Pensions update – a quick look at the pros and cons of the proposals for the post-2014 Local Government Pension Scheme

As members will be aware, the government and employers have been proposing to cut back on employees’ pensions. We in the trade unions have been fighting against this, and the industrial action on 30th November 2011 was able to get some concessions from the employers.

The latest proposals from the Government and local government employers after negotiations with UNISON and other union representatives are for a new scheme for service after 2014 (the pension for service before 2014 will remain the same as now) which will be based on average salary (rather than final salary at the moment). Staff will accrue 1/49th (2.04%) of their average salary in pension for each year of service after 2014.

UNISON nationally has been running a series of briefings across England and Wales about the features of the new look scheme, as currently proposed. Five Camden branch officers attended at least part of the London regional briefing on 13 June. UNISON will ballot its members between 31 July and 24 August 2012 to find out whether they agree to this new proposal. Members should look at the plus and minus points of the deal before deciding whether to vote ‘Yes’ or ‘No’ when the ballot envelope comes through their letterboxes.

The plus points of the deal are:

  • There are not going to be pension contribution increases for the 90% of staff who earn less than £43,000 a year
  • The scheme is still better than most schemes on offer from private employers
  • Staff who are outsourced to private companies will be able to remain in the pension scheme, though the details of this aspect of the new scheme remain unclear
  • People’s overtime payments will count as part of their pensionable pay.

The minus points of the deal are:

  • The normal pension age at which a full local government pension will be payable will go up with the state pension age. This could mean that some younger workers might have to work until they are 68 or even older before they could draw a full pension, as the State Pension Age itself is going to increase over the years ahead.
  • If people get promoted to a higher grade or if our pay increases exceed inflation (as measured by the Consumer Price Index) then this average salary scheme will result in people getting somewhat lower pensions than they would with a final salary scheme.
  • While the monthly contributions have remained the same for the majority of scheme members, members will be paying them over a longer period of time as the State Pension Age goes up.

Members will also need to bear in mind that, if the proposals are rejected, the union may need to take further industrial action to get a better deal from the government. We were told that last year’s strike ballot is still ‘live’, and in the event of action we would not be isolated if we to fight for something better since the NUT, PCS and several smaller unions are still in dispute with the government over the teachers’ and civil service pension schemes.

NEWS FLASH: There will be an extended debate at UNISON’s local government conference this Sunday afternoon (17 June) about the current proposals for the Local Government Pension Scheme. Please visit the website for updates early next week!

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