LGPS must adapt to avoid spending cuts – Mayer
UK - Public sector pension schemes will have to accept changes if they are to survive potential funding cuts, the London Pension Fund Authority (LPFA) has warned.
Speaking at the National Association of Pension Funds' (NAPF) local authority conference, Anthony Mayer, chairman of the LPFA, said even the local government pension scheme (LGPS) would not be immune to public spending cuts under the new UK government, given the high level of national debt in the country.
Mayer told delegates: "If we are to be listened to by this new government, then a cap to public expenditure must be on offer, along with steps to ensure the long term sustainability of the LGPS. If not, the LGPS will wither away, because without real and radical action the scheme will be unaffordable in the long term no matter what current cashflow is."
He argued that campaigning for higher employer contributions would therefore be to "enter cloud cuckoo land", and instead reiterated calls for a new independent pensions commission to develop "positive, realistic and practical ideas" for making public sector pensions sustainable.
This was one of the issues highlighted in the coalition document published last week, which stated the commission would look at making public sector pensions sustainable while protecting accrued rights. (See earlier IPE article: Iain Duncan Smith appointed UK pensions secretary).
Meanwhile, the day after George Osborne, chancellor of the exchequer, and David Laws, chief secretary to the Treasury, announced plans to cut £6bn (€7bn) of public spending and a forthcoming emergency budget on 22 June 2010, Mayer admitted "public sector pension schemes will be under attack in the coming months".
He added: "And yes, the guardians of the LGPS need to respond with positive and effective measures to ensure its long term affordability and our responsibilities to the public purse.
"But in doing so let us remember we represent millions of ordinary working people who deserve a decent pension even if they may have to work longer, pay more and receive a little less for the privilege."
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email firstname.lastname@example.org