55% Will Opt Out Of Local Government Pension Scheme
15 Nov 2011
A GMB survey shows that 55% of members will opt out of the Local Government Pension Scheme (LGPS) if the government increases contributions and reduces benefits. Asking council workers who have had a pay freeze for two years and pay cuts in many areas to pay 25% more for a pension that could be worth as much as a third less is plainly just too much.
A new GMB consultation survey of more than 1,000 members of the LGPS shows that the government’s proposed cuts in benefits and contributions increases to be imposed ahead of the introduction of a new scheme in 2015 will cause a collapse in scheme membership and a crisis for the scheme’s 89 funds in England and Wales.
In October last year the Chancellor announced plans to increase income to the Treasury by £2.8bn through a 3 percentage point hike in member contributions to the NHS, Civil Service and Teachers pensions schemes. In the small print of the Spending Review was the decision to apply the same policy to the LGPS, despite the fact that it is funded and doesn’t relate to the Treasury balance sheet at all. On 7th October DCLG published a consultation aimed at securing £900m from LGPS members through a combination of higher contributions and worse benefits.
GMB conducted a random survey of LGPS members between 12th October and 14th November 2011 asking for their views on DCLG’s consultation launched on 7th October and how they would react if those proposals were imposed. 55% of members said imposition of either of DCLG’s proposals would lead to them opting out of the LGPS.
On 7th November Francis Maude and Danny Alexander announced transitional protection and less severe cuts in pension than had previously been announced. However, as cuts will already be in place and the LGPS already has a scheme pension age that matches the state pension age the government’s latest offer does virtually nothing for the two million contributing members of the LGPS who are being hit hardest of all.
Brian Strutton, GMB’s National Secretary for Public Services said, “GMB’s survey shows more than half the members of the LGPS say they would leave the scheme if government go ahead with these cuts. That would destroy a scheme that is sustainable for generations and invests £billions every year in the UK economy. This is precisely the danger that both GMB and the councils representative body, the LGA, had warned about.
Asking council workers who have had a pay freeze for two years and pay cuts in many areas to pay 25% more for a pension that could be worth as much as a third less is plainly just too much. Especially as their scheme is funded and affordable. These proposals won’t generate the savings the government is demanding because members will simply opt out of the scheme. Who benefits from this? Not taxpayers who will have to support these workers in retirement; not councils who will have to sell assets or make more cuts to services to support the obligations they already have to the scheme; and certainly not the school dinner ladies, care workers, binmen, social workers and other scheme members for whom a decent retirement is now in jeopardy.”