Unison wins delay over LGPS 85-year rule

21 Jun 07
The government has given way to union demands to delay retirement age increases for long-serving members of the Local Government Pension Scheme until 2020, local government minister Phil Woolas indicated last week.

22 June 2007

The government has given way to union demands to delay retirement age increases for long-serving members of the Local Government Pension Scheme until 2020, local government minister Phil Woolas indicated last week.

In a written statement to the Commons on June 15, Woolas said the government would fully protect existing scheme members until 2020, rather than 2016 as previously proposed. However, the extra £25m-a-year cost would have to be recouped from within the reformed scheme.

'This could be achieved either by increases in employee contributions, or from further amendments which will reduce a specific element of the new 2008 benefit structure,' said Woolas.

'Alternatively, some other means could be sought from within the existing scheme regulatory framework which will also expressly offset the specific estimated total additional costs.'

The two-and-a-half-year dispute has been blighted with disagreements over actuarial assumptions relating to the removal of the '85-year rule', under which workers whose age plus years of service equal 85 may retire on unreduced benefits before 65.

In June 2006, the Government Actuary's Department estimated that protecting existing scheme members from the rule change until 2016 and tapering the impact thereafter until 2020 would cost a net £50m a year for 20 years.

Extending full protection to 2020 would increase the cost to £75m a year. That is still much less than the £347m-£625m town halls are projected to save annually through the rule change, but they say they need that cash to help fill a £27bn 'black hole' in their funds.

Dave Prentis, Unison's general secretary, said: 'Our campaign has delivered many improvements to the new pension scheme, but winning this extension to 2020 was absolutely critical to our members.'

However, the union's delight at their apparent pensions victory was tempered by dissatisfaction over local government pay negotiations.

The unions have requested a 5% rise for 2007/08, but Heather Wakefield, Unison head of local government, said: 'For months, employers have stuck rigidly to their highly unrealistic line that staff have to accept a pay increase of just 2%. 'This is effectively a pay cut, because increased living costs… dwarf this meagre amount.'

Wakefield was speaking at Unison's annual conference in Brighton on June 18, where delegates instructed officials to begin consultation for an industrial action ballot over pay.

A union source told Public Finance possible strike action could begin in September.

PFjun2007

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