strike is that the government clearly thought that 30 November was the end of it, and they are clearly trying to project the image that the issue is done. These strikes will show very clearly that this is not the case."

The PCS has played down the prospect of disruption at Heathrow airport, where it represents immigration control officers, despite the furore over queues in passport halls. The Home Office is expected to deploy its successful contingency operation, used twice last year, which involves drafting in security-cleared staff from the Home Office and the Ministry of Defence to man passport booths.

Tens of thousands of lecturers from at least 75 universities and university colleges and more than 270 further education colleges will take part in the walkout over changes to the teachers' pension scheme.

The changes are likely to cost lecturers between an extra £350 and £500 a year in pension contributions – a 50% rise. When the changes are introduced, in 2015, many will have to work until the age of 67 or 68, rather than 65.

Sally Hunt, general secretary of the University and College Union (UCU), which represents lecturers, said college and university staff were already seeing the impact of the government's pension changes.

"It is simply not fair for ordinary families to be to be bearing the brunt of the government's cuts while those at the top get tax cuts," she said.

Universities and colleges across England are taking part. Steve Storey, branch chairman of the UCU at Sunderland University, said lecturers in their 20s, 30s and 40s would be the ones to suffer from the changes. "A lot of lecturers, like myself, are going on strike and sacrificing a day of pay to protect the pensions of people in the future," he said.

Unite represents around 100,000 health staff, including radiologists and health visitors and some paramedics, with the likelihood that appointments will have to be cancelled or rescheduled.

Dan Milmo

Jessica Shepherd