Local government pensions and the Tories

thatoldchestnut

Hello all,

I have just successfully opted back into the pension scheme at work (it's LGPS), and wondered what everyone thought about what the future holds for local government final salary schemes once the Conservatives get into power next year, as they almost certainly will. I'm just wondering what they might want to do, or be able to do, to local government pensions that will help them make public spending cuts as they say they want to.

George Osbourne says: "When it comes to [public sector] pensions, I'm not bound by any deal that the Labour Party has done with the public sector unions who pay their bills, but I will do this in a way that is fair. When I reform public sector pensions, I will want to do it in cooperation - I hope - with those who represent the public sector. I am not out to slash and burn the public sector."

But then, to say he is would obv. not be much of a vote winner.

What I suppose I'm wondering is, once you're in a final salary scheme, are you in it for as long as you're employed in local government? If they wanted, could the government force existing local government employees to, for example, sign up to a different scheme that costs local councils less/is not final salary? If so, do you think they would?

Or, would they only do this for future employees, or existing employees who might opt into the pension scheme in the future? Do they have to honour the original agreement when an employee opts in for as long as they're employed?

I appreciate that these are not easy questions to answer when the Tories are being so tight-lipped about what it is they're going to do exactly, and I suppose they could always 'change the law to break the law' as it were, if they wanted to achieve something that wasn't currently allowed and enough of the right people thought it was a good idea, but I just wondered what everyone thought.

barny_100

thatoldchestnut wrote: »

But then, to say he is would obv. not be much of a vote winner.

In my book this would be a vote winner, a massive one for me personally actually. Unaffordable and unfunded pensions for public sector workers are a massive issue. In my opinion they have to be stopped ASAP, it's happened in the private sector and within T&C's should happen in the public sector.

As to what they will do? You'll have to ask George O!

jh2009

Any employer including the government can give any pension benefits it wants for future service, as long as it consults employees for around 90 days before any change.

Any historical service before any change is protected by law, and so i doubt any party is going to rush into changing this. So any change is likely to be for future service only. So you would get two types of benefits for service before and after the dates. (which will be very easy im sure for pension administrators to explain and the public to understand!!)

The problem with pension reform is the rewards or cost of failure to reform will only be known in 30 to 40 years time (beyond the shelf life of todays politicians) hence why any agreement may not be the best long term but to avoid trouble in short term.

Any action to make public service pensions massively less generous is dangerous and will cause lots of strikes. Remember that several million people and their families will be affected, so maybe it wont be the vote winner some think (though i accept it would with some) so i doubt even if the tories do want to take it on they will not say much in the election campaign, possibly hiding a "review" in the small print of their manifesto.

I think change will come regardless of whose in power. Seems likely a middle solution such as career average will be implemented. Will cut the costs if so, but is a better benefit than a straight forward switch to market based DC Schemes that the private sector has.

Andy_L

Past service is, IMO, pretty much guaranteed as they would have to change the law to affect it & that would open a whole can of worms
Future service is, like every other T&C of employment subject to negotiated/imposed change. Since a cut in pension benefits is effectively a cut in pay it would likely involve deals/fights with the Public Sector TUs.
Again IMO the funded schemes like the LGPS are the most vulnerable for a change to defined contribution as it results in an immediate saving unlike the unfunded schems (eg Civil Service) as, perversly, a change to funded resulta in an increase in the annual costs.

seven-day-weekend

Preserved pensions not due to be taken yet would, presumably, be safe from any changes?

Cook_County

seven-day-weekend wrote: »

Preserved pensions not due to be taken yet would, presumably, be safe from any changes?

I would not think anything is guaranteed. Retirement ages we had all been planning towards previously have been deferred historically & we may see such changes in the future. Equally the trustees of underfunded schemes (most - including many government employers) may need to cut inflation increases or take other measures if they don't have enough dough.

Yes this would be a vote winner. Why are public sector pensions largely still gold plated?

seven-day-weekend

Sorry, I meant deferred pensions (I no longer work for the Local Authority and can take my pension in 2014).

seven-day-weekend

Cook_County wrote: »

I would not think anything is guaranteed. Retirement ages we had all been planning towards previously have been deferred historically & we may see such changes in the future. Equally the trustees of underfunded schemes (most - including many government employers) may need to cut inflation increases or take other measures if they don't have enough dough.

Yes this would be a vote winner. Why are public sector pensions largely still gold plated?

The usual answer given is because of the low salaries we have compared to private sector.

prowla

Who says public sector workers get less than private?
What about job security?
When was your last pay cut? I've just been offered a 15% cut.

barny_100

seven-day-weekend wrote: »

The usual answer given is because of the low salaries we have compared to private sector.

The problem is that is a myth thanks to the 12 years of Labour.

From: http://burningourmoney.blogspot.com/2009/04/grasping-public-sector-pay-nettle.html using official Gov.Stats

The story up to last April (the ONS's latest Annual Survey of Hours and Earnings) was that overall public sector pay compared well with the private sector (figures relate to full-time gross pay, including bonuses):

• Average pay - £582 per week in the public sector, compared to £574pw in the private sector - so the public sector was marginally ahead
• Median pay - £523pw public sector, compared to £461pw in the private - so the typical public sector worker was 13% ahead
• Pay increase since 1997 - median pay in the public sector had increased by 49.6%, compared to 48.8% in the private sector - so once again the public sector was marginally ahead

But that was only up to last April. Since then, the public sector has stormed ahead. Here's a chart showing the astonishing increase in average public sector earnings relative to private sector earnings over the most recent 12-month period:



The reason for the increase is that while private sector earnings have gone down by over 1% - reflecting pay cuts and the shredding of bonuses - public sector pay is still bounding merrily ahead by an average 4% pa.

seven-day-weekend

prowla wrote: »

Who says public sector workers get less than private?
What about job security?
When was your last pay cut? I've just been offered a 15% cut.

I was just giving the answer that is normally given.

I am early retired and no longer work for the Local Authority. However, I do know that some of my colleagues have been given a pay cut under the Single Status agreement. The job that I was in remained the same.