Thursday, 9 August 2012

Reject the Local Government Pension Offer

Ballot starts 31st July - ends 24th August

Over a million workers are to be balloted on whether to accept the new Local Government pension deal or not to start in 2014. This is a deal that will affect some 4.6million workers.

The Pension scheme is NOT in trouble

The scheme is not in financial difficulty it currently has assets of £150billion. It currently takes in £4billion a year more than it pays out. Four years ago £1billion was stolen off us as many were forced to pay more and to get less supposedly “in order to protect the scheme for a generation”. Now just four years on and the employers are already coming back for more.

The Government's Real Agenda

The real drive for the change is the government stated attempt to save £900m. When we started the pension fight, it was to stop us having to work longer, pay more and/or get less. These should be the key tests on accepting or rejecting the deal.

Will I have to work longer?

Effectively, for those under the age of 55 your new normal retirement age will now rise in line with the new state pension age which is due to increase to 67 then 68 and possibly on to 70. This means that most of us will have to work 1,2, 3, and even 5 years longer than now. If you have to work longer you will of course be paying your pension contributions for longer.

Many will rightly shiver at the idea of having to work on and on. You have to wonder if the employers/government agenda is for us to work till we drop dead, that way they won’t have to pay out any pension at all!

Many simply be able to work on (currently the average age of retirement in the LGPS is 62). If you retire before your Normal age of retirement then you will lose approx 5% of your pension for each year you go “early”. (Leave 5 years early you lose at least 25%) what is this if it is not making us work longer or get less?

What will I get in pension when I retire?

For workers already retired and those of us to follow we will now get less than before (15% according to the TUC). This is because our pensions will only be up rated in Line with the lower Consumer price index inflation rate rather than the Retail Price Index rate. The TUC has estimated that this measure alone has stolen £15 billion off the current pensioners and those yet to retire.


What is the new scheme?

The final salary scheme is to be replaced with a career average scheme. Your current pension is based on your final salary when you retire. You earn 1/60th of your salary in pension each year (accrual rate) i.e. 1/60th of final salary x length of service = pension. In 2006 we fought to keep this scheme and opposed the career average scheme.

The unions are now claiming that the career average scheme is better, because it has a better Accrual rate of 1/49th and will be up rated by the CPI inflation rate. Given that most workers end up earning more in their last years of working than when they first started, they will be rightly suspicious that taking their average salary over their whole career can be better than using their final salary. Even on the information we have been given once you have worked for 20 years or more they accept that you will be worse off with a career average scheme.

No increase in contribution rates for workers earning less than £43k

This is good for those of us earning less than £43k. We know in other schemes workers are being asked to pay more. However we’ve being paying more for the last four years and had no pay rise for three of those years.

In light of the other attacks on our pension is this more of a case of being told “don’t worry we won't rob out of your front pocket, but we will take it from your back pocket instead”, either way its still robbery!

Part-time staff will now pay based on their actual earnings not the full-time equivalent.

This is an improvement as it was always unfair for part-time staff to have to pay a contribution rate based on the full time equivalent earnings.

Staff transferring to the private sector can remain in the pension scheme as a right from April 2014

This is an improvement as at the moment private companies are only required to come up with a “broadly comparable scheme”. It’s not clear who will pay for this the councils or the profit making companies?

There will now be a 50/50 option

Effectively you can pay half the monthly contribution rate and get half the benefits for a period of time! This is supposed to be a help to workers struggling to be able to make some short term monthly savings as long as they accept giving up half the pension for the years they opt out, in other words: save now lose later! The reason why we are struggling is because we’ve had no pay rise for three years, if the employers are concerned for our monthly pay packets why not just give us a rise!!

Future costs of the scheme yet to be resolved

There is to be in place an automatic mechanism of who pays if the costs of the scheme go up in the future. However how much and who pays what is to be left until after this scheme is accepted. This is a recipe for “vote now, pay more later”! In the health service they ended up with a deal where the employers were protected from increases and all the increased costs now fall on the shoulders of the workers.


There is no need for us to work longer, get less or pay more as the local government scheme is perfectly healthy. This is just another attempt by the government to steal money from the pockets of public sector workers and must be resisted. Some may think this offer is not as bad as they were threatening, however that’s like being asked to be grateful to a burglar who threatened to take your wallet, telly and computer and now says he’ll only take your wallet!

We should make our position clear: not a penny more off our pensions and not a day longer to be worked!

If the union leaders think this is what a good deal can be achieved through negotiation, imagine what could be won if we fight alongside all the others still fighting to protect their pensions.

Join The National Shop Stewards Network Lobby of the TUC on Sunday 9th September On Brighton Seafront (Meet at The Level 1pm) - Calling For a 24 Hour National Strike Against Cuts, Privatisation and Austerity