24 September 2004
Local government's pension scheme moved up the political agenda this week when Britain's biggest union, Unison, threatened to strike over changes to retirement plans.
The union also condemned some council funds for excluding workers from decision-making.
General secretary Dave Prentis has warned that 'industrial action is now a real possibility', after talks with ministers over changes to the Local Government Pension Scheme reached stalemate.
Prentis claimed the government is trying to force through a rise in the retirement age for thousands of council and education staff, which could come into force a year before it is rolled out across the public sector.
But Public Finance has learnt that Unison and the Trades Union Congress have raised separate fears about the way that some LGPS schemes are managed and administered on a local basis.
That debate centres around the role of pension fund trustees – who monitor the way funds invest cash and help make decisions over contributions rates, for example.
Prentis has written to new Work and Pensions Secretary Alan Johnson, urging him to extend a proposed increase in member trustees for private sector schemes to the local government arena.
In a speech to the TUC's annual conference last week, Johnson said he wants pension scheme members to make up 50% of trustees.
But council pension panels are dominated by councillors and fund managers, while trade union or staff representatives are either not co-opted or given 'observer' status, which prevents them from voting on key issues.
John Gray, Unison's London pension spokesman, claimed that having members as full trustees could help prevent panels from taking poor decisions, such as the contribution 'holidays' that have left some schemes underfunded.
'We're not approaching this from a critical viewpoint – we feel this would help councillors and fund managers make better, more accountable decisions,' he said. Gray believes many councillors would back moves to bring members on board. But some councillors have refused observers entry to meetings and denied them contributions on issues such as investment choices, he said.
Tom Powdrill, senior policy officer at the TUC, said: 'Experience in the private sector shows that pension funds benefit from members' involvement. It would make sense to extend the principle to the LGPS.'
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