Spending review will lead to LGPS exodus, GMB warns

Speaking at a Chartered Institute of Public Finance and Accounting event, Brian Strutton (pictured), GMB’s national secretary, criticised the plans in the Comprehensive Spending Review (CSR) to increase council workers’ pension contributions by three percentage points.

He said LGPS members were being unjustly penalised for the unfunded public sector schemes, such as the teachers, National Health Service and civil service schemes.

“This is a slap in the face for everybody who has worked hard to keep the LGPS stable and well funded,” he said.

In George Osborne’s CSR speech in parliament, the chancellor announced an “additional £1.8bn of savings per year in the cost of public service pensions by 2014-15”.

But the CSR report stated these “savings” would come from additional contributions made by members, including those in the funded LGPS.

Strutton said 1.7 million public service workers would see increased pension contributions, adding: “It’s simply not affordable and would lead to a mass exodus, leaving the scheme unsustainable.

“GMB calls on the government to recognise that the LGPS is well funded with £132bn in the bank. We can find savings without having to destroy the scheme.”

The LGPS is 75-80% funded with two million members contributing £2.4bn per annum. The employer contributes 13.6% of payroll.

The current average LGPS contribution is 6.4%, which will rise to 9.4% following the CSR announcement. For those earning below £12,600, the current contribution is 5.5%, and 7.5% for those earning more than £78,700.

There have been suggestions that those earning below £18,000 should not be affected by the increase in contributions. But to accommodate that, better paid workers would have to contribute even more.

This would see those earning £18,901 to £31,500 increasing their contribution from 6.5% to 12%, and those earning more than £78,700 increasing their contribution from 7.5% to 14%.

In cash terms, this would see those earning £20,000 increase their annual pension contributions from £1,300 to £2,400, and those earning £50,000 increase their annual pension contributions from £3,600 to £6,700.