Pensions: Local Government Group reveals new plan

 
Striking women from Unison with placards Several unions are holding votes on staging a "day of action" on 30 November

The government could save £900m a year from public sector pensions without raising workers' contributions for two years, a lobbying group has argued.

The Local Government Group has written to the Communities Secretary Eric Pickles with its suggestions, which he says he is "considering carefully".

It says employees could either pay more in - starting in two years' time - to keep their benefits, or pay what they do now and get less when they retire.

But unions have dismissed the plan.

Public sector trade unions have already said they will go ahead with ballots for mass strike action on 30 November over pensions, after talks with ministers failed to reach a breakthrough.

But that was on the basis that millions of workers would have to pay more from next April while they were still experiencing a pay freeze.

'Careful consideration'

The latest proposal, which could affect two million workers, claims to bring the £900m in savings the government is looking to make by 2014-15 without employees opting out of the pension scheme.

In the letter the group states that its proposal "delivers the required level of savings, other than wholly through an increase in employee contributions, minimises the impact on the lower-paid and offers choice to individuals".

The proposals include an increase in the normal pension age from 65 to 66 from April 2014 which, the group claims, would save £300m a year. The remaining £600m comes from an increase in contribution rates with protection for the lower-paid, it says.

But for employees who were not willing or able to contribute more, there would be the option of accepting a reduction in their pension benefits.

No employee would face a rise in contributions for at least two years.

Analysis

This plan could create problems for some of the main trades unions which represent public sector staff including Unison, the GMB and Unite.

Last week they announced plans to ballot members on strike action amid concerns that the government would force through increases in pension contributions.

But if workers no longer face an immediate rise in contributions, will they be prepared to go on strike?

The proposals could also create problems for Eric Pickles. His department is due to publish its own proposals on pension reform in the coming weeks.

Would it risk a row with the Tory-led Local Government Group by ignoring its plans and perhaps seeking savings in the scheme in years one and two?

The Department for Communities and Local Government now has to decide whether to adopt the latest proposal or launch its own proposals for pension changes at the end of the month.

'Short-term tax'

A spokesman said these suggestions were a valid contribution to solving the public pension problem.

"This is a genuine consultation to which we are committed in order to try and agree a way forward with the unions and employers," he said.

"Public service pensions will still be among the very best, with a guaranteed pension, but we must ensure that they remain affordable in the future and deliver better value for the taxpayer."

In a statement, Unison said it could not "sign up to these plans, which are proposed to raise nothing more than a £900m 'tax' on local government pension scheme members for the government in the short term".

The GMB said there were "significant problems" with the proposals and that the government did not look set to change its "hardline stance".

On Thursday, a TUC-led delegation met Chief Secretary to the Treasury Danny Alexander and Cabinet Office minister Francis Maude in the latest round of talks on pensions, but no agreement was reached.

TUC general secretary Brendan Barber told the BBC there had been no "dramatic change", with the two sides still "a long way apart", but promised there would be further talks.

"Unions will continue to step up their efforts with the ballots of their members and planning of industrial action," he added.

The Local Government Group says it works with local authorities, regional employers and other bodies to create solutions on pay, pensions and employment contracts.

 

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  • rate this
    +1

    Comment number 474.

    @470 Cannot see why you removed this. No racial,sexist,swearwords, or other undertones. Baffled!

  • rate this
    -2

    Comment number 473.

    471.Spirit-of-56
    "Why are you griping and not campaigning for a better pension from your private sector employer?"

    This is the bit the left just don't get - the kinds of pensions up for discussion are not offered by pensions providers any more. Your employer can't buy them in.

    The only reason the public sector has them is because it is outside the market system. They do not work.

  • rate this
    +1

    Comment number 472.

    work as an electrician for local council , pay rise 2009 nothing, pay rise 2010 nothing, pay rise 2011 nothing and 2% reduction in pay and now they want another 3.5% to my pension total from pay 41% see you on the picket line.

  • rate this
    +2

    Comment number 471.

    #468
    Why are you griping and not campaigning for a better pension from your private sector employer?

  • Comment number 470.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +3

    Comment number 469.

