Cameron warns of pensions 'apartheid'

Prime Minister David Cameron has warned of a pensions “apartheid” between the public and private sector if reforms are not pushed through for public sector workers.

Cameron said people in the private sector have a "flexible ethic" where employees keep on working if they can, while there remains an expensive cut-off point in the public sector.

He was speaking at the Northern Futures Forum alongside prime ministers from Nordic and Baltic nations.

He gave a nod of approval to Norwegian pensions, saying he was "very interested" in the system where state pension age rises automatically with increasing life expectancy.

People can choose when they begin claiming their state pensions but those who retire later receive higher payments. "I love the idea," Cameron told delegates.

Cameron also emphasised the need for greater flexibility in retirement.

"I think the more we can allow people to choose the extent of their retirement and their timing I think the stronger our societies and our economies will be" he said.

His comments come as the fierce debate over public sector pensions continues in Britain with further pressure from Union leaders.

The prime minister said: "We do have one problem with the public sector pensions system where you have got a lot of resistance to changing public sector pensions, some of which have very low retirement ages.

"We think we are making some progress, otherwise we could end up with quite an apartheid system where people in the private sector have this flexible ethic, they go on working, they change the way they work.

"But in the public sector, we have quite a cut-off and a very expensive public sector pensions system."