Taxpayers' Alliance pension claims slammed

11 Jul 12
The Local Government Association and Unison have both rejected fresh claims from the Taxpayers’ Alliance that pensions for council workers are unaffordable.
By Richard Johnstone | 11 July 2012

The Local Government Association and Unison have both rejected fresh claims from the Taxpayers’ Alliance that pensions for council workers are unaffordable.

The low-tax campaign group today said there has been a ‘substantial rise’ in the number of former council staff drawing pensions compared to the number in work and paying into the Local Government Pension Scheme. This could threaten the future viability of the scheme, the alliance claimed.

Taxpayers’ Alliance research found that in 2010/11, there were fewer than 1.6 active members of Local Government Pension Scheme for every 1 member drawing a pension. This is down from nearly 1.9 active members for every 1 member drawing a pension five years ago. There are now 13 local authorities where those drawing pensions outnumbered active members by more than 2 to 1.

The group said that the falling ratio is the result of a rising number of former local government workers drawing pensions. There were 910,000 former local authority employees receiving pensions in 2010/11, up from 771,000 in 2006/07. There are also more than 1 million deferred members on the LGPS who no longer work in local government but are not yet eligible to draw pensions

The Taxpayers’ Alliance, which has previously highlighted a gap between the total assets and liabilities of the LGPS, said ‘the future of the scheme is bleak unless urgent reforms are made’.

Director Matthew Sinclair urged the government to press ahead with reforms to the scheme ‘to ensure that taxpayers aren’t left with a ticking financial timebomb’.

However, Sir Steve Bullock, chair of the LGA workforce board, criticised the group’s ‘simplistic and misleading analysis’ which had reached ‘several flawed and inaccurate conclusions’.

Bullock said: ‘The LGPS funds in England and Wales hold £145bn in investments and assets, enough to pay benefits for more than 20 years. The scheme currently has £4bn more being paid in each year than is taken out, and the amount councils allocate to pension contributions represents just a small fraction of their budgets.’

He pointed out that the LGA has been working ‘with unions to ensure the LGPS continues to be sustainable in the decades ahead’, with reforms to the scheme agreed earlier this year.

‘We have jointly developed a set of proposals that are affordable for employers and council taxpayers in the long-term, while still offering members a fair deal and greater flexibility to suit their needs. These proposals have been submitted to government and the new scheme could take effect in April 2014,’ Bullock said.

The trade union Unison accused the Taxpayers’ Alliance of not getting its facts right. The union, which is the largest in local government, said ministers, employers and trade unions have been involved in months of talks on reforms. Even before this deal, the pension fund could afford to pay all of its liabilities for the next twenty years without an increase in contributions, Unison’s head of local government Heather Wakefield said.

She said the Taxpayers’ Alliance was guilty of making the same ‘tired old claims’ about local government pensions.

‘They are cherry-picking the facts when in reality latest figures showed the LGPS was still cash rich to the tune of around £3.5bn a year – that means the contributions going in were more than pensions being paid out,’ Wakefield said.


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