Treasury Wrong On LG Pension
Tuesday 8th November 2011
TREASURY’S PENSION CALCULATIONS ARE
WRONG AND THE TRUTH IS COUNCIL WORKERS WILL SUFFER A HUGE LOSS IN
PENSION AND WAGES SAYS GMB
A part time school dinner lady could
typically expect to get £400 a year less pension even if she works
until she is 68
On top of this she’ll have to pay
£5,500 more for the privilege of getting less
New GMB analysis of last week’s government’s
‘improved offer’ for public sector pensions shows that Treasury’s
quoted local government examples are wrong.
The figures below for 3 case studies used by
the Treasure but calculated by GMB clear show the annual pensions loses local government
employees would face. The figures also show the increase in
contributions to reach this level of pension.
Treasury Case Study 5 – Local
Government Administrator
Salary (full time) £20,000
Age when new scheme starts
32
Length of service when new scheme starts
13
Annual pension under the current LGPS taken at
65
£15,333
Annual pension under the
government proposals taken at 65
£13,683 a
drop of £1,650 a year.
Annual pension under the current LGPS taken at
68
£19,910
Annual pension under the
government proposals taken at 68
£17,282 a
drop of £2,628 a year.
In addition she would have paid out an
additional £21,600 in extra
contributions by the time retires in order to qualify for the
lesser pension under the government’s latest proposals.
School Dinner Lady
Salary (working part time) £8,000
Age when new scheme starts
45
Length of service when new scheme starts 5
Annual pension under the current LGPS taken at
65
£3,333
Annual pension under the
government proposals taken at 65
£2,933 a
drop of £400 a year.
Annual pension under the current LGPS taken at
68
£4,551
Annual pension under the
government proposals taken at 68
£3,879 a
drop of 672 a year.
In addition she would have paid out an
additional £5,500 in extra
contributions by the time retires in order to qualify for the
lesser pension under the government’s latest proposals.
Environmental Health
Officer
Salary (full time) £30,000
Age when new scheme starts
50
Length of service when new scheme starts
20
Annual pension under the current LGPS taken at
65
£17,500
Annual pension under the
government proposals taken at 65
£16,375 a
drop of £1,125 a year.
Annual pension under the current LGPS taken at
68
£23,161
Annual pension under the
government proposals taken at 68
£21,190 a
drop of £1,971 a year.
In addition she would have paid out an
additional £16,000 in extra
contributions by the time retires in order to qualify for the
lesser pension under the government’s latest proposals.
GMB National Secretary, Brian Strutton said,
“There is clearly a serious problem with the information
presented by Treasury. Where it shows local government
employees benefiting, the reality is a very significant loss.
A part time school dinner lady could typically expect to get £500 a
year less pension even if she works until she is 68.
On top of this she’ll have to pay
£5,500 more for the privilege of getting less. When the
government talks about putting their ‘offer’ direct to public
sector workers I think it is important that proper information is
used not misleading propaganda.”
Ends
Contact: Brain Strutton, GMB
National Secretary on 07860 606137 or Naomi Cooke, GMB National
Pensions Officer on 07739 919633 or GMB Press Office: Rose Conroy
on 07974 258123.
Notes for Editors:
Case Study 5 taken from HMT paper CM8214
published on 2nd November 2011 that shows a £9,800
pension from the current scheme at 65 and a £12,000 at 68 or £9,800
at 65 under government proposals. It does not reflect the
increase in contributions Treasury announced in the 2010 Spending
Review.
Assumptions used in the calculations:
· Accrued rights at
the point of change are protected (as Treasury)
· 1/60th
accrual pension scheme for both the new and current scheme
reflecting the scheme introduced for all members in 2008 (as
Treasury)
· 3% increase in
member contributions
· Pension amounts
are discounted by salary inflation (as Treasury)
· HMT assume a
career break in their calculation but do not indicate where, for
simplicity and to ensure comparability, GMB’s figures do not
· 15% reduction for
a member taking their pension 3 years early reflecting the current
scheme figures provided by GAD
· 21.9% enhancement
for a member taking their pension 3 years after pension age
reflecting the current scheme figures provided by GAD
· Pension age in
the government proposals is 68 (as Treasury)