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Strike threat over UK local government pensions

UK - Local government workers may strike over planned changes to their pension scheme, which they say are being "rushed through Parliament".

The Unison union says its 'strike committee' has authorised a decision to ballot its 800,000 local government workers over the changes.

Balloting will take place over the next few weeks and the result will be known in March, with the first strike day planned soon after.

"We have told the government that our members will not accept these changes to their pension scheme and that we will take action to fight them," said general secretary Dave Prentis.

"The average pension for a local government worker is £3,800 a year and we feel that is too low. Local government workers have very difficult and stressful jobs so forcing them to work longer, and for a smaller payout, is unacceptable. They will be working themselves to an early grave."

The union said changes to the Local Government Pension Scheme are being "rushed through Parliament a year ahead of other public sector schemes".

The planned changes include increasing the retirement age to 65 and a move to a basic pay scheme rather than final salary which would result in a "significantly smaller pension".

Meanwhile, submissions to Adair Turner's Pensions Commission have started to be published, ahead of the end-January deadline.

In a research note written for RBC Capital Markets by independent pension consultant, John Ralfe says the report's analysis of the advantages of a funded pension system, with individuals holding equities and bonds, over a pay-as-you-go system, "is incomplete at best and flawed at worst".

He argues the Turner report "repeats the conventional wisdom that this risk, as measured by the volatility of returns, decreases the longer the time horizon".

There was "no reason to believe that returns from a funded pension system will be higher than the PAYG real rate of growth, even before costs".

Consulting firm Punter Southall said all pensioners should receive a minimum level of income in retirement - "which should be partly funded by compulsory contributions from both employers and employees". It also called for an "improved voluntary system".

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