UK – Demands by unions ahead of tomorrow’s mass council pension strike could cost every council taxpayer “at least” 2% extra per year, warned the Local Government Association.
Union calls for the 85-year rule to apply to all Local Government Pension Scheme members by 30 September 2006 would cost an estimated £6bn (€8.71bn) over the next 15 years, according to an LGA analysis and ministerial actuarial advice.
This means that council taxpayers will each have to fork out an additional 2% annually.
"The council taxpayer simply cannot pay more,” said LGA chairman Sir Sandy Bruce Lockhart.
"The changes to local government staff pensions are both needed and necessary. There must be a modern scheme that is affordable, viable and fit for the 21st century.”
Unions have warned that as many as 1.5m workers could participate in the nationwide strike tomorrow – the UK’s biggest industrial action since the 1926 General Strike.
However, the LGA told IPE that union figures were “optimistic”. They estimated that numbers would probably be around the 250,000 mark. The North is also expected to suffer more from the strike action than the South.
Over the past few weeks, unions have expressed anger at government proposals to scrap the 85-year rule allowing some to retire at 60 on a full pension.
However, the LGA believes the uneven balance between employee staff contributions and employer council tax contributions must be addressed. The current employee contribution stands at roughly 6%, while the employer contribution is more than double this.
"Unless action is taken in the very near future, the cost to individual council tax payers and local government because people are living longer will continue to rise," said Bruce-Lockhart in a statement.
"The key aspect of these changes is to make sure the pension scheme does not cost the council taxpayer any more money while at the same time making sure that local government continues to be an attractive place to work in.
"The employers and the unions have both given their advice to the Deputy Prime Minister and together with staff are waiting for him, as the decision maker, to make up his mind."
The Office of the Deputy Prime Minister said: “The government is committed to decent and secure pensions for local government employees. These must be affordable, viable and fair to taxpayers, who guarantee their security. Strike action is entirely a matter for the trades unions. ODPM wants to continue holding meetings, to discuss necessary reform of the LGPS with all interests, including the unions.”
It continued: “The retirement age of the LGPS is already 65. It has an early retirement provision (the 85 year rule), which is age-discriminatory and must be removed from the scheme. The scheme must also be affordable. The LGPS is a funded scheme, unlike other public service schemes, which is dependent on investment income. For these reasons it is dealt with separately.”