FURTHER INFORMATION ON LGPS DISPUTE

1. The changes made basing index linking from RPI to CPI have already happened and will further reduce pensions.

2. Many low paid staff have already opted out of the LGPS – an average of 25% of eligible workers are not paying into the scheme, and in some authorities less than 50 per cent of workers are paying in

3. Many LGPS members are facing tough choices about their outgoings in the face of a pay freeze and the soaring cost of living including food, transport and energy prices. The 80% of local government workers earning £21k or under have not received the £250 compensation during what is so far a two-year pay freeze, unlike other parts of the public sector. Contribution increases will mean many will not be able to afford to continue to pay into the scheme

4. The threshold of £15k to protect ‘low paid’ workers from paying more is far too low. The Joseph Rowntree Foundation’s “Minimum Income Standard” for a working couple with two children is at least £36,800 for a minimum acceptable standard of living – an average of £18,400 each

5. Many part-time staff whose actual earnings are less than £15k will not be protected from having to pay higher contributions because their full-time equivalent earnings on which their pension is based would be above that. In local government two thirds of our workforce are part-time

6. The uncertainty about just what our pension will be worth in future years means many workers are losing confidence in the benefits of paying into the scheme. The current proposals for LGPS are due to take effect in 2014, but a whole raft more detrimental changes are expected from 2015. Workers are increasingly questioning whether it will be worth our while to continue paying more and more in. The uncertainty that has blighted confidence in private sector money-purchase schemes is spreading to public sector schemes

If there are large scale opt-outs from the LGPS, the consequences could be catastrophic.

On current terms the LGPS will be cash rich for 15-20 years – it currently takes in £4bn more each year than it pays out. If the changes trigger large scale opt-outs, the Scheme will be in deficit within 5 years. Far from sustaining public sector schemes for the future, the changes could be bringing about their demise.