The call follows a claim by John Balfe, so-called “independent” pensions consultant, that the scheme’s liabilities had increased to £100 billion. The Communities and Local Government Minister, Eric Pickles, managed to muddy the waters even more by unsubstantiated claims that ‘town hall pensions are now costing over £300 a year to every household paying council tax."
Heather Wakefield, UNISON Head of Local Government, said:
“Another week, another attack on the local government pension scheme. These so-called independent pensions consultants and government ministers should get their facts right before they resort to crude scare-mongering.
“Eric Pickles is plain wrong. Less than 6% of council tax payments fund pensions. More than 50% is made up of employee contributions and investment returns.
“The local government pension scheme is in good shape, and is a vital way of allowing mainly low paid workers to save for their retirement. A report out this year confirmed that the scheme could cover all its liabilities for the next twenty years, without a single penny more in contributions. What’s more, the scheme invests hundreds of billions in UK stocks and shares every year – a huge boost to our economy.
“With pensions, its vital to take a long term view. It is totally misleading to take an assessment of the schemes liabilities now and make claims for the future that don’t stack-up. All investments have taken a knock thanks to the financial crisis, but given time they will recover.”
Key facts on the local government pension scheme:
- The average local government pension is £4,000 per year, for women this drops to just £2,600, or less than £40 per week.
- After intense negotiations, a new pensions agreement in local government was introduced in 2008, setting out terms that include workers paying 6.4% of their salary into the scheme.
- Local councils get most of their revenue from business rates and from central government grants. In reality, less than 6% of council taxpayers’ rates goes towards funding the pension scheme. More than 50% of the cost is met by employee contributions and investment returns.
- Research in 2006 showed that if the LGPS did not exist - based only on current pensioners – it would cost the taxpayer £2bn a year in increased means tested benefits and loss of tax revenue. It would also fuel increased take up of NHS and council care services.
- Often overlooked is the huge investment power of the LGPS fund. In 2008 the total value of combined assets in England, Wales, Scotland and Northern Ireland, were £143 billion - 60% of which was invested in equities or shares, in UK and global stock markets. In the same year, more than £1 billion was invested in each of the top four FTSE companies. If the scheme were to close, and this investment was withdrawn, it would have a huge impact on the UK economy.
- The LGPS is in better shape than a most other schemes. Even in the depths of the recession, investments provided nearly £3bn for the LGPS in England, accounting for nearly one third (27%) of the scheme’s overall income. Year on year, the scheme takes billions more in contributions and investments returns than it pays out in benefits. Last year, income from member contributions to the scheme in England alone increased by 15% - outstripping expenditure by £6 billion.
- An Audit Commission report in 2010 stated that the LGPS could pay out all pensions due for the next 20 years without any further contributions.
More information from UNISON Press Office on 0207 551 1555".
(Hat tip UNISON press release)
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