UK - A quarter of UK local authority employees have opted out of the Local Government Pension Scheme (LGPS), according to the GMB trade union.

In a survey published yesterday, the union - which by its own account represents 610,000 employees in "every part of the UK economy doing every type of job imaginable" - found significantly divergent participation rates across the UK.

They ranged from fewer than half in one local authority in the east of England to a 99% membership rate in Sheffield, in the north.

Sources within the union said low-paid workers were increasingly reluctant to contribute to a pension scheme that would pay out £50 (€55.5) each week, but lose them almost that much in state-provided pension credits.

"You have to go some to opt out of the scheme," said one source. "You have to fill in a three-page form and get that to your employer. It isn't something you do automatically."

GMB pensions officer Naomi Cooke said a recent public-sector pay freeze had contributed to the numbers dropping out of the scheme.

Local employee membership of the 4m-member LGPS has fallen by 7% over five years from 83% to 75%.

"Employees who are not in the scheme are disproportionately low paid, part-time and female," she said. 

The GMB believes government proposals to increase employee contributions to the pension fund from 3.2% to 9.6% could jeopardise the existence of the scheme altogether.

Cooke described a "quantum difference" between attrition from the pension scheme now and the likely fallout if the government's planned contribution increase goes ahead.

An earlier survey by the union revealed 39% of pension scheme members would opt out if the employee's contribution increases.

"The government needs to see sense about the contribution increase," she said. "It would break this scheme for the 4m current members, let alone future members."

She also dismissed an amendment agreed last week to the pensions bill currently before parliament that would allow employers a three-month grace period before auto-enrolling employees into occupational pension schemes.

"There is no need for a waiting period," she said. "Participation in a good-quality pension scheme should be available from day one."
 

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