TUC pension plan set to take off in town halls

13 Jun 02
The government's refusal to allow local authorities to offer in-house stakeholder pensions could lead to a surge in popularity of the Trades Union Congress's version of the retirement package.

14 June 2002

Mike Woodall, chief officer at the West Midlands Pension Fund, says his body could become the first Local Government Pension Scheme to approve the TUC's stakeholder package as a complementary savings scheme. The fund's administrators will be meeting on June 25 to decide whether to circulate information on the scheme to members.

A positive decision by the authority will encourage fund members to sign up to the TUC package, which is administered by the Prudential and endorsed by the likes of Unison and the GMB.

And, where one of the country's largest retirement plans – and leading light in the LGPS – dares to go, other funds are likely to follow.

The TUC scheme has already been adopted by the NHS and teaching bodies, and Public Finance has learned that the congress wants to roll it out across the local government arena.

Local government schemes cannot recommend a particular stakeholder plan or they would fall foul of regulations preventing the dissemination of financial advice by non-qualified bodies. But they are allowed to distribute details on schemes.

Woodall said West Midlands' action comes on the back of the 'steadfast refusal' by the former Department for Transport, Local Government and the Regions to relax regulations prohibiting LGPS administrators from offering

in-house versions of stakeholder pensions. 'The average annual LGPS pension is just £3,500, so our members can benefit from having the additional savings package that stakeholder provides. We have called repeatedly on the government to let us offer a complementary scheme that is as flexible, but there has been no ministerial appetite for it. The TUC's scheme is as close as we can get,' he said.

Stakeholder pensions, launched as low-cost schemes in April 2001, have largely flopped in the private sector. But Michelle Lewis, the TUC's pensions officer, said she recommended them to public sector workers without a pension, 'or those who wish to top up their existing package, because they are tax-efficient and can be transferred when workers change jobs'.


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