Headlines: November 24th, 2006



Consultations have begun on a revised Local Government Pension Scheme. Employees will be expected to pay bigger contributions as part of a package of reforms designed to ensure there is no added burden to council tax payers. The proposals, announced by Local Government Minister Phil Woolas, follow discussions between the employers’ side and relevant trade unions. The announcement marks the beginning of a 12-week consultation period but the leading Local Government union is already warning its members won’t pay more for less.

The reforms are felt to be necessary so the Scheme can meet the needs of a diverse local government workforce and to meet the challenge of increase in life expectancy and longer working lives. The reforms will also mean the Scheme is ‘equality-proofed’ so it can provide fairly for the range and variety of employments in local government and that it is compliant with anti-discrimination law.

The Government believes the changes will mean more lower paid staff, who are predominantly female workers with short periods of local government employment, will be attracted to the Scheme as it will now address issues of equity within the scheme relating to variations in pay, and full-time and part-time working.

Mr. Woolas said the Government felt it was appropriate to increase the contributions paid by employees to help to deal with the higher costs brought about by increases in life expectancy and the proposed benefit improvements. This, he said, would mean the Scheme was affordable for employers and fair to taxpayers. “Our objective has always been to provide a viable Local Government Pension Scheme in England and Wales, flexible for both existing and future members, but also affordable to employers and fair to the taxpayers who underwrite it. These reforms will help to stabilise costs, while honouring the Government’s intention to ensure that no additional costs are imposed on taxpayers,” he added.

A system of tiered contributions by employees will mean their paying 5.5 per cent on the first 12,000 pounds of pensionable salary and 7.5 per cent on pensionable pay above that figure. Average contributions across all pay will be 6.3 per cent, compared with the current level of 5.8 per cent. Unison general Secretary Dave Prentis said it was nonsense for the Government to claim staff werel living too long and costing too much. At a lobby of MPs he said, “”Life expectancy has not increased for manual workers in the north, it’s not increasing for the low-paid in Birmingham – but it is for well-paid MPs who have just voted themselves the best pension in Europe.Well, if it’s okay for them, then it’s okay for our home helps, teaching assistants and care workers too.”

The proposals have been outlined in a letter to all local authority chief executives and to other interested parties. Local authorities, employers and Scheme members can visit a single information point http://www.communities.gov.uk/lgps   for information, including examples of how the changes will affect different members of the scheme.