The Local Government Group (LGG) has set out alternative proposals for public sector pension reforms, which it claims would minimise the impact on lower paid workers, while still delivering the Government’s target of £900 million in savings.
A letter, sent by the LGG to communities secretary Eric Pickles, set out plans for workers to be able to choose whether to pay increased contributions towards their pensions or to receive a reduction in their accrual rate. Additionally, it proposed that increases in contributions could be implemented in 2014 or phased in over a three-year period from next spring.
The letter also suggested that those earning less than £15,000 should be protected from any increase in contributions, with those paid between £15,000 and £21,000 subjected to a 1.5% increase and those earning more contributing an extra 2% to 2.5%.
According to the LGG letter, the benefits of implementing the proposals include more choice for employees, encouragement for lower paid workers to stay in the scheme and a reduced risk of industrial action.
Although the LGG has held discussions with unions over the plans, they were unable to reach an agreement, with public service union Unison insisting that it could not sign up to the proposals.
Unison’s national secretary for local government Heather Wakefield argued that the plans were “nothing more” than a £900 million tax on members of the Local Government Pension Scheme (LGPS) to raise money for the Government in the short term.
“Savings of almost £2 billion have been made since 2008 as a result of redundancies, a two-year pay freeze, the end of the Rule of 85 and changes to the benefit structure,” Wakefield explained.
“Our members in the LGPS are facing attacks on their pay and conditions everywhere, local government pay has been frozen for two years and inflation is going through the roof. Increases in pension costs are the final straw.”
The TUC announced earlier this month that, given “the failure of the Government to engage properly in negotiations” over pension reforms, it would be holding a day of action on Wednesday 30 November. Unison has also announced that it will be balloting more than one million of its members in local government and health over the changes.
For more information on pensions, see XpertHR’s resources on the topic.