07 April 2006
Local government workers are not striking over unreasonable pension demands. They simply want equal treatment with other public sector employees and a fair replacement for the '85-year' rule
John Rees might be right about the Local Government Pension Scheme (Comment, March 24—30). As unions, we know that we can't always get what we want. But, as Mick Jagger also said: 'If you try sometimes, you just might find, you get what you need.' So, we are trying, and trying hard. After all, it's not very often that local government workers get what they need.
What we need is quite simple: equal treatment for our members with every other group of current public sector pension scheme members — all rightly granted protection of their retirement age of 60 and existing benefits.
To pay for it, we want to use half of the savings from proposed changes, as allowed in every other scheme. We are not arguing for the continuation of the 85-year rule, but a fair replacement for it.
Neither do we pretend that longevity is not an issue. We, too, want a viable, sustainable LGPS and accept that the retirement age needs to rise. But not all of our members are enjoying increased life expectancy, especially manual workers and the low paid. And someone needs to tell us how
65-year-old home carers could continue to lift elderly people or refuse collectors keep wheeling those bins.
The government and the Local Government Association make three main arguments against our case. First, the LGPS is a funded scheme and different to all the others. Secondly, the cost of protection is too great. And, thirdly, the 85-year rule is age discriminatory and has to go, whatever the cost.
Being a funded scheme should make no difference. If anything, it should help, since the 89 funds in the LGPS generate significant investment income not available to government in funding other public sector pensions. In England last year, 28% of income to the LGPS came from investment returns, not a fact which should lead to our members receiving worse treatment than the rest of the public sector. If being a funded scheme is such a barrier to equality, we'll settle for an unfunded one.
After all, one reason for the pressure on the LGPS is that the 89 individual funds have had discretion over contribution rates and investment strategies. The Thatcher government allowed funds to reduce their funding levels to help ease out the poll tax.
Some — such as Kent, home of LGA leader Sir Sandy Bruce-Lockhart — took full advantage of this to reduce employer contributions below the employees' 6% for a number of years, leaving them now with deficits that have to be made good through high contribution rates.
When it comes to cost, careful work by independent actuaries Aon, appointed by the trade unions to scrutinise the figures from the Government Actuary's Department, has led to some rather different conclusions about affordability.
In Aon's view, the GAD's estimates just do not add up. Aon calculates the cost of full protection at £1.25bn, compared with the GAD's £5.61bn. Aon estimates that savings from the introduction of 25% cash commutation alone will generate between £3.5bn and £7.8bn — more than enough to cover protection — while the GAD suggests the figure will be under £1bn. These are crucial areas of disagreement that have to be ironed out.
It is also important to note that 20% of LGPS members work outside of local government, so a substantial part of the scheme's burden falls beyond the LGA, in areas that are increasingly concerned by their lack of involvement in decision-making.
As for age discrimination… European Directive 2000/87/EC was on the statute book for five years before the government decided that it signalled death to the 85-year rule and was never mentioned until the Amendment (2) Regulations were revoked last year. In any case, the European Commission, leading counsel, the Convention of Scottish Local Authorities, and many others have all said either that the 85-year rule does not breach the law and/or that protection of existing members can be justified.
However, we would welcome equal concern from the Office of the Deputy Prime Minister over real areas of discrimination, such as the gender pay gap in councils and discrimination against part-time workers. Let's not forget that the average pension of £1,600 for the women who make up 73% of LGPS members is a direct reflection of that systemic discrimination.
And for the record: lack of basic LGPS data delayed negotiations until September 2005. That hardly amounts to the five years of negotiations John Rees suggests. And, by the way, the 'regulator' doesn't exist in the LGPS regulations. He's a figment of civil servants' imagination. If only…
Heather Wakefield is Unison's national secretary for local government
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