Friday, May 13, 2011

"...the greatest threat to your pensions - Ever"

On Wednesday lunchtime there was a meeting of the UNISON London Region Pension network at ULU. This is a quarterly training meeting of UNISON member nominated representatives who sit on London Local Government Pension Scheme (LGPS) committees and members who are interested in pension issues. Our guest speaker was Colin Meech, who is the UNISON national officer for its Capital Stewardship Programme.

These are my notes of his presentation:  Colin pointed out that this current government is committed to cutting £85 billion in expenditure during the last 4.5 years. They charged Lord Hutton to find savings in public pension schemes to reduce government debt. Hutton was not responsible for the decision to change pension uprating from the RPI to the CPI index. Which it is estimated will "rob" £85 billon from pensioners in public schemes in the next 15 years.

It is proposed to raise contributions by 3.2% of income (over 50% increase in actual "real money" contributions). In the LGPS they aim to reduce government grant to councils by £900 million over 3 years. However, UNISON has sponsored research by the respected Dutch pension group AGP which found that if the 101 different Council pension schemes which together manage £160 billion in assets were to be merged into 14 it would cuts costs and increase income by a staggering £1.2 billion per year. But if pension contribution are increased by 50% then this could cause masses of members to leave the scheme.

Especially after the years of 0% pay rises ("pay cuts" when you take into account inflation) that Council staff have suffered. If employees leave the scheme because they cannot afford contributions then this will make it even more expensive, lose economices of scale and could lead to the collapse of the scheme. Many will then have to depend on state benefits when they retire.

It does not make sense to put at risk a long established pension scheme for 4 million people, which saves the government untold billions of pounds in benefit claims at risk, to save £300 million per year, when we could earn £1.2 billion by merger?
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