    #452 Angry
    The contribution freeze attempts to deal with one of the Unions issues i.e. these workers are being hit with a 2 year wage freeze while inflation is 5% and are expected to sign up to a pension contribution increase for worse pensions.Whether sensible it is negotiation!
    l wonder if the bankers who caused all this would agree to similar changes or aren't we all in this together

  • rate this
    +2

    Comment number 468.

    The biggest gripe private sector workers have isn't so much the size of a public sector worker's pension, but the absolute certainty of it. For the vast majority in the private sector, they have absolutely no idea what pension they'll get - all they do know is that annuity rates drop year by year, it seems no matter how much you put aside, your annual pension seems to go down faster.

  • rate this
    +1

    Comment number 467.

    The public and private sectors can not be the same, they should never be the same, for both fulfill important but different functions. The way universities and colleges are now run like private businesses has ruined eductaion, especially in science and arts. Privatisation of energy companies is probably largely responsible for the extortionate fuel prices. The public sector does many things better

  • rate this
    -1

    Comment number 466.

    Public pensions are the biggest ponzi scheme around. There is no investment that can produce the require returns for a public pension to work unless you are taking crazy amounts of risk.

    Public pensions should be phased out for private pensions where you can choose your own investment strategy and can't blame someone for miss-managing your money as it's your own call.

  • rate this
    0

    Comment number 465.

    @457Mervhob.
    Not sure what "Consols" means. All I was meaning, was I am happy to stop work at 60, mainly through ill health, & without burden to society. Grandad was lucky (but know he had a hard life), working 57 years & having 22 years of retirement. I had cancer myself 10 years ago with 20% chance of survival. Still here & living every day as it comes. See my view about using my last years?

  • rate this
    +8

    Comment number 464.

    Re the argument that public sector pensions should be better as public sector workers are lower paid, I have worked in both the public and private sector and in my case the equivalent jobs in the public sector were better paid than the private sector.

    This may not always be true but I’m afraid this means I have little sympathy for the public sector workers threatening strikes.

  • rate this
    0

    Comment number 463.

    441 Billy The Bull

    I fully agree, but sadly, reversing the torrent of mediocrity and greed will not be easy. While the French Revolution was following its bloody path, a quieter revolution in this country was forging the technical roots that underly our present prosperity. To this, the speculative markets added nothing of value - in fact their influence was completely negative!

  • rate this
    0

    Comment number 462.

    459.Lowest Rated

    That was actually my point - they may be paying more, or less than their fair share. It's an incredibly vacuous statement to say they *should*, without defining what their fair share is.

    Btw, your argument was flawed anyway about public services, but if you'd bothered reading my post you'd have realised I take a similar stance to you.

  • rate this
    -1

    Comment number 461.

    both djgazb46 and the people saying the opposite are correct (ish).

    The public sector pension funds SHOULD BE stuffed full of money as both the employees and employers have made their contributions.

    Unfortunately the body looking after the monies was the Treasury, who instead of keeping it safe, promptly borrowed and spent it. An action which would be regarded as criminal for anyone else.

  • Comment number 460.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +2

    Comment number 459.

    446. The_Gambler wrote

    Rich should pay their fair share - which is?

    --

    The "rich" already subsidise the public services that you benefit from. How much more do you want them to pay?

  • rate this
    0

    Comment number 458.

    453.Roly
    "The Government are doing a Bob Maxwell to fund an ideologically driven economic policy."

    The entire point of political parties is that they have a defined ideology. This isn't a criticism.

    I'm not surprised any more; this is the standard of thought we have in this country, by and large. Endless streams of words that say absolutely nothing.

  • rate this
    +2

    Comment number 457.

    434 Ronald

    My grandfather was still working at 77 when cancer struck him down in the late 1950s. The local gardener and odd job man was still working at 92. Nothing but a state pension for either of them. This problem with 'living longer' is predicated on a continuing fall in asset and equity values, the Victorians were perfectly happy with their 3% Consols as cost of living fell in the 19thC.

  • Comment number 456.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 455.

    @450.
    Bit of both. I did manage to improve my life (financially) by getting a job abroad (chance). Only could have stopped work at 60 by doing this. Said in previous posts, claim nothing from UK. If had not worked out, would be living back in UK, claiming benefits. People who work hard, should be able to live in their old age, look after themselves, as they planned, without further taxes.

 

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