Local Government pension deal
Why I am Voting to reject it
As we speak over a million workers are to be balloted on whether to accept the local Government pension deal or not.
This is a deal that will effect all those who are currently in receipt of the pension, those whose pension is deferred and those of us still paying into the scheme which amounts to some 4.6million workers.
The Pension scheme is NOT in trouble
The local government pension 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”.
In light of the above there is NO reason for a single worker to work longer pay more or get less. If this deal is not as good as or better than our existing scheme then we should reject it.
Now just four years on and the employers are already coming back for more.
Governments Real Agenda
The real drive for the change is the government stated attempt to save £900m. Nowhere in the new scheme does it state that the government has not saved that money (presumably that’s why they are happy with it). If £900 million has been taken out of the scheme it can only come from one place that’s our pockets or the employers. The employers will not have to pay more so it must be coming from us one way or another.
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!
For many they wont 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 and are allowed too, then you will lose approx 5% of your pension for each year you go “early”. (Leave 5 years early you lose at least 25%) in effect for many this is making us work longer or get less.
To accept this deal would be to concede on two of our key demands.
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.
THESE MEASURES ALONE ARE ENOUGH TO REJECT THE DEAL
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 and you earn 1/60th of your salary in pension each year (accrual rate). (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 then you will be worse off with a Career average scheme.
*no increase in contribution rates 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 wont 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 there 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 now
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 pay 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.
Conclusion
In my opinion as staff side secretary and a union member there is no need for us work longer get less or pay more.
The local government scheme is perfectly healthy and 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 it’s 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 will 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 some 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.
I for one will be voting NO to this deal.
Danny Hoggan
Unite Greenwich 2050
Branch Secretary
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