19 August 2005
Deputy Prime Minister John Prescott has asked local government pension funds to recalculate the disputed cost of revoking last April's increase in the scheme's retirement age to 65. It has emerged that their actuaries had assumed all members eligible to retire at 60 did so.
The local government Employers' Organisation has steadfastly opposed the revocation, arguing that preserving the status quo would cost local government an 'unaffordable' £400m each year.
That figure has now been thrown into doubt, as it is based partially on the assumption that all scheme members currently retire at 60, which would have the effect of inflating the cost estimates of the revocation.
'We're not prepared to accept a figure that has no empirical basis or evidential roots at all,' said Heather Wakefield, head of local government at Unison, the union at the centre of the pension dispute. 'It's gone from £100m to £200m to £400m in two easy steps.'
Public Finance understands that Prescott's request came after pressure from Unison, which has also been conducting its own inquiry into the reliability of the actuarial assumptions behind the EO's position.
John Rees, director of central services at the Local Government Association, who attends the union-ODPM-EO tripartite meetings for the EO, admitted that employers were having difficulty in establishing the facts.
'We're trying to do what we can to make this an exercise based on as much fact and as much reasonable assumption as possible, but it's not terribly easy in all cases because the information is not necessarily kept in a retrievable way,' Rees said.
Prescott has given pension schemes until mid-September to report back on actual retirement behaviour.
A study on increases in life expectancy is also due to report at that time, as the deputy prime minister aims for a resolution to the pension dispute by the end of the year.
PFaug2005
