GMB On PM Pensions Speech
Tuesday 28
th June 2011
MR CAMERON HAS
RESTATED THE GOVERNMENT CASE FOR REFORM BUT
HAS SAID NOTHING ON THE SCOPE FOR
NEGOTIATIONS SAYS GMB
Negotiations are crucial to avoiding
any escalation of the current disputes and the limited progress
that has been made in talks needs to be encouraged not damped
down
GMB reacted to a speech on public sector pensions by the Prime
Minister at the Local Government Group Conference in Birmingham
today.
Brian Strutton GMB National Officer for Public Services said
"Mr Cameron has restated the government case for reform but
has said nothing on the scope for negotiations.
Negotiations are crucial to avoiding any escalation of
the current disputes and the limited progress that has been made in
talks needs to be encouraged not damped down. For example,
government has helpfully recognised the need for specific talks
about the LGPS and I believe this is the way forward for reform
negotiations in all the schemes.
Mr Cameron's speech doesn't seem to look beyond the
strike this week yet negotiations continue. The pensions for 12
million people are at stake in these talks."
End
Contact: Brian Strutton on 07860 606137 or GMB Press Office
07921 289 880 or 07974 251 823
Notes to Editors
text of GMB press release on LGPS talks earlier today (28
June)
GMB INVITES COUNCIL BODY (LGG)
ANDDEPARTMENT MINISTERS FOR
LOCAL GOVERNMENT TO PENSION TALKS WITH FRANCIS MAUDE
ANDDANNY
ALEXANDER
The Local Government Group, Local Government
Ministers and the 90 Local Government Pension Funds (LGPS) have a
vital role in the scheme's future design and their involvement in
the talks is essential says GMB.
GMB, public services union, welcomed yesterday's agreement
by Danny Alexander and Francis Maude to hold separate negotiations
on the Local Government Pension Scheme (LGPS). See notes to editors
for details about the LGPS and how the proposed contribution
increase of 3.2% will destroy the scheme.
GMB said it was essential that the council representative
body the Local Government Group (LGG formerly the LGA) and
Ministers from the Department of Local Government in
Whitehalljoin the talks. GMB today announced its
invitation to the LGG and to Ministers from the Department of Local
Government to engage in discussions with the trade unions. GMB
expect that the first meeting with Francis Maude and Danny
Alexander will be in the next week or so.
Brian Strutton GMB National Secretary for Public Services
said "The central discussions over the reform of public
sector pensions are ongoing. Government has recognised that the
LGPS is fundamentally different from the other schemes under
consideration and GMB welcome this.
Francis Maude and Danny Alexander will hold specific
LGPS negotiations with GMB and the other unions involved so that we
can design reform that is bespoke to the LGPS and ensures its
sustainability. I'm pleased that government has listened and I
expect that our first meeting with them on the LGPS will take place
in the next week or so.
I think it's essential that other local government
interests are not left out of the process. In particular the
Local Government Group, Local Government Ministers and the LGPS
funds have a vital role in the scheme's future design and their
involvement in the talks is essential. I will be raising their
participation in the new talks at the next meeting of the steering
group for the policy management of the scheme which is called LGPS
Policy Review Group when it meets on 21st
July.
I did invite both the LGG and Local Government
Ministers to talks before now but I got no response. I am renewing
those invitations and hope they now recognise the urgency and
importance of this issue.
I look forward to the new spirit of friendship
between LGG and Local Government Ministers also lending itself to
some better relationships with the trades unions and pensions is a
good place to start. "
End
Notes to Editors
1 Like a private sector scheme the Local Government Pension
Scheme is fund-based with £150b in assets held in 101 funds around
the UK. These assets are mainly invested in
UKequities to provide income on the pension savings of
4.7m council workers and pensioners. There are about 2m workers
contributing into the scheme. 25% of these work in the private
sector mainly due to privatisation and outsourcing. About 1.35m
retired workers being paid a pension from the scheme. There are
< another 1.35m workers ex local council workers yet to retire
who are entitled to a deferred pension from the scheme when they
retire.
2 The assets are sufficient to pay all prospective benefits
for the next 20 years.
3 To pay for the LGPS, members contribute on a sliding scale
according to salary at an average of 6.5%. With employers paying
twice this for ongoing service, the LGPS represents good value but
is unaffordable for many of the low to middle earners. Although new
starters into local government are automatically enrolled into the
LGPS only 75% stay in; 1-in-4 break the usual inertia and complete
the complicated process to opt out.
4 Members range from cleaners, care workers and school
dinner ladies paid just above the minimum wage to local authority
chief executives on £150,000 and beyond.
5 Two-thirds of the local authority workforce are part-time
women and the average length of service in the LGPS is less than
ten years.
6 Average pensions from the LGPS are around £4,000 per annum
and more commonly less than £2,000.
7 The government have proposed that contribution from the 2m
active members who pay into the LGPS should be increased by 3.2%
while the contribution from public funds should be cut by 3.2%.
This additional 3.2% from scheme members is to assist the
Government to cut the deficit in public spending rather than
increase funds in the scheme. It amounts to targeted additional
taxation on mainly low paid local council workers.
8 If Government go ahead with this proposal to increase
contributions by 50% from 6.5% to 9.7% there will be a mass exodus
from the scheme. Many of the LGPS funds will become insolvent. As
made clear in note 3 above one in four council workers (400,000)
already opt out of the LGPS because they can't afford it. GMB
surveys show this rate will treble to nearly three quarters if
contributions increase by 3.2% on average.
9 Government announced that those earning less than £15,000
would not be asked to pay more. This is a sleight of hand. Anyone
earning less than £15,000 – the 1m part timers in local government-
would have to look at their equivalent full time earnings to see if
that would be less than £15,000. If not they will have to pay more.
So those on spinal point 11 and above will have to pay more event
if they earn below £15,000. The same applies to the proposed
protection for a 1.5% contribution increase for full-time
equivalent earnings between £15,000 and £18,000.
10 Because there are so many low paid workers in the LGPS,
to achieve the 3.2% yield while protecting the lowest paid means
virtually doubling contributions for others. That's unaffordable.
How can, say, a social worker on £25,000 find an extra £115 a
month? lass=SpellE>bOr a binman an extra £100 a month? They
can't. Hundreds of thousands of contributing members would simply
leave the LGPS and become deferred members.
11 The Treasury desire to target this group of workers to
pay more to save public funds will backfire. One of the finest
pensions saving schemes in Europewill be
destroyed. Instead these workers will have to depend on public
funds to sustain them in retirement